Africa’s Economic Horizon: A Conversation with Acha Leke, Chairman, McKinsey Africa

Full Transcript

Note: Transcripts are generated by machine and lightly edited by humans. They may contain errors.

(00:01)
Acha Leke: I would say first today, one out of every six people in the world is African. By 2050, we’re probably going to be two and a half billion, one of every four. By turn of the century, it could be 4 billion, one out of every three. I was shocked to realize that China is going to lose 200 million people, and that’s interior. And so the world is going to have to turn somewhere for this workforce. It’ll turn a bit to India. They’re going to add about 200 plus. It’ll turn to us. So I say the imperative for us is no longer like an African imperative. It’s a global imperative. And I argue that if we get this right, the biggest export from the continent is no longer going to be our resources. It’s going to be our people.

(00:44)
Darius Teter: Welcome to Grit & Growth from Stanford Graduate School of Business, the podcast where Africa and Asia’s intrepid entrepreneurs share their trials and triumphs with insights from Stanford faculty and global experts on how to tackle challenges and grow your business. I’m your host, Darius Teter, the executive director of Stanford Seed. In 2010, McKinsey published the report “Lions on the Move,” which highlighted incredible growth on the continent. Africa was indeed a new frontier of global investment and economic opportunity. But fast-forward to today and the narrative has changed. But why? In this episode we’re exploring a critical question: What is the economic future of Africa? We’ll be taking a close look at Africa’s business landscape, examining the shifts, the challenges, and the emerging opportunities born from digital transformation. Joining us is somebody with a lot to say on these topics.

(01:39)
Acha Leke: My name is Acha Leke. I’m a senior partner and chairman of McKinsey Africa, and I’m also the co-founder of the African Leadership Academy, the African Leadership University.

(01:49)
Darius Teter: Acha co-authored the 2010 report and every subsequent McKinsey analysis of economic prospects on the continent. He and I discussed not just the current challenges, but also the resilience and innovation that may just shape the path forward. So let’s dive in. Acha, I’m so grateful for your time. I read your Africa’s Business Revolution, and then I read the more recent McKinsey report. I’m going to kick things off by noting that the McKinsey report of 2023, it just struck me as considerably more pessimistic about the growth prospects for Africa than your 2018 book, which was super inspiring. So let’s just start right there. What’s changed?

(02:32)
Acha Leke: The reality is quite a bit has changed on the continent and there’s a history to this report, which is every sort of five or six years we actually write a report. The first one we wrote was in 2010. We called it “Lions on the Move,” and people got all excited about it. We actually won an award as the initiative that best promoted Africa as an investment destination in 2010. And at the time, if you saw what was happening on the continent, there was strong growth. What was much more exciting was that if you looked at the top 30 economies across Africa, they were all growing. More than two-thirds of them had accelerated their growth relative to the previous decade. And everywhere you went, whether in SME, whether you were a large company, everywhere you went, there was growth, there was growth to be captured.

(03:17)
Darius Teter: Africa’s surge in growth wasn’t simply a result of its natural resources boom. Governments stepped up to resolve political conflicts, provide some macroeconomic stability, and create a more favorable climate for business.

(03:29)
Acha Leke: Fast-forward, sort of, 10 years later, things have changed. And it’s funny, there’s a reason why we didn’t call it “Lions on the Move,” because we had a second report about 2016, which was “Lions on the Move II.” But we got tired of people asking us, ”What happened to the lions? Why are they so slow and lost along the way?” So we have a different title, but it is the third in the series of reports. But the reality is the last 10 years have been tougher, and we thought: let’s be quite clear about it and objective about what has happened. There’s some bright spots – we can come back to it – but growth has slowed down. Growth has slowed down considerably from 5.1 percent in the 2000s to more like 3.4 percent in the last 10 years on a continent that, on average, population grows at 2.7 percent. So net–net, we’re not seeing much per capita growth.

