A young social entrepreneur must decide whether to stick with her struggling start-up--a tomato paste company based entirely in Nigeria--or go to work for an investment group that funds small businesses in Africa. Where would she have the most impact? This fictional case study by Sophus A. Reinert features expert commentary by Acha Leke and Mira Mehta.

A young social entrepreneur must decide whether to stick with her struggling start-up--a tomato paste company based entirely in Nigeria--or go to work for an investment group that funds small businesses in Africa. Where would she have the most impact? This fictional case study by Sophus A. Reinert features expert commentary by Acha Leke and Mira Mehta.

How many companies in Africa earn annual revenues of $1 billion or more? Most global executives guess there are fewer than a hundred; many answer "zero." The reality? Four hundred such companies exist--and they are, on average, faster growing and more profitable than their global peers. There's an unexpected side effect of this growth burst: Africa has become a test lab for global innovation. If your offering is cost-effective and robust enough to succeed on the continent, chances are it will be competitive elsewhere. The authors offer a taxonomy of six innovation types: moves to build financial inclusion; partnerships for infrastructure development; smart approaches to industrialization; new models of food production; consumer products aimed at the low end of the market; and future-focused capability building, from job-readiness boot camps to world-class universities. Technology is the golden thread running throughout: Africa has become a proving ground for digitally enabled breakthroughs that can leapfrog entrenched barriers and unlock exponential progress.

In the 2000s, the African economy finally began to stir. Africa is today the world's third fastest-growing region, and its collective GDP is roughly equal to Brazil's and Russia's. Africans spend nearly $900 billion on goods and services-far more than Indians do. Pent-up consumer demand on the continent is enormous, and so are the opportunities: Consider that telecom companies have added 316 million subscribers-more than the U.S. population-in Africa since 2000. Yet because of political instability and poverty, many companies have reservations about Africa. To help managers assess whether growth will continue there-and if so, where-McKinsey conducted an economic analysis of the continent and studied its consumer markets. The conclusion: Companies can no longer ignore Africa. But they need to manage risks, develop innovative strategies to deal with gaps in infrastructure and training, and recognize that it isn't one market. There are four main types of economies: diversified, oil exporting, transition, and pretransition. Each presents a different set of opportunities and challenges, and executives must develop their strategies accordingly.