The Middle East Africa (MEA) region has become increasingly important for the majority of global Fortune 500 companies, according to a new report released by Infomineo, a global business research company specialising in Africa and the Middle East.
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 Fortune 500 companies in MEA in 2016 compared to 2015, with Johannesburg being the leading destination for Africa.
According to a statement from Infomineo dated April 18, 2017, 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% 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.
Nairobi, in Kenya, is the leading destination for the FMCG (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. Casablanca has the highest growth rate overall, while Dubai has the highest count.
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 revealing the dynamic growth patterns within the region and a clear trend of Fortune 500 companies establishing 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.
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.