In a new report by Infomineo, a
global business research company specialising in Africa and the Middle
East, Lagos alongside other cities in the region have
become increasingly important for the majority of global Fortune 500
countries.
The report focuses on multinationals looking at
entering, or already present, in the Middle East and Africa region.
Overall, there was a 17% increase in the number of companies in MEA in
2016 compared to 2015, with Johannesburg being the leading destination
for Africa.
The Infomineo analysis includes the regional footprint
of multinationals in the MEA region, the most commonly chosen cities,
and the factors which influence the selection of the region, country and
city – each element revealing the dynamic growth patterns within the
region and a clear trend of Fortune 500 companies establishing some kind
of presence in MEA.
In 2016, 196 Fortune 500 companies had
established a dedicated regional headquarters in the MEA region. In the
Middle-East, Dubai is the most popular choice with 138 companies
establishing a dedicated entity in the city. There has also been a
marked uptick in companies deciding to cover MEA from outside of the
region – 38 companies up from 22 have established a regional
headquarters in areas such as London, Brussels and Paris.
The
leading destinations on the Fortune 500 list include Dubai,
Johannesburg, Casablanca, Nairobi, Lagos, and Cairo. Egypt remains
behind the leaders due to political instability, however, it has seen a
250% increase in Fortune 500 investment since 2015. Germany and France
are leading in terms of coverage rate while China has the lowest
presence in the region.
Industry type plays a pivotal role in the
selection of city and country. Financial services are more likely to
base MEA coverage from London, while technology companies are more
inclined towards Casablanca or Lagos. The latter city is also the
premier location for organisations looking to manage their operations
across Western Africa with 12 Fortune 500 companies already established
in the region. Automotive and Healthcare tend to have a presence in both
Africa and the Middle East, while Technology is more inclined to having
a presence from the outside.
Nairobi, in Kenya, is the leading
destination for the FMCG companies and tends to be the top choice for
organisations looking to service Eastern Africa. Dubai and Johannesburg
are the most popular hubs overall, but both Casablanca and Nairobi are
rapidly gaining traction and international awareness.
Casablanca
has the highest growth rate overall, while Dubai has the highest count.
The same can be said for London, which has tripled its number of
regional HQs in the region, acting as an MEA hub. Given the geographical
proximity and the talent pool present in the city, it could be that
London is playing the role of a first step into the MEA region,
especially for Japanese and North American companies.
There are
numerous factors which impact on the organisation’s selection of a
specific city. These include the local market potential, maturity of the
industry, existing competitors, political stability and the quality of
the employment market, among others. Determining the attractiveness of a
location along these clear lines assures the Fortune 500 companies of a
stable and profitable investment and significantly mitigates risk. The
most attractive cities are Dubai, Johannesburg, Casablanca and Nairobi,
and at the lower end of the spectrum, Cairo, Paris, Algiers and Cape
Town.
Through this analysis, organisations gain a thorough
understanding of markets and factors which ensure a steady base of
operations from which organisations can expand into the growing MEA
market, and establish brand and identity within the growing middle
classes. Infomineo has undertaken in-depth analysis and research on the
MEA region, revealing the various factors inhibiting or inspiring
Fortune 500 uptake. Further data on the analysis can be found HERE
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