South Africa and Egypt are the biggest contributors to this year’s list—but their prospects are diverging.  

Author: Aleksandra Snesareva

Specialized container-handling outfit Alexandria Container and Cargo Handling Company became the best-performing company in Africa for the second year in a row, thanks to improved profit margins and growing assets. Regionally, South Africa and Egypt were tied, with each contributing six companies to the list.

However, South Africa’s position has deteriorated from 2018 and 2017, when it contributed nine and 14 companies, respectively. “The picture is not very positive in South Africa, due to weak growth and high unemployment,” says John Ashbourne, a senior emerging-markets economist at Capital Economics. “It is hard to see that changing over the short or medium term.” The economy has been hurt by a decline in mining and manufacturing, and a 29% unemployment rate.

With 0.6% projected 2019 GDP growth, the focus is now on new President Cyril Ramaphosa to “implement significant reforms” amid rising social tensions, says Kevin Lings, chief economist at South Africa–based wealth manager Stanlib. These include the need to “reduce the fiscal deficit [and] reverse the ongoing increase in public debt,” according to a June 3 press release by the International Monetary Fund. Even with prompt reforms, the economy is unlikely to turn around for the next three to five years, added Lings.

Sluggish growth has knocked several sectors in South Africa off our list of top companies, including the construction sector and all but one IT-services company. Construction has become “the worst sector to be in,” as the completion of large projects has contributed to an oversupply of office and retail space in major cities, while demand for new infrastructure has fallen due to government spending cutbacks, says Lings. IT services, meanwhile, has been affected by a lack of technology investment after the government decided not to renew expiring contracts with various vendors, and the private sector has also held off on investing, says Lings.

Retail has been one sector that has “held up better because of the resilience in consumers’ income,” says Lings. Still, Italtile Limited is the only remaining retail company on our list. The home-furnishings specialist has been performing better than its clothing counterparts, and Italtile’s website credits the “proud homeowners” of South Africa, “who invest significantly in this primary asset.” The government’s housing programs also helped, says Lings.

Egypt’s economy, meanwhile, is gathering strength on the back of austerity measures implemented over the past few years, according to Jason Tuvey, a senior emerging-markets economist at Capital Economics, a London-based independent research firm. Egypt’s economy is projected to grow 5.5% this year, up from 5.3% in 2018, according to the International Monetary Fund (IMF), while inflation is expected to drop to 14.5%, from 20.8% in 2018.

Despite these positive developments, Egypt still needs to implement structural reforms “to improve the business environment, access to land and finance, [and] strengthen competition,” according to a July 24 IMF report. Access to land, in particular, is a sore topic for Africa’s second-most populous country. It uses only 4% of its territory, concentrated alongside the Nile River, according to the United States Agency for International Development (USAID) and Tuvey. Most of the land is owned by the military, which restricts access, says Tuvey. That is unlikely to change in the near future, hindering foreign direct investment (FDI), he adds.

Elsewhere on the continent, Kenya, Cote D’Ivoire and Ethiopia are among Africa’s rising stars, says Philippe de Pontet, an independent consultant specializing in sub-Saharan Africa. Ethiopia’s economy is poised to grow 7.7% this year due to “an incipient privatization initiative, new leadership under Prime Minister Abiy Ahmed and the 2018 peace agreement with neighboring Eritrea,” says de Pontet. In Kenya, the situation is more nuanced; while growth is robust, “business and retail prospects have weakened relative to other markets,” according to a 2019 Nielsen Africa Prospects study. 


AFRICA'S 25 BEST PERFORMING COMPANIES

Rank
Company
Country
Sector
Total Assets (US$ 000)
Operating Revenue (US$ 000)
Liquidity Ratio
Solvency Ratio (%)
Return on Assets (%)
Profit Margin (%)
Total Score
Market Cap ($US 000)

1

Alexandria Container And Cargo Handling Company S.A.E.

Egypt

Transport & logistics

340

168

2.88

72.51

40.52

82.34

55

1,301,202

2

Bowler Metcalf Limited

South Africa

Chemicals, rubber, plastics, non-metallic products

64

42

5.76

86.63

15.86

32.79

55

68,126

3

Bauba Platinum Limited

South Africa

Metal & metal products

23

17

4.97

88.28

11.85

44.54

69

9,914

4

African Rainbow Minerals

South Africa

Metal & metal products

2,491

736

2.38

79.81

13.30

53.81

70

1,937,306

5

Newrest ASL Nigeria PLC

South Africa

Transport & logistics

21

19

3.01

75.02

22.80

25.55

77

14,566

6

Italtile Limited

South Africa

Wholesale & retail trade

459

471

2.46

87.32

17.07

24.30

80

1,178,321

7

Compagnie Miniere de Touissit SA

Morocco

Metal & metal products

115

55

3.15

64.88

18.34

46.90

80

241,911

8

Padenga Holdings Limited

Zimbabwe

Wholesale retail & trade

104

43

3.43

65.47

12.70

40.91

109

9,478

9

Cleopatra Hospital Company

Egypt

Education, health

129

82

2.99

73.05

12.83

27.90

110

640,609

10

Industries Chimiques du Fluor SA

Tunisia

Wholesale & retail trade

50

53

1.59

74.02

25.98

26.92

123

142,821

11

Telnet Holding SA

Tunisia

IT services

18

14

2.24

63.51

17.98

24.96

136

38,305

12

Misr Duty Free Shops

Egypt

Wholesale & retail trade

24

44

1.64

67.47

25.11

23.60

147

44,839

13

Associated Commercial Co LTD

Mauritius

Machinery, equipment, furniture, recycling

12

8

7.11

88.36

9.40

16.65

147

5,485

14

Societe des Boissons du Maroc

Morocco

Food, beverages, tobacco

255

270

2.29

68.59

13.13

20.43

154

743,503

15

Egyptian International Pharmaceuticals Company

Egypt

Education, healthq

217

163

1.31

71.80

16.84

30.27

160

467,189

16

Automobile Reseau Tunisien et Services SA

Tunisia

Wholesale & retail trade

81

79

2.18

72.32

12.87

18.03

161

73,264

17

Ziplow Holdings Limited

Zimbabwe

Machinery, equipment, furniture, recycling

48

50

1.90

76.14

12.58

15.95

168

1,240

18

Development & Engineering Consultants Company SAE

Egypt

Construction & civil engineering

61

42

1.11

74.43

15.05

45.46

174

17,466

19

Chombe Holdings Limited

Botswana

Media & entertainment

42

32

1.07

74.10

18.25

32.44

177

889

20

TSL Limited

Zimbabwe

Transport & logistics

113

54

1.25

76.62

10.85

28.20

185

2,571

21

Namibia Breweries Limited

Namibia

Food, beverages, tobacco

200

198

1.64

59.86

14.67

21.17

210

677,527

22

Egyptian Media Production City —(SAE) The

Egypt

Media & entertainment

134

21

2.90

90.65

3.90

24.61

218

62,297

23

Astral Foods Limited

South Africa

Food, beverages, tobacco

435

916

1.64

60.53

23.18

15.34

219

560,927

24

Edgars Stores Limited

Zimbabwe

Textiles, wearing apparel, leather

68

76

2.10

62.62

12.44

15.23

220

494

25

Reunert Limited

South Africa

Machinery, equipment, furniture, recycling

737

713

1.68

72.00

11.08

14.94

225

988,853

Footnote: All data from reporting year 2018.