(04:14)
Darius Teter: So I know that some of the big economies, Nigeria, Egypt, Morocco, South Africa, Algeria, Angola, those all slowed dramatically. And, particularly for our purposes, sub-Saharan Africa, this is bad news in Nigeria and South Africa. But what about other countries in sub-Saharan Africa? If you take out the slow growers from the data, is the picture a bit brighter for the other economies in that period up to the most recent report?

(04:41)
Acha Leke: The picture is definitely much brighter, and that’s why we said you have to be more granular. And we talk about Africa, but there’s no “one Africa” and there’s no “one sub-Saharan Africa.” And so as you’ve seen in the report, we have a bit of a two by two where we just literally plotted growth between 2000 and 2010 and between 2010 and 2019. And you see four clear categories of countries, so what we call the consistent growth, these are countries that have grown consistently above the average for 20 years. You look at Ethiopia, Ethiopia has grown 9 percent a year, not for one year, not for five, not for 10, but for 20 years on average. Rwanda has grown 7 percent a year for 20 years on average. So the number of countries, they tend to be the smaller countries in East Africa, primarily it’s West Africa. At the top of that matrix are what we call recent accelerators. They have actually accelerated over the last 10 years. So Cote d’Ivoire is growing, the last 10 years it has grown about 6 percent a year, and those are primarily actually West African countries with a few East. And by the way, what you find is that 50 percent of Africans live in countries above the line – so countries that have grown above 10 percent above the average for the last 10 years – but it only represents about a quarter of our GDP because they tend to be smaller countries, but 50 percent of Africans live in those countries.

(05:52)
Darius Teter: Are there any common trends or common attributes of the long-term growers, the Ethiopias and the Rwandas, and the 10-year recent growers, the Cote d’Ivoires, are they doing something right? And by “they” I mean government policy, whatever it is?

(06:08)
Acha Leke: Absolutely. If you look at them and we analyze it in detail, so first they’re primarily non-resource economies, which is interesting. Two is they have put in place, they’ve been able to attract foreign direct investments a lot more than the others. So they have policies in place to make sure investors are excited about coming and investing in those countries too,

(06:26)
Darius Teter: Which is not what normally comes to my mind when I think of Ethiopia.

(06:29)
Acha Leke: Actually Ethiopia, they’ve had some challenges of late, right? But the reality, they’ve been opening up the economy quite a bit sector by sector. There’s still government controls in certain sectors, but they’ve been gradually opening the economy, certain areas of financial services, even though they’re starting to open up retail. Well, some sectors they’ve been opening up. I just came from Rwanda, right? It’s amazing. We just spent three days there, brought 400 people to Kigali for the African Leadership Network annual gathering, and they’re just blown away by what the country is doing, put in place the enabling environment. Look at a small country like Togo. It was in number two, the best performer when the World Bank did their report on enabling environments. They were the top performing in West Africa and the second best performing in Africa.

(07:11)
Darius Teter: I want to pivot now from the macro-level GDP growth to productivity. One of the things that was mentioned in the report is that their low productivity seems to be a theme throughout, and I guess you’re talking about labor productivity, and I’m curious if that’s really just an African phenomenon, because if you look across the U.S. and OECD countries, they also experienced pretty surprising declines in labor productivity comparing the early nineties and aughts to sort of 2005 to 2015. It seems to be across the board.

(07:43)
Acha Leke: The issue for us is less the decline – it’s actually the starting position. Just productivity across the board is incredibly low. We looked at every single sector. We looked at services, we looked at agriculture, we looked at resources, and we looked at manufacturing. And in every single sector we’re either the least productive of any region in the world or the second least productive. So agricultural productivity has grown over the last 10 years, but from a very, very low base. And so the issue we have is we need a faster growth. Of course we’re coming from a very, very low base. And that’s what I would argue is the biggest issue we have across the continent. And we talk about GDP and all of that, but quite a bit of our GDP was driven by resource prices because we have these commodity-heavy economies. But when it comes to what have we done to really transform our countries and start to measure productivity, that’s the push we’re making – to say we need to get to that level of granularity in how we measure it because we are really, really struggling on that front across all of our sectors.

