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McKinsey & Company

McKinsey & Company

McKinsey & Company is a leading global consulting firm. Through the business journal McKinsey Quarterly, articles written by McKinsey consultants offer practical ideas and far-reaching analyses on global trends and challenges facing companies, governments, and society. is proud to offer Africa-related articles and special reports from McKinsey & Company.


McKINSEY REPORT: Winning Strategies Among Africa’s Top Banks

The McKinsey Global Banking practice has published a new report on African Retail Banking –

Roaring to life: Growth and innovation in African retail banking.

The report finds that Africa’s banking markets are among the most exciting in the world. The continent’s overall banking market is the second-fastest-growing and second most profitable of any global region, and a hotbed of innovation. Nearly 300 million Africans are banked today, a number that could rise to 450 million in 5 years. The report illustrates four segments of African markets – from the advanced markets like South Africa and Egypt, to fast-growing transition markets such as Kenya, Ghana and Cote D’Ivoire, to sleeping giants like Algeria, Nigeria and Angola, to nascent banking markets like DRC and Ethiopia.

The report finds that Africa’s top quintile banks – the so-called “winners” – are simultaneously 4 times more profitable and over 2 times faster growing than bottom quintile banks.

The report’s key findings are that these “winners” are defined by employing one or more of five winning practices:

Draw the right map. In Africa, geography matters. About 65 percent of African banks’ profitability (measured by RoE) and 94 percent of their revenue growth are attributable to their geographic footprint. Importantly, the report highlights a shift in exchange-rate adjusted revenue pools North Africa, East Africa and West Africa, and away from South Africa.

Right segments, compelling offers. We find that 70 percent of revenue pool growth will occur in the middle segments, defined as earning between US$ 6,000 and US$ 36,000 in annual income. The mass market – individuals earning less than US$6,000 per annum – accounts for 13 percent of the growth, but is the fastest growing segment. Whichever segment banks choose, having the right proposition is key. Our survey of 2,500 banking customers in 6 African countries finds that 25 percent of customers choose price as the most important factors in choosing banks. Equally important is convenience, also cited by 25 percent of customers. Service is the third most important factor, selected by 12 percent of customers. We also find huge cross-sell opportunities – while 95% of Africans have transaction products, fewer than 20 percent have lending, insurance, investment or deposit products.

Leaner, simpler banking. While African banks’ cost: income has been falling, we find that this is due to rising margins for banks, and their cost-to-assets ratio has actually been worsening. At 3.6 percent, Africa has the 2nd highest cost-to-assets ratio in the world. However, rapid efficiency gains are possible, and we spotlight eight African banks that have made strides in efficiency in the last five years, through a combination of three levers – end-to-end digitisation; sales productivity improvements fuelled by advanced analytics; back- and middle-office optimisation.

Digital first. 40% of Africans prefer to use digital channels for transactions. In four major African countries – South Africa, Nigeria, Kenya, Angola – a higher proportion of Africans prefer the digital channel for transactions to the branch channel. Given low branch density in Africa, banks need to employ a digital first approach. The report hones in on four themes of innovation emerging in Africa on digital – end-to-end digital transformations (e.g. Equity Bank); partnering with telco companies (e.g. CBA in Kenya or Diamond Bank in Nigeria); building a digital bank (e.g. ALAT in Nigeria); and building an ecosystem (e.g. Alipay in China).

Innovate on risk. African banking still has the second highest cost of risk in the world. Poor data availability is part of the problem: 11 percent of Africans are on credit bureaus, compared to in excess of 90 percent in advanced markets. However, we are seeing innovations such as banks partnering with data and analytics fintechs like Jumo to improve credit underwriting; banks partnering with telcos to leverage telco data to issue small-ticket loans on mobile; and players employing payroll lending across countries.

This new report draws on the experience of McKinsey’s partners and colleagues serving banks across Africa; McKinsey’s Global Banking Pools research; a proprietary database of the financial performance of 35 of Africa’s leading banks; a survey of executives from 20 banks and financial institutions across Africa; and a broad-based survey of 2,500 banking customers from 6 African countries – South Africa, Egypt, Nigeria, Morocco, Angola and Kenya.

