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AFRICA’S TOP COMPANIES 2024: LISTINGS SHOW SOME GROWTH AGAINST A STILL-DIFFICULT
BACKDROP

This year’s African Business ranking of the continent’s Top 250 Companies again
shows a fall in their dollar-denominated market value – but almost all this
year’s fall is down to one South African company. There are sparks of growth
elsewhere on the continent, reports Neil Ford.

May 6th, 2024

By

Neil Ford

Image : GIANLUIGI GUERCIA/AFP

The value of Africa’s biggest companies has fallen again this year. But one
company – Naspers – is mainly responsible. The total market capitalisation of
the 250 biggest listed companies in Africa stood at $505bn on 31 March 2024,
down 9% from the $556bn recorded one year earlier and even lower than the $597bn
recorded in March 2020 at the height of the Covid-19 pandemic. This continues
the overall trend over the past decade, with the figure declining from the
record $948bn set in 2015. Back then, it seemed likely that the $1 trillion
barrier was on the verge of being broken.

Africa’s 250 biggest listed companies are now worth less than the equivalent
cohort in March 2020, when uncertainty over how long the economic impact of the
pandemic would last shook confidence in global equities. However, the $51bn fall
over the past 12 months almost entirely matches the $48.9bn decline in the value
of Naspers.

The company’s fluctuating share price is mainly the result of its involvement in
Hong Kong-listed tech and entertainment company Tencent. It bought a 33% stake
in the company in 2016, before Tencent’s value boomed, but has since sold part
of its shareholding as Hong Kong tech share prices have fallen sharply. Naspers
local businesses are a relatively limited part of its total operations, so the
big fall in its value over the past two years is not a direct reflection of its
South African or even African operations.

Naspers is still the biggest listed company in Africa by some distance; but its
lead has been greatly reduced. Its market value has fluctuated wildly over the
past few years, reaching a peak of $104.2bn in our 2021 survey, dropping to
$49.6bn the following year, jumping again to $80.8bn in 2023 before diving again
to $31.9bn this year. The Cape Town-headquartered company mainly operates in the
technology and multimedia sector, but has interests stretching from publishing
to venture capital. It operates around the world and calculates that its
products and services are used by about 2bn people.

Its $31.9bn value is sufficient to keep it a long way ahead of the three South
African banks that follow it in our rankings: Absa with $18.4bn; FirstRand with
$18.3bn; and Standard Bank Group with $16.4bn. The value of the three banks has
fluctuated since last year but none have experienced any falls to compare with
that of Naspers. The rest of the Top 10 is mainly filled by other South African
firms, such as Capitec Bank, telecoms firm Vodacom Group and miners Anglo
American Platinum and AngloGold Ashanti.

Vodacom’s value declined from $14.3bn in last year’s survey to $10.8bn this
year, resulting in a fall from fourth to seventh position. However, Vodacom’s
fortunes could be on the verge of improving. It recorded a 27% increase in
revenue for the final quarter of 2023 to 38.9bn rand ($2bn), with its
acquisition of Vodafone Egypt proving a particular engine of growth.

The only non-South African company in our Top 10 this year is Morocco’s
Attijariwafa Bank, which moves up from 14th to eighth on the back of a rise in
value from $8.3bn to $10.8bn. Although its progress has not been constant, its
market capitalisation is on an upward trend; and if the Moroccan and South
African economies continue on their current trajectories, Attijariwafa Bank may
begin to overtake some of South Africa’s biggest banks over the next four years.
One factor that weakens that assumption is the fact that both Moroccan and South
African banks are following the same strategy – expanding their operations
outside their domestic markets and into the rest of the continent.

Our rankings feature only listed companies, and therefore exclude parastatals
and firms held in private hands. Oil companies Sonatrach of Algeria and Angola’s
Sonangol would certainly secure a place near the top of our table if they were
to seek a listing on an African stock exchange, as would an initial public
offering in South African power company Eskom on the Johannesburg Stock
Exchange.


BIGGEST RISERS

The companies that have made most progress rising up our rankings this year
include Morocco’s Banque Centrale Populaire, which moves up from 31st to 20th
and from a market capitalisation of $4.5bn to $5.9bn; and South Africa-based
Harmony Gold Mining, which jumps 25 places to 24th as a result of its value more
than doubling from $2.5bn to $5.2bn. Egypt’s Talaat Moustafa Group climbs from
146th to 50th following a stunning increase in value from $581m to $2.5bn, in
large part because of its February agreement with the Abu Dhabi Developmental
Holding Company and Modon Developments to work on the $35bn Ras El Hikma City
project.