(08:41)
Darius Teter: In the classic story of technology leapfrogging, you’d think there would be a massive digital divide, especially with network coverage expanding, cost of access dropping, and more devices than ever before in the hands of Africans. And yeah, we do see some sectors reaping the benefits, but here’s the kicker, not so much in commodities. The expected boost in agricultural productivity and other productive sectors? Well, it’s still a bit murky.

(09:06)
Acha Leke: We think digital is the single most important lever to transform productivity in Africa, absolutely. Across the public sector or across the private sector or across the social sector, there’s no question. And we are seeing examples of it and it got accelerated through COVID. I may tsunami have tell you the story about how initially in Togo[?] you had to pay cash for your COVID test. Once she was able with her team to digitize it, revenues went up 4X. So governments are really seeing the benefits because there’s reduced leakage, right? The citizens’ experience is much better. You can apply for a visa online, don’t have to show up at the embassy. Little things like that that make a difference, and we’ve seen it across multiple sectors, right? So financial services, you see mobile banking over the mobile banking accounts in the world, 60 percent are in Africa. It’s great. We’ve seen it starting to address some of our productivity issues on the agriculture front. You see it in the energy space, everything with investors and players like that across the continent. So you see, it affects sectors, but the question is how do you do that at scale? And that is one of the big issues we have. You have these examples which are great, but you need to do it at scale.

(10:20)
Darius Teter: The conditions for expanding through digital transformation are coming fast. Between 2019 and 2022, over 160 million Africans gained broadband internet access. That’s a massive jump, but is this enough when you’re dealing with a tangle of policy and regulatory requirements across the continent? I’m curious about one thing. So five years ago there were 40 million unbanked adults in Nigeria. There’s been this massive wave of fintechs both for payments but also for banking, for savings and lending. And it seems like some of these fintechs have struggled to go across the continent. And I’m wondering: you talk about delivering these services at scale. Is this problem of cross-border regulatory environments, banking regulations, is that a major piece of friction in bringing these digital services to scale?

(11:16)
Acha Leke: Scale is an issue in general across all of our enterprises when you want to go from one country to the next, because it is 54 countries. It’s easier for digital enterprises to do that. It doesn’t mean it’s easy, that it’s easier for them. But the challenge then comes to regulation. And so again, last week Fred and I, before ALN, we had the Qatar Africa Business Forum.

(11:37)
Darius Teter: Fred Swaniker is the chairman of African Leadership Group and a former member of Stanford Seed’s advisory board.

(11:42)
Acha Leke: And one of the people who spoke there was Wamkele Mene, who’s the secretary general of the African Continental Free Trade Area. And that’s what this area is supposed to do, it’s supposed to create one big economic community across all 54 countries. And it took us a while to sort of get it going in practice, but it was ratified now and there’s a secretariat and it’s up and running. But it does take a while to then change some of these habits and to allow people to be able to do cross-border trade. Now there’s some improvements. So the Pan-African Payment System payments is an issue. We have currencies, different currencies when you’ll go from one to the next, at least perhaps that will sort of be spearheaded by the African bank, and AFCFTA is now in place and traders are starting to use it now. Question: How do you use it at scale?

