(Ecofin Agency) - French companies have to revise their business model in Africa, a study published on December 9 by consulting firm BearingPoint says.

Dedicated to opportunities offered by the African market, the sixth edition of International Development Observatory, an annual survey on development habits and practices revealed that Africa’s contribution to turnover of big French companies will increase 75% over the 10 next years.

Based on a survey of 800 French companies, the report also indicates that the percentage of these companies affirming that Africa generates less than 5% of their turnover dropped to 38% in 2015 from 57% in 2005. According to the report, this value will further drop over the coming years till it reaches 14% in 2020.

More than half of the companies approached expect to obtain 5%-20% of their global turnover from Africa in five years, and another company even forecast this value at 50% in the next five years.

“Nowadays, investors are convinced of Africa’s potential. Companies seize various opportunities in various sectors. BearingPoint is one of the first consulting firm to have established in Africa, and that is why we wanted to provide our experience and field vision to firms who do not always have these before entering the African market,” said Jean-Michel Huet, associated to BearingPoint who provides counseling to important groups in terms of international development strategy and also to institutions from emerging countries.

BearingPoint’s report also revealed that Côte d’Ivoire holds the top position in terms of most attractive African countries, with 50% of survey sample implanted in the country. Nipping at its heels are South Africa and Morocco (40%).

Despite political instability, Egypt also emerged as a promising business destination mainly due to its abundant energy resources.

Côte d’Ivoire position is explained by its emerging middle class who aspires to a more western lifestyle.This is also noticed in other countries from sub-Saharan Africa.“This emergence of middle class should extend to one or two generations more – a very short period on the socio-demographic scale – but quite long for the companies,” the study says, adding that Africa’s population in 2040 will be close to 1.9 billion people, out of which 900 million would belong to the middle class.

The report also points out that the success of companies seduced by Africa’s perspectives was conditioned by their ability to adjust the development of their activities to local demand. Population’s heterogeneity and that of its needs and growing aspirations, combined with an excessive disparity in the development of local structures and firms, drive western companies to adapt their segmentation to the African market.

“Innovating in Africa means offering more disruptive solutions, adapted to people who have access to new technologies without necessarily having to respond to essential needs such as food, health or housing,” Jean-Michel Huet says. In response to these challenges, 45% of companies go down the caution-lane, by developing in only a country at a time.

BearingPoint also revealed that companies that try to develop in Africa often meet a growing, rude competition from locals who better understand the markets (customers’ needs, institutional infrastructures, economy), but who also offer highly competitive rates which threatens the position of western actors.43% of surveyed firms indeed said their competitors are locals against 22% saying they are from Europe.

French companies sometimes fail to identify specific challenges in Africa.Truly, results from the report indicate that 95% of them believe that their product’s quality is a major advantage and 86% of them think themselves not competitive enough cost-wise.

“Prices