Six Kenyan Companies Among Africa's Billion-Dollar Enterprises

A recent report by the McKinsey Global Institute sheds light on the landscape of large companies in Africa.

Kenya emerges as a front-runner in East Africa, boasting six companies generating over Sh130.5 billion (USD1 billion) annually. This positions Kenya well within the continent where Kenya's six entities contribute to a group of 345 similar firms. Notably, South Africa dominates the scene with 147 large companies, representing 40% of the total. Conversely, countries like Uganda, Burundi, and Mozambique lack companies in this category. The report delves further into ownership structures. Nearly half of Africa's large companies are publicly traded while 30% remain privately held.

The remaining portion falls under the umbrella of state-owned enterprises. Interestingly, a large number of these large companies are subsidiaries of foreign firms. Publicly traded subsidiaries make up 37% of this group with the remainder being private entities including a small number of state-owned enterprises primarily from China. The study spotlights the outsized role foreign-owned companies play in Kenya and across Africa. These entities account for roughly one-third of all large African companies and contribute a similar share to total corporate revenues.

In Kenya, a surge in both domestic and foreign companies is evident, particularly within the service sector. State-owned enterprises, in contrast, tend to concentrate on extractive industries. The report also unveils a net decrease in the number of large corporations in Africa compared to other regions. Over the past few years, Africa has witnessed a 16% decline in companies exceeding $1 billion in revenue, with only a minor portion attributable to currency fluctuations. However, a 9% increase in new large firms has emerged resulting in an overall net decrease.

Encouragingly, the report highlights Kenya as a country exhibiting consistent growth in this area. According to the report, closures and relocations have become a reality due to a confluence of factors including rising taxes, a challenging business environment, and high input costs. These difficulties have unfortunately translated into job losses for many Kenyans.