(12:27)
How do you add more banks onto it? How do you expand it to many more countries? But at least you’re starting to see some emergence of that. But to your point, I think regulation is one of the big challenges. I’ll give you another example: vaccine manufacturing, COVID vaccines. When we decided to bring them into the continent, and the big challenge was every country had to go and decide whether that vaccine was appropriate. We didn’t have the African Medicines Agency, AMA, which we’re putting in place now that could actually make that decision for the continent and then everybody could just apply it. So harmonization of regulations in key areas is actually critical. Again, if you want to achieve scale …

(13:03)
Darius Teter: That’s an interesting one because usually we talk about this stuff only in terms of trade, but you brought it up a whole nother level. I’m curious, when I look at all of this explosion of, let’s just focus on fintech for a second, although I also want to talk about agriculture. This explosion of companies and apps, it seems like the natural progression here would be consolidation, that the ones who are able to scale and have reasonably low customer acquisition costs will start to absorb the other ones. Or maybe big international players will come in and absorb them. Are they living on borrowed time? What’s their future trajectory?

(13:43)
Acha Leke: It’s very exciting for us to see the explosion of fintech. It is very exciting to see the amount of capital that’s going to back them. But I think any other businesses, not all are going to succeed. And so what you’re seeing is in each country people are trying to create their own, whether it’s digitizing the merchants and helping the merchants digitize, whether it is the route to market, whether it’s payments, whether it is banking services, you’re seeing it coming from all kinds of different angles and the reality is not everybody’s going to survive. What I’m happy about is we’re seeing huge, the power of the entrepreneurship spirit across the continent. My sense is you’re going to start to see some of these either firstly, some are not going to make it or you’re going to see some mergers or some international like Stripe came in, what they did with Paystack. I think you’re going to see more of that over time. And the environment is actually tougher for them as well. It was a lot easier for them to raise money in the past. It’s much tougher now. So what that’s forcing them to do, which I think is a good thing, forcing them to focus on profitability as opposed to just growth, right? So how you manage the two will be critical. And my sense is that we’re going to see many more failures over time and a lot more consolidation.

(14:56)
Darius Teter: Why is venture capital cooling off in the continent? I mean I can see it cooling off here in Silicon Valley too.

(15:02)
Acha Leke: Exactly. Well, it’s cooling off everywhere, and as a result, the VCs then have a lot more options for what would they do with the limited capital they have.

(15:10)
Darius Teter: In 2023, investments in African startups totaled $4.5 billion. Now, that sounds like a lot, but it’s actually a 31 percent decrease from the previous year.

(15:20)
Acha Leke: I think the challenge we have in Africa is that not enough of VC money is raised from Africa and from Africans. Obviously, in the U.S. you look at all the successful entrepreneurs who’ve actually then gone and become venture capitalist investors, not just because they want to support the next generation of entrepreneurs, but also they know that they can make quite a bit of money that way. We’re not seeing that enough in Africa with the successful entrepreneurs in Africa.

(15:45)
Darius Teter: People keep talking about, well, you really need patient capital if you’re going to invest in Africa. And I’m like, Uber just had their first two consecutive quarters of profitability ever. That’s pretty patient. And that was right here.

(15:57)
Acha Leke: In the U.S., and they were able to raise money, that much money and that the money was patient. But the reality is you don’t see that on the continent. I – look, I do a lot of private equity work and the challenge with private equity, as you know, is if you need to invest and you need to exit within five, six years, you have one bad year, it’s hard to recover. If you’re a country like Nigeria where the currency is devalued, sort of, more than 100 percent, you need to grow more than 100 percent just to stay afloat. So I think those are some of the challenges. So I actually believe in a model that’s more of a permanent capital vehicle. I remember I have a client of mine that’s more of a permanent capital vehicle. I’ve served them on one or two deals, and they had done this deal where they said they were a pure private equity firm and they had to exit within five to seven years, that I made no money. The fact, what they did is they were able to hold onto the investment for 10 years and they sold it for 16 times EBITDA. So think about that.

(17:01)
Darius Teter: So I want to pivot here for a little bit to talk about small and medium enterprises. So something less than a hundred employees, maybe revenues – maybe a million dollars, but I mean what I’m describing is something like 50 percent, 50 to 60 percent of GDP, 80 to 90 percent of employment. And yet in your new report, SMEs are mentioned exactly once, and I was shocked by that after reading the 2018 book. I said, what happened? It seems like Africa’s champions are billion-dollar companies and nobody else’s really features. Tell me why.