Africa and China: Dance of the Lions and Dragons

Chinese firms in Africa could reach revenues of $440 billion in 2025 by aggressively expanding in both existing and new sectors on the continent.

This forms part of the findings of McKinsey & Company‘s latest report, “Dance of the Lions and Dragons,” in which the global consulting firm takes a closer look at the Africa-China relationship, asking “How are Africa and China engaging, and how will the partnership evolve?”

Compiled by Kartik Jayaram and Omid Kassiri from the Nairobi office, along with Irene Yuan Sun from the Washington, DC, office, the report focuses on eight large African economies – Angola, Côte d’Ivoire, Ethiopia, Kenya, Nigeria, South Africa, Tanzania, and Zambia – and identifies the four distinct archetypes of Africa’s relationship with its largest economic partner:

Robust partners. Ethiopia and South Africa have a clear strategic posture toward China, along with a high degree of economic engagement in the form of investment, trade, loans, and aid.

Solid partners. Kenya, Nigeria, and Tanzania do not yet have the same level of engagement with China as Ethiopia and South Africa, but government relations and Chinese business and investment activity are meaningful and growing.

Unbalanced partners. In the case of Angola and Zambia, the engagement with China has been quite narrowly focused.

Nascent partners. Côte d’Ivoire is at the very beginning of developing a partnership with China, and so the partnership model has yet to become clear.

From the more than 1,000 Chinese-owned companies McKinsey & Company spoke to for this report, 89 percent of employees were African, Mckinsey & Company report on Africa-Chinaadding up to more than 300,000 jobs for African workers, with nearly two-thirds of Chinese employers provide some kind of skills training.

Chinese firms are said to operate across various sectors of the African economy, with nearly a third involved in manufacturing, a quarter in services, and around a fifth each in trade and in construction and real estate. The report found that of companies engaged in construction and manufacturing where skilled labour is a necessity, half offer apprenticeship training. Other key report findings:

  • Half of Chinese firms have introduced a new product or service to the local market, and one-third have introduced a new technology. In some cases, Chinese firms have lowered prices for existing products and services by as much as 40 percent through improved technology and efficiencies of scale.
  • Chinese construction contractors command around 50 percent of Africa’s international engineering, procurement, and construction (EPC) market. African government officials overseeing infrastructure development for their countries cited Chinese firms’ efficient cost structures and speedy delivery as major value-adds.

The report also goes on to highlight areas that need significant improvement, including the lost opportunity for local companies to benefit from Chinese investment considering that only 47 percent of the Chinese firms’ sourcing was from local African firms.

It also found that:

  • Only 44 percent of local managers at the Chinese-owned companies we surveyed were African, though some Chinese firms have driven their local managerial employment above 80 percent.
  • There have been instances of major labor and environmental violations by Chinese-owned businesses. These range from in inhumane working conditions to illegal extraction of natural resources including timber and fish.

Read the full McKinsey & Company report on the Africa-China relationship HERE.

Women Matter Africa Report: Representation of African Women in the Private and Public Sectors

Drawing on research undertaken at over 200 African companies and interviews with more than 30 women leaders across the continent, McKinsey & Company’s latest report on Africa, Women Matter Africa, highlights that the continent has taken big strides regarding women’s representation in the private and public sectors.


  • In the private sector, Africa has more women in executive committee, CEO, and board roles in companies than the average worldwide.
    Numbers vary by industry and region – not surprisingly – and are much lower in industries that traditionally rely on men for their workforce (heavy industry, for example). Yet women are still under-represented at every level of the corporate ladder – non-management and middle and senior management – and fall in number the higher they climb. Only 5 percent of women make it to the very top.
  • In government the number of women parliamentarians has almost doubled over the past 15 years and the number of women in cabinet has grown fivefold in 30 years. Again, numbers vary considerably, this time by country and region. Southern and East Africa are ahead of the pack, but there is room for improvement even here. In global terms, Africa has more women in parliament than the average. Credit for this growth may go in large part to targets for women’s representation set by parliaments and political parties. Representation rates, however, still need to double if Africa is to achieve gender equality. Numbers do not equal influence. Although the number of women in leadership positions may have risen, women do not necessarily have greater power. In the private sector, more than half of senior women occupy staff roles rather than the line roles2 from which promotion to CEO typically comes.
  • In the public sector, approximately half of women cabinet ministers hold social welfare portfolios, with arguably limited political influence, that do not open doors to top leadership roles. Indeed, the increase in women’s share of cabinet roles appears to come more from the creation of new social welfare portfolios than from any real redistribution of power.


