About the Report

  • Xavier Rolet, CEO London Stock Exchange

LSEG foreword

Welcome to the inaugural edition of London Stock Exchange Group’s Companies to Inspire Africa report.

For the first time ever, we offer the market a definitive report identifying hundreds of Africa’s most inspirational and dynamic private, high-growth companies – ones which have come to the attention of major global investors.

The motivation behind researching and publishing this report was to demonstrate what we instinctively believe – that these companies are fundamental to the successful future of the African economy, with enormous potential for growth and high-quality job creation.

The companies we list and profile boast an impressive average compound annual growth rate of 16%. On average, each firm employs nearly 400 people. While Industry (including, for example, construction and mining) is the biggest sector to be represented (at 23% of companies in the report), it is also encouraging that Financial Services is the second biggest sector (at 16%), demonstrating that the continent holds great promise for both traditional and more recent economic success stories.

And with sectors ranging from Agriculture to Healthcare & Pharmaceutical, the composition of companies featured clearly shows a community of businesses that is richer and more varied than previously identified. It also highlights the unique role of female entrepreneurship, with approximately 12% of these high-growth companies
led by female entrepreneurs, three times the average for companies across Africa.

Driving force

This new report demonstrates that high-growth, private companies are fast becoming the driving force behind African economies: developing skills, creating high-quality jobs and driving economic growth.

And London Stock Exchange Group – which has made it our mission for over 300 years to support access to growth capital for small and large companies in all parts of the world – is proud to play its part in this great economic journey.

Our Group is at the heart of the world’s financial markets and has a connection with Africa that stretches back decades, to when the first African company – African Explosives & Industries, which made explosives and blasting technology for the South African mining industry – listed its shares in London in the 1930s.

Today, it is no longer just the natural resources (oil, gas, mining and precious metal) sector that is looking to global capital markets to finance growth, but emerging sectors
from across the pan-African economy.

“This report demonstrates that high-growth, private companies are fast becoming the driving force behind African economies” 

This is encouraging because equity capital is demonstrably more effective at helping dynamic start-ups and high-growth companies become the major companies and employers of tomorrow, than traditional sources of debt finance has proved to be.

Debt is a short-term fix that does not encourage long-term growth. It may be a suitable funding tool for established blue-chip multinationals, but is not designed to help innovative companies that need capital to grow and invest.

Any small company in receipt of a bank loan must prioritise managing that debt or risk default, rather than being able to use all its financial and human capital to invest, innovate and grow.

It is not surprising therefore that Europe, where 80% of SME financing comes from bank loans, has less than 15% of the world’s most valuable companies. By contrast America, where 80% of SME financing comes from equity, has over 60% of these companies.

In this report, we see many of these African companies instinctively attracted to equity finance, with major investors investing in these high-growth companies. It will be fascinating to see how this trend develops in Africa.

Raising capital

Of course, we firmly believe that we must unleash the potential of equity capital to support these companies that are so vital to the future of the African economies.

London is the most international financial centre in the world, with the deepest and most liquid pool of capital, and the widest and most sophisticated breadth of investors.

Whether it was financing the building of the great American railways in the 19th century, globally transformational oil and mineral exploration in the 20th century, or the global transition to a low-carbon economy in this century, London has always been at the vanguard of funding great global economic shifts. And due to our innovative nature, London is almost uniquely a global capital market that supports SMEs and high-growth companies. For example, we are the only country in the world with a successful, global, growth market – the Alternative Investment Market, or AIM – that has raised £100bn in capital specifically for SMEs and high-growth companies. More than 60 companies operating throughout Africa are listed on this market.

And for companies at an earlier stage of development, London Stock Exchange Group’s very own ELITE initiative – a bespoke business-support programme for developing ambitious high-growth private companies – now supports more than 700 global firms. This includes partnering with the Casablanca Stock Exchange to support a Moroccan version of ELITE. According to the World Bank, small and medium-sized enterprises (SMEs) account for up to 90% of all businesses across Sub-Saharan African markets, a clear illustration of their significance to the future growth of the economy.

We are committed to expanding the ELITE progamme in other countries across the continent.

Productive partnerships

Working in partnership with African exchanges, we are developing robust, efficient and transparent capital markets to raise finance for companies like the ones listed in this report – and thousands of others – to realise their potential.

But it is not only about raising finance. We are also providing trading software and clearing technology. MillenniumIT, the capital markets technology that underpins London Stock Exchange’s own trading platforms, is now used by 12 African exchanges, including Africa’s largest, Johannesburg Stock Exchange, as well as Botswana Stock Exchange and Casablanca Stock Exchange.

We have partnered with a number of these exchanges to enable dual listings for companies looking to simultaneously list shares in both Africa and London.

For example, utilising a unique cross-border settlement system, Nigerian oil and gas exploration firm Seplat was admitted to London Stock Exchange and The Nigerian Stock Exchange in 2014, raising $500m to further fund the company’s expansion.

And we are helping those with capital to invest. Our FTSE Russell benchmarking business has worked with Johannesburg Stock Exchange to calculate domestic indexes for 15 years. Five years ago, FTSE Russell partnered with Nairobi Securities Exchange and last year Namibian Stock Exchange to launch Kenyan- and Namibian-focused Index Series, encouraging increased investor participation.

Last year, London Stock Exchange Group also established its African Advisory Group of 12 distinguished business leaders, policy makers and investors from across Africa to look at the challenges and opportunities presented by the development of the continent’s capital markets. They will present a new leadership study, delivering empirically grounded, actionable and Africa-specific policy recommendations to positively shape the development of the continent’s capital markets, in the next 18 months.

This report is just the latest milestone in supporting private African companies with the greatest growth potential.

They, and companies like them, are the future regional champions in Africa. They are revolutionising their sectors and paving the way for future entrepreneurs, with a combination of the strongest growth figures and most impressive stories.

Our sponsors

I would like to sincerely thank our partners – African Development Bank Group, CDC Group and PwC – which contributed their expertise to the report, and sponsors FTI Consulting, Citigroup and Diamond Bank for their generous support. All of these institutions have distinguished themselves as champions of dynamic companies at key stages of their funding and development process. Without their valuable support, this report would not have been possible.

I would also like to extend my personal gratitude to the UK Secretary of State for International Development, The Rt Hon Priti Patel MP; Vice-President of the European Commission, Jyrki Katainen; the Maltese Minister of Finance, Professor Edward Scicluna; and Lord Boateng, former UK High Commissioner to South Africa. Their strong political support underlines their commitment to the development of SMEs around the world to innovate, grow and create the jobs of tomorrow.

We hope you are inspired.

Xavier Rolet KBE, CEO, London Stock Exchange Group