To read our regional survey of Africa’s Top 250 companies for 2020, click here
North Africa – Egyptian companies score biggest increase in rankings
Market capitalisation for the region is down to $98bn or 13% of the total, with the bulk of the market capital supplied by the Bourse de Casablanca in Morocco and the Egyptian Exchange.
Both the Egyptian Exchange EGX30 and Morocco’s MASI Free Float indices are down by about 16% in local currency over the year to March 2019.
The outlook for Egypt is particularly positive, with stockbroker Exotix forecasting higher economic growth (GDP) than in 2018, and lower inflation, interest rates and deficit in the current account.
According to the International Monetary Fund (IMF), the prospects for Egypt’s economy are good with real GDP growth of 5.5% forecast this year, rising to 6% by 2024.
Egypt scored the biggest increase with its share of the top 250 ranking rising from 34 companies in 2018 to 39 this year. Moroccan companies though accounted for a bigger share by market capitalisation.
The new entrants include healthcare (Cleopatra Hospital at #161), building materials (Samcrete #184), banks and capital markets companies, distributors MM Group (#244) and Egypt Chemical Industries (#248).
Many Egyptian companies scaled the rankings including hotels, banks, food, real estate, capital markets and telecoms.
The number of Tunisian companies in the ranking has shrunk from seven to five. However leading beverages firm Société de Fabrication des Boissons de Tunisie (SFBT) and industrial conglomerate Poulina – whose iconic founder passed away earlier this year – soared up the Top 250.
West Africa – Region holds many star performers of the future
Many of the star economies for 2019 and future years are in the region, with growth set to benefit from relative political stability, improving prices for oil and other commodities, and ever closer links between the economies.
Top real GDP growth in 2019 is forecast for Ghana (8.8%), Côte d’Ivoire (7.5%), Senegal (6.9%), Benin (6.5%), Burkina Faso (6%) and Niger (6.5%).
Nigeria’s election in February, won by the incumbent Muhammadu Buhari, has not brought stockmarket cheer and the NGSE Main Index has slid steadily since.
In April the IMF forecast 2.1% real GDP growth, rising to 2.6% by 2024. It will be boosted by recovering oil production and rising private demand.
Excitement about economic growth in the Francophone economies is not reflected in the market capitalisations and the stock exchange indices, with the BRVM-Composite Index on the regional exchange down 28% from March 2018.
The high growth economies are linked by a shared currency, with value pegged to the euro, a shared central bank and regulator, and a dynamic regional stock exchange shared by eight markets.
Growth in Ghana is forecast to slow by 2024, meanwhile the Ghana Stock Exchange Composite Index shows that investors are already cautious as it is down by 28% in the year to March, after peaking in late April 2018.
East Africa – Strong investment prospects across region
Ethiopia is the top growing economy, with growth forecast at 7.7% for this year and more than 100m people, but has no listed companies on the Top 250.
That could start to change in coming years, as Prime Minister Abiy Ahmed has led calls for establishment of a functioning capital market by 2020.
The rest of the region is also enjoying strong economic prospects, with attraction to investors boosted by the close ties between the countries.
The IMF forecasts growth in Kenya at 5.8%, rising to 6% by 2024, and in Uganda at 6.3%, rising to 6.7%. Small Rwanda is set to be a regional star with growth of 7.8% forecast this year, rising to 8.1% in 2020 and 7.5% by 2024.
Although the Rwanda Stock Exchange has eight securities, many are dual-listings and market capitalisation of the Rwandan companies is not enough for any to make the top 250 this year.
Many of the economies are still very dependent on agriculture and Felipe Jaramillo, World Bank Kenya country director, warned:
“Delays in the long rain season and a growing need for emergency interventions to deal with food shortages are a reminder of the outstanding challenges in managing agricultural risks in Kenya.”
Kenyan companies on the list are up two to 14, with the addition of bank CFC Stanbic Holdings at #223 and oil, gas and fuel group Kenolkobil at #249.
Eight of the Kenyan top companies are banks while giant Kenyan telco Safaricom continues to climb the rankings, reaching #14 from last year’s #17.
Uganda’s two top companies also include the local arm of Standard Bank as well as the local arm of British American Tobacco.
The exception to the rosy growth forecast is Tanzania.
After many years of strong growth, a difficult operating environment and disputes between businesses and government has led to growth forecasts being downgraded, with the economy only forecast for 4% growth this year.
Three of the four Tanzanian companies in the ranking continued to climb, with Vodacom Tanzania up from last year’s #158 to #135.
South Africa’s share of top companies falls
The bulk of Africa’s Top 250 by market capitalisation are listed on the JSE and based in South Africa or internationally in UK, Switzerland and other countries.
Currency depreciation in the rand (and the Namibian dollar, which is pegged to the rand) has helped reduce the number of South African companies in the ranking to 109 – from 116 the previous year – and the JSE share is 75% of the total market capitalisation, marginally down from last year’s 76%.
Standard Bank’s Sim Tshabalala says “In South Africa, we expect an uptick in growth to 1.3% for the year, driven by a stronger second half in 2019.”
Government spending on boosting the economy will be limited as it has to prioritise tackling inherited structural problems.
A key problem is state-owned utility Eskom which was plunging large parts of South Africa into darkness through planned power cuts in the first quarter, harming business, but the February Budget included a $4.9bn bailout over the coming three years.
The turning point is likely to be elections in early May, after which it may be possible to chart a clearer economic course.
Angola’s stock exchange, BODIVA, is not yet contributing any companies to the Top 250 list, but recovery in the oil sector is likely to support continued growth of the larger companies there.
The World Bank in January forecast 2.9% economic growth in 2019, supported by reforms in the business environment and new oil fields, but by April the IMF had put this on hold, with growth of only 0.4% forecast.
The number of Zimbabwean firms in the Top 250 ranking has climbed from five in 2018 to nine, boosted by high prices on the Zimbabwe Stock Exchange and the effect of official exchange rates higher than those available elsewhere which affects the USD equivalence of the market capitalisation.
In contrast, the IMF is forecasting a 5.2% contraction in real GDP in Zimbabwe this year followed by modest growth. The Fund avoids official exchange rates by sticking to a 2009 base for calculations.
Malawi and Mozambique make their first appearances on the list.
The Malawi Stock Exchange has 14 main board listed companies and the economy is on a trend for steady growth. The new top company is telco TNM at #239.
Bolsa de Valores de Moçambique (BVM) has eight listed companies, dominated by brewer Cervejas de Moçambique #222 in our ranking .
Although forecast growth this year and next are forecast to be fairly modest at 4% a year, the IMF anticipates soaring real GDP growth of 11.7% a year by 2024, presumably hoping that governance problems are overcome and the huge oil and gas reserves step up production.