McKinsey: Eradicating Polio in Nigeria

The country’s novel approach to disease control can offer lessons for other countries facing urgent public-health challenges.

Nigeria recently celebrated a full year and a half without a new case of wild poliovirus. The World Health Organization (WHO) has certified there has been no evidence of wild polio in Nigeria for more than a year and removed it from the list of polio-endemic countries. These are milestones both for Nigeria and for the global campaign to eradicate polio. Nonetheless, continued effort and vigilance will be critical over the next two years to declare the country and the rest of Africa completely free of the disease.

Toward these ends, Nigeria has significantly increased polio immunity among its population over the past three years. As recently as February 2012, only 16 percent of local-government areas (LGAs) in high-risk states had achieved the target level of immunity coverage: vaccinating more than 80 percent of all children under the age of five. By September 2015, coverage had improved more than sixfold: 97 percent of LGAs in high-risk states had achieved the target (Exhibit 1). The success of Nigeria’s federal and state governments, Global Polio Eradication Initiative partners, and the Bill & Melinda Gates Foundation is all the more impressive given the climate of disinformation, intimidation, and violence that peaked with the 2013 murder of 13 vaccinators by insurgents in Kano and Borno states.



This article reviews the steps that Nigeria and its partners took to eradicate polio, especially the introduction of a novel approach to disease control: emergency operations centers (EOCs). It also explores what the lessons learned from Nigeria’s approach to polio might teach other countries about emergency health responses.

Taking the fight to polio: Establishing EOCs

In 2012, Nigeria had a serious polio problem. It was Africa’s only remaining polio-endemic country, and the number of confirmed new wild poliovirus cases was increasing, eventually reaching 122 that year. Indeed, Nigeria was considered the worst performing of all polio-endemic countries, with a majority of new cases throughout the world. Immunization coverage was declining, attributable to weak program performance, lack of accountability, significant levels of mistrust at the community level, poor engagement of the country’s traditional structures, and little coordination between the government and its international partners working to eradicate the disease. In addition, the states with the highest risk for polio were all in northern areas plagued by weak health systems, poor health indicators, and challenging security conditions.

Nigeria created a presidential task force to lead the country’s response to the eradication of polio. The plan was to work with national and international organizations, such as the National Primary Health Care Development Agency (NPHCDA), WHO, the US Centers for Disease Control and Prevention (CDC), the United Nations Children’s Fund (UNICEF), the Bill & Melinda Gates Foundation, and Rotary International. With the support of the Gates Foundation and strategic assistance from McKinsey & Company (see sidebar “McKinsey’s support for Nigeria’s polio-eradication effort”), the Ministry of Health created EOCs to focus on the highest-priority interventions, to improve coordination, and to manage the program’s overall performance closely. EOCs are centralized command-and-control units responsible for disaster preparation and management. Other countries and cities have also used them to respond to emergencies.

Nigeria’s National Polio EOC was established in the capital, Abuja, in October 2012. The EOC model requires national and international organizations to locate their leaders in the same place and to meet regularly to develop and execute eradication strategies, improve vaccination campaigns, and respond immediately to outbreaks. Each organization contributed people to support the collection, analysis, and reporting of eradication data. The NPHCDA provided local staff to gather data from LGAs, wards, and settlements in high-risk states.

The Minister of State for Health, Dr. Mohammad Ali Pate, asked the NPHCDA’s Executive Director, Dr. Ado Jimada Gana Muhammad, to lead the creation of the national EOC. He appointed Dr. Andrew Etsano as EOC Incident Manager and Dr. Faisal Shuaib as Deputy Incident Manager, with direct reporting lines to the Executive Director and the Minister, respectively. They worked with the NPHCDA and the international partners to develop the required organizational structure, working committees, meeting routines, procedures, and data-analysis support. Besides establishing the national EOC in Abuja, the ministry oversaw the design and set up the first state EOC in Kano. This became the model for the successful EOCs opened in six other high-risk states in northern Nigeria.


ABOUT THE AUTHOR: Scott Desmarais is a principal in McKinsey’s Lagos office. Since November 2012, more than 25 consultants from McKinsey’s offices in Lagos and around the world have supported Nigeria’s efforts to eradicate polio. The author wishes to thank each of them for their commitment and passion.


South Africa’s ‘Big Five’ Growth Opportunities

In the two decades since South Africans worked together to transform their political landscape and usher in a new democracy, the country has made remarkable progress. In particular, GDP has nearly doubled in real terms, lifting millions of people out of poverty and into the middle class and greatly expanding access to services. Yet since 2008, average annual GDP growth has slowed to just 1.8 percent, while unemployment has stubbornly remained at 25 percent. Given the country’s vibrant public life and dynamic business sector, South Africa has no shortage of ideas, but a tone of pessimism is growing as many worry that the economy is stuck in a low-growth trap.

A new McKinsey Global Institute (MGI) report, South Africa’s big five: Bold priorities for inclusive growth, recommends reigniting the country’s economic progress by focusing on five opportunities: advanced manufacturing, infrastructure, natural gas, service exports, and the agricultural value chain. If government and businesses prioritize them, these five initiatives alone could by 2030 increase GDP growth by a total of 1.1 percentage points per year, adding 1 trillion rand ($87 billion) to annual GDP and creating 3.4 million new jobs.

Big 5 growth opportunities

Here are the “big five” opportunities we’ve identified—and why:

  • Advanced manufacturing. South Africa can draw on its skilled labor to grow into a globally competitive manufacturing hub focused on high-value-added categories such as automotive, industrial machinery and equipment, and chemicals. To realize this opportunity, South African manufacturers will have to pursue new markets and step up innovation and productivity.
  • Infrastructure productivity. While the country is investing heavily in infrastructure, big gaps remain in electricity, water, and sanitation. A true partnership between the public and private sectors could make infrastructure spending up to 40 percent more productive by maximizing the use of existing assets and increasing maintenance, prioritizing projects with greatest impact, and strengthening management practices to streamline delivery.
  • Natural gas. South Africa’s electricity shortage has constrained growth, and, despite new capacity, another shortfall is projected between 2025 and 2030. Natural-gas plants—which are fast to build, entail low capital costs, and have a small carbon footprint—can provide an alternative to diversify the power supply. With the necessary regulatory certainty, we estimate that South Africa could install up to 20 gigawatts of gas-fired base-load power-generation capacity by 2030. Gas can be provided through imports, local shale-gas resources (if proven), or both.
  • Service exports. South Africa has highly developed service industries, yet it currently captures only 2 percent of the rest of sub-Saharan Africa’s market for service imports, which is worth nearly half a trillion rand ($38 billion). With the right investments, service businesses could ramp up exports to the region; and government can help by promoting regional trade deals. In construction, the opportunity ranges from design to construction management to maintenance services. In financial services, promising growth areas include wholesale and retail banking, as well as insurance.
  • Raw and processed agricultural exports. With consumption rising in markets throughout sub-Saharan Africa and Asia, South Africa could triple its agricultural exports by 2030. This could be a key driver of rural growth, benefiting the nearly one in ten South Africans who depend on subsistence or smallholder farming. Capturing this potential will require a bold national agriculture plan to ramp up production, productivity, and agroprocessing.

Successfully delivering on these priorities will move South Africa closer to realizing its long-held vision of a “rainbow nation” characterized by shared prosperity for all. But first, the country will need to embrace some fundamental changes to become more globally competitive; not least, it will have to address a serious skills shortage through a dramatic expansion of vocational training. Tackling such foundational issues will require business and government to come together in a new partnership characterized by shared vision, collaboration, and trust.

Richard Dobbs is a director of the McKinsey Global Institute, where Susan Lund is a partner; David Fine is a director in McKinsey’s Johannesburg office, where Paul Jacobson is a consultant, Acha Lekeis a director, and Nomfanelo Magwentshu and Christine Wu are principals.

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