(17:38)
Acha Leke: It goes back to sort of the position we try to take in some of these reports. When we did “Lions on the Move,” initially what people liked is we said, let’s lead with opportunity, recognizing the risk. Everything you read about Africa was all about the risk. Say, when you’re talking about China and India, you talk about the opportunity. So let’s do the same. Let’s not downplay the risk, but let’s actually lead with the opportunity here. I would argue that a lot of the talk about businesses in Africa is focused on SMEs. That’s what people write about all the time. And we believe that we’re overlooking the power and the importance of large companies. It’s not at the expense of SMEs and I’ll come back to that, but we’re overlooking that, right? And we found at McKinsey research around the world and not just in Africa, that if you look in every country, the top hundred companies and the millions of companies generate in every country – the top hundred contribute 50 to 70 percent of the tax revenues of the country. They’re just the top hundred. They’re the ones who drive innovation because they have the capital to invest in R&D and innovation. What they do is they actually help the supply chain of SMEs and they help grow that supply chain of SMEs that are feeding into them. And so, yes, we couldn’t talk about everything in the report. We decided to focus on the large companies because we think that’s the segment that’s really overlooked when you talk about Africa.

(18:50)
Darius Teter: So let’s bring that to life for the agriculture sector. My background is in agriculture development. I worked for nonprofits and governments and what I was thinking about is how important land ownership patterns are and your ability to consolidate agriculture at scale. And so some industries like cocoa, they’re smallholder industries, and so you need complex outgrower processes and agreements and systems to grow at scale. What is the role of big African champions in increasing agricultural productivity when agriculture itself is so atomized?

(19:25)
Acha Leke: If you look at the trend on the agriculture sector, and we saw that in the report, we’re seeing a massive shift away from agriculture and into services. So agriculture is employing close to 60 percent of Africans, it’s down to 50 percent, it’s still half of Africans employed in agriculture. But all of that shift has gone into services and it’s partly as a result of that, that if you look at agricultural productivity in this period, it has actually gone up because we’ve been producing a bit more with a lot fewer people.

(19:52)
Darius Teter: Substituting capital for labor.

(19:54)
Acha Leke: Subcapital, capital for labor. Exactly. Now what is the role? And like you said, it is predominantly a smallholder farmer in Africa and there’s this big debate, I’m sure you know it very well, which is: Should it be large commercial farms, or should it not be large commercial farms, and can the smallholder model work? I actually don’t think it’s either/or. I think it’s going to be both. And so I think there’s a role for large businesses and then I don’t know exactly the commodities, but I’m sure there’ll be a role for large businesses to actually come and set up some of these large commercial farms and significantly increase productivity. There’ll be a role for the small and medium enterprises or the small traders to actually feed into that. By the way, right back to your outgrow scheme, regardless of the model, we know that we fundamentally need to significantly increase productivity and yields across all sectors, across all commodities in Africa. So my sense is there’ll be a role for both in agriculture, but regardless of who’s playing that role, we need to see yields increase and we just have not seen them increase fast enough.

(20:50)
Darius Teter: Earlier in our conversation, Acha mentioned the importance of the African champions, the big corporates that not only drive innovation but also contribute significantly to tax revenues. Acha argues that these companies are the key customers for SMEs in their supply chain.

