Johannesburg is the leading destination on the continent for multinationals looking at entering, or already present, in the Middle-East and Africa (MEA) region with a 17% increase in the number of Fortune 500-listed companies in 2016 compared to the previous year.
So says a new report released by Infomineo yesterday, which says the region has become increasingly important for the majority of global Fortune 500 companies. Infomineo is a global business research company specialising in Africa and the Middle East. 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 a region, country and city.
Each element reveals the dynamic growth patterns within the region and a clear trend of Fortune 500 companies establishing a presence in the 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 the region – 38 companies up from 22 have established 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 due to political instability but it has seen a 250% increase in Fortune 500 investment since 2015. Infomineo says 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 city. Automotive and healthcare tend to have a presence in both Africa and the Middle East, while technology is more inclined to a presence from the outside. Nairobi, in Kenya, is the leading destination for the fast-moving consumer goods 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. Given the geographical proximity and the talent pool present in the city of London, it could be that it is playing the role of a first step into the MEA region, especially for Japanese and North American companies.
Numerous factors are used for a city’s selection, including local market potential, maturity of the industry, existing competitors, political stability and the quality of the employment market.