Business / News
Tuesday, 18 Apr 2017 16:39 EAT
Nairobi and Casablanca are among the cities in the Middle East Africa (MEA) region that have become increasingly important for the majority of global Fortune 500 companies, a new report released Tuesday says. The report is by Infomineo (www.infomineo.com), a global business research company specialising in Africa and the Middle East.
The report, which focuses on multinationals looking at entering, or already present, in the Middle East and Africa region, indicates that there was a 17 percent increase in the number of Fortune 500 companies in MEA in 2016 compared to 2015, with Johannesburg being the leading destination for Africa.
The African Press Organization (APO), who distributed the report to the media from Johannesburg, says the Infomineo analysis includes the regional footprint of multinationals in the MEA region. It also includes the most commonly chosen cities, and the factors which influence the selection of a region, country and city - each element revealing the dynamic growth patterns within the region and a clear trend of Fortune 500 companies establishing presence in MEA.
Nairobi is the leading destination for the Fast Moving Consumer Goods (FCMG) 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 report is released a week after Nairobi Governor Evans Kidero asked Kenyans to take pride and support Nairobi's growing status as a top Fortune 500 investment destination in Africa. Speaking at a Global Christian Union function, Dr Kidero said the number of multinationals moving their African headquarters to Nairobi had increased.
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, says the report. 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 regional 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 percent 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. Lagos is also the premier location for organisations looking to manage their operations across Western Africa with 12 Fortune 500 companies already established in the city.
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. 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 other.