Investor interest in Africa may have been piqued since the start of the 21st century, but many of the world’s Fortune 500 still seem reluctant to actually move to the continent. And if the do, they rarely stray from the beaten path.
Last year, 196 companies on the Fortune 500 had a dedicated entity covering the region, an increase from 167 in 2015. Still, 305 companies had no such entity, while 226 had no significant business in the region, says a report by Infomineo which tracked business settlement in Africa and the Middle East
Johannesburg, the economic capital of Africa’s most advanced economy, was viewed as the most attractive African city to Fortune 500 companies. International companies have a well-established presence in South Africa: German carmaker Bosch first entered the South African market in 1905, and opened a subsidiary in 1985, according to the report. Similarly, pharmaceutical giant Merck established its Africa headquarters in Johannesburg in 1971.
Johannesburg’s popularity, however, is increasingly under threat from Casablanca. The north African city has become a hub for northern Africa, more than doubling its count of regional headquarters. The automotive and tech industry have shown the most interest in the Moroccan city, along with Swiss multinationals. That growing popularity is attributed to an investment in physical infrastructure like ports and business parks, investing in its local talent pool through higher education programs and tax breaks and tax exemptions on exports, according to Infomineo.
Lagos and Nairobi still dominate their respective regions as the most popular destination for the regional headquarters of Fortune 500 companies, with Nairobi gaining popularity especially for consumer goods companies. In southern African the next most popular destination is Cape Town, with two headquarters opened there in the last year. Luanda the capital city of one of Africa’s largest oil producers, Angola, has also become more attractive to energy companies.
“When settling in Africa, it is important to diversify your presence because you will always have one country that is performing better than another,” Francois Marchal, general manager of the Ghana offices of French financial services firm Société General, told researchers.
Despite this, many Fortune 500 companies still prefer to oversee their Middle East and Africa operations from outside of the continent. London has recently eclipsed Paris, and has seen more new interest than Dubai as a base for regional headquarters. The British city is still is seen by many Fortune 500 companies as a stable gateway into the region.