(21:06)
Acha Leke: So first, there are actually 350 billion-dollar businesses in Africa. They are – about 40 percent of them are in South Africa, but the good news is every single sector has a billion-dollar business, so it cuts across sectors. Now, to your point: what the example is, exactly, that we like to see. If I take an example of a company, well, MTN. So MTN and many of the markets, most of the markets, they’re literally the number one taxpayer in that country. And what they do is, you’ve seen that you have all of these small traders who are sort of selling MTN in recharge cards, who are selling SIM cards, who are providing these kinds of services, who are providing mobile services, mobile money services, and that’s what they do. They then really help to significantly grow the value chain. And so eventually, as MTN scales and grows, that’s the trickle-down effect it has on the country and on the economy and on jobs. So the banks, you look at some of the retailers and what they’re doing. So again, this is back to the point around – they have a fundamental role to play, which, again, I think is quite overlooked – to help grow these sort of 80 to 90 million MSEs and actually help them not just grow, but also scale and increase the opportunity to employ more people into those sectors. As you say, if they still employ 50 percent of Africans who are in the private sector.

(22:33)
Darius Teter: Today, more than 60 percent of Africa’s population is under the age of 25, and these numbers continue to rise. By 2035, there will be more young Africans entering the workforce annually than all the rest of the world combined.

(22:46)
Acha Leke: Let’s talk about the facts. I would say first, today, one out of every six people in the world is African. By 2050, we’re probably going to be two and a half billion, one out of every four. By turn of century, it could be 4 billion, one out of every three. So this is a continent that’ll be home to a quarter to a third of the world. Just think about that. Now we can come back to some of the risks that are associated with that. As a result of that, our labor force, we’re going to have the largest working-age population in the world, and so we’ll have added 800 million people to the workforce in a context where North America is going to stay flat, Europe is going to decline. I was shocked to realize that China is going to lose 200 million people, and that’s interior, and so the world is going to have to turn somewhere for this workforce. It’ll turn a bit to India. They’re going to add about 200 plus. It’ll turn to us. So I say the imperative for us is no longer like an African imperative. It’s a global imperative, but how we then make sure that these people are skilled and trained to provide those services, and I argue that if we get this right, the biggest export from the continent is not going to be our resources. It’s going to be our people. They’ll not need to leave our shores to provide those services through digital services.

(23:55)
Darius Teter: How do you do that at scale?

(23:57)
Acha Leke: You do it at scale by making sure the unit costs are low – and they are. You do a skill by making sure that – we wrote about it in the book – understanding which parts of the value chain you actually control or what sort of science technology is doing. Because they control the upper part of the value chain where they’re doing the training with the universities, it’s easier for them to find the right talent. I think some of the challenges that other people had was they didn’t control the supply of the talent. So what we found in our work in Africa’s Business Revolution is that businesses have to really think very carefully about which parts of the value chain they want to control for competitive purposes. You do it at scale by building partnerships, you need to have clients on the other side who need the service, and how do you start to build partnerships with those clients? How do you attract? India has done this very, very well. Do you then try to partner with an Indian firm that has done it and figure out how you can replicate it in Africa so you can learn from them? You do the skill by training the talent, really understanding what are the skills for the 21st century that this talent needs to have. Not just coding skills, but what else do they need to have.

(25:00)
Darius Teter: Do you think governments in sub-Saharan Africa understand that they will be competing to deploy their labor against their neighbors?

(25:07)
Acha Leke: Absolutely. I do a lot of government work, and it’s very clear to me that not all countries are going to win here. I think it’s going to be a few countries that are going to go really at scale here, just like we see tourism, what Rwanda does with tourism, or South Africa or Morocco. It’s not like 20 tourism hubs in Africa. I think from a sort of outsourcing technology services business, I think you’re going to see a few winners on the continent. People who again take it seriously, who understand the value because what you need, you need the infrastructure to be in place. You need to name the environment if you’re going to attract all this talent, if you want to attract pan-African talent. How do you make sure they can come and work in your country without too many hassles? How do you make it –

(25:45)
Darius Teter: Investing in upskilling, human capital investment.

(25:48)
Acha Leke: Investing in upskilling them at scale, Again, you’ll have the school that does 2,000 people. We’re talking about how do you do this at a hundred, 200, 300, 400,000 people?