MTN Nigeria falls spectacularly out of the Top 10, dropping from ninth to 35th
position, as a result of a fall from $10.6bn last year to $3.7bn in this year’s
survey. Nigeria’s biggest telecoms provider’s value had grown rapidly over the
previous two years, but at the end of February the company warned that its
profits could fall by up to 90% as a result of the devaluation of the naira,
despite having 79m customers. CEO Karl Toriola said that allowing the naira to
float freely had driven up its operating costs.

Despite the overall decline in the value of the Top 250 African companies, the
threshold for entering our rankings has actually risen slightly over the past 12
months. Bank of Africa Côte d’Ivoire needed $239m to secure 250th position in
our rankings this year, while Egypt’s Cleopatra Hospital required just $229m to
take the same spot in 2023.

Even here, however, the overall trend is downwards, with $394m necessary to take
the final position in our table as recently as 2018.





SOUTHERN AFRICAN DOMINANCE WEAKENING

Despite the falling value of Naspers, South African companies continue to
dominate our table, with combined market capitalisation of $304.9bn, or 60.33%
of the total. Given the South African economy’s continued difficulties, it is
remarkable that the country’s companies continue to perform as well as they do.
The impact of low levels of economic growth over the past two decades is being
compounded by poor performance by the country’s parastatals, particularly
Transnet and Eskom.

The volume of freight handled by Transnet’s rail and port operations has fallen
dramatically, including that of the country’s two biggest earners – coal and
iron ore. In addition, erratic power supplies and rationing continues to affect
companies in all sectors. Despite these logistics problems, the value of Kumba
Iron Ore has declined only slightly from $8.2bn to $7.9bn over the past year,
seeing it fall just one place to 16th. Its big fall occurred last year when its
value declined from a peak of $14.4bn in our 2022 survey.

Pretoria is banking on greater private sector involvement to attract more
investment and engender more competition; but the benefits will not be felt
immediately. A combination of power shortages, logistics challenges and high
inflation and interest rates are currently putting pressure on businesses. In
March, Standard Bank announced that its credit impairment charges had increased
by 22% over the past year, despite lending rising just 7%, driving up its
credit-loss ratio from 83 basis points to 98 basis points as more companies and
individuals struggled to service their loans.

The rest of Southern Africa accounts for just $22bn or 4.40% of our Top 250,
with Mauritius and Namibia well represented, despite their small populations.
West African companies are valued at $49.8bn in our rankings, accounting for 10%
of the total Top 250 market capitalisation, with Nigeria at the forefront with
7.9% – although this proportion is roughly half what might be expected given
that Nigeria accounts for 15.3% of the continent’s population. We look at
Nigerian companies in more depth and examine the total absence of any Central
African companies in our regional rankings.

East Africa is also vastly underrepresented in our table, with the region’s
companies listed in the Top 250 valued at just $18.3bn or 3.66% of the total.
These figures seem likely gradually to increase over the next few years, with
Kenya, Tanzania and Uganda consistently among the fastest-growing economies in
Africa and all experiencing rapidly growing populations. Despite growing
competition, Nairobi remains the region’s financial and business centre and is
likely to provide a growing number of representatives in our table.

We look in more detail at the fortunes of the biggest companies within each
region. By far the most-represented sector in our table is finance, which
accounts for $195bn or 38.7% of the Top 250’s total value, a big rise on last
year’s 30.7%, as Africa’s biggest banks grow on the back of the roll-out of
digital platforms and growing banking service penetration rates. Nine of the 20
biggest listed companies are banks and other financial services companies.
Companies whose main activity is manufacturing are unrepresented in our table,
despite rising wage costs in China and in some parts of Southeast Asia. There
are manufacturing success stories in the South African and Moroccan automotive
sectors, for instance, but relatively little manufacturing activity anywhere
between South Africa and the far north of the continent.

The finance sector is followed by the mining industry, categorised as non-energy
materials in our table, with a 20% share of the Top 250; consumer non-cyclicals
make up 15.6% and telecommunications 11.6%.

The representation of the consumer non-cyclical sector has seen a big decline
from 24% last year, partly as a result of Naspers’ falling value. Other
companies operating in this segment include South Africa’s Shoprite Holdings and
Clicks Group; plus Nigeria’s BUA Group.

Despite growing strongly, the construction and technology sectors account for
shares of just 0.05% and 0.25% respectively, mainly because both industries are
dominated by big non-African firms or companies that are too small to secure a
place in our rankings.

To subscribe to African Business Magazine and access the full Africa’s Top
Companies 2024 rankings and report in the May issue click here


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NEIL FORD

Neil is a journalist, writer, editor and consultant, specialising in
international and African affairs.




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