As international investors take fright, the total market capitalisation of the firms in this year’s survey is down 18% on last year. But there are glimmers of hope amid the gloom. Tom Minney takes stock of the fortunes of Africa’s Top 250 Companies
As African leaders slammed the brakes on economic activities and put their countries or cities into lockdown to block the spread of the coronavirus, businesses and jobs were collapsing into intensive care and could be among the biggest casualties of the health crisis.
This year’s Top 250 Companies survey highlights the overall carnage in African share valuations in the last few years and even more so in March 2020. The survey ranks African or Africa-focused companies listed on public securities exchanges according to their market valuation, also known as “market capitalisation”.
To view the full ranking of the Top 250 Companies, click here .
Total value for all 250 firms on the list this year is $597.7bn, down 20% from last year’s total of $748.2bn. But last year had seen a 16% fall compared to total market capitalisation of $887.1bn in March 2018 and this year’s total value is 37% below peak value of $948.3bn in 2015.
The market value of the 250th company – in other words the cut-off market capitalisation to join the Top 250 list – was $195m in 2020, compared to $394m in 2018. It is too early to say what the damage the pandemic will cause to companies’ future profits, a key basis on which investors value securities and set the market capitalisation.
An early indicator of the scale of the cutback in Africa is the number of lost jobs. In mid-April, international consulting firm McKinsey estimated that in the formal sector, which employs around 110m people across Africa, between 9m and 18m jobs may be terminated and there could be pay cuts for another 30m-35m workers. But 100m jobs are thought to be “vulnerable” in the informal sector, which it estimates accounts for three-quarters of Africa’s 440m jobs. GDP forecasts slashed
McKinsey also said that Africa’s GDP growth in 2020 could be reduced by three to eight percentage points. Its most optimistic scenario is 0.2% growth while the worst case scenario would be a contraction of 5.2%. The different scenarios depend on how many people fall sick in Africa and across the globe, but do not take into account the effects of fiscal stimulus packages, which […]