(26:01)
Darius Teter: I wanted to get Acha’s take on the implications for Africa of rapidly improving and often free AI tools.

(26:08)
Acha Leke: We’ve done research at McKinsey, right? And this is more on the digital front. I think we’re doing this similar to AI and the report was called “Job Loss/Job Gain,” and what you realize is, yes, you’re going to lose jobs, but when you go through these changes that have happened over the years, you eventually gain more jobs. So I’m actually quite confident now, the reality is you need to understand what are the jobs that you may lose and what do you do about that and get ahead of the curve and thinking about where are the jobs going to be, the jobs people are going to need and how do you prepare your people for it? And that’s why, again, I’m back to, I think only a few countries are going to win because only a few are going to be that proactive and starting to think through: How is this shift going to affect them? I’m not worried. I think we will find there will be still plenty of jobs for everybody out there. They’ll be very different from what we have today. I think there’ll be few jobs that will be completely eliminated, but what we need then, to your point, is to start to be a lot more thoughtful and proactive around thinking about what are these new jobs that could be created and how do we then train and upskill our people for them?

(27:11)
Darius Teter: What gives you optimism about the growth trajectory? You’ve mentioned that for some elements of your report there’s going to be a handful of winners and not everyone’s going to be able to ride that wave. Are you generally optimistic about the growth prospects across the continent relative to 10 years ago, or are there a lot of caveats?

(27:31)
Acha Leke: I’m generally an optimist in general. I think as a continent we’re going to do well. We’re going to do fine. So that’s not a problem. I do think, again, it’s back to granularity. More and more countries that are getting a little more serious about it, and honestly, it comes down to leadership. Obviously you have the right leader in the country, they attract the right set of folks around them. They put in the right enabling environments. They do sort of performance management and they track and they deliver. I think we’re seeing more and more countries with such leaders now. When we talk about broader pan-African level, we need to see that in our large economies. I’m quite optimistic on Nigeria, to be honest.

(28:12)
They’ve done all the right things, whether it’s elimination of subsidy, whether it is the exchange rate. These are difficult decisions to make and they’re tough for people, but they’re actually the right things to do. They’re now setting up a delivery unit right under the president. So I’m actually quite optimistic about a country like Nigeria. So I think the smaller economies, my sense is you’re starting to see more and more of them trying to replicate what Rwanda or what an Ethiopia or what a Togo or Senegal or Cote d’Ivoire – you’re seeing quite a few of those and I’m starting to get more optimistic, at least about some of our big economies. Those are the ones that are going to propel the growth. I mean the top six economies account for, what, two-thirds of our GDP. So we need them to grow much faster than they are right now to really drive overall economic growth across the continent.

(28:59)
Darius Teter: What about South Africa?

(29:01)
Acha Leke: That’s where I live, South Africa. South Africa is a country that is the largest economy in Africa that has grown the slowest. That needs to be reversed.

(29:31)
Darius Teter: With its vibrant youth, inventive energy, and abundant resources. Africa stands at the threshold of rewriting its economic narrative. Fueled by a digital revolution, Africa has the opportunity to reignite its growth by dramatically increasing the productivity of its people and its businesses. But with less venture capital flowing through the continent, this transformation will require a focus on digital infrastructure, allowing for greater accessibility, better coverage, and higher quality services. Personally, while I found the analysis in Acha’s report compelling, I wish there was a greater recognition of the role of SMEs in job creation and broadly shared economic prosperity, not just in the service of corporate supply chains, but in meeting the enormous unmet demands of individual consumers dispersed across sub-Saharan Africa. I want to thank Acha Leke for sharing his expertise and insights with us, and I hope that the next McKinsey report finds that Africa’s lions are back. Erika Amoako-Agyei and VeAnne Virgin researched and developed content for this episode. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Nathan Tower and sound design and mixing by Ben Crannell at Lower Street Media. I’m Darius Teter. This has been Grit & Growth. Thank you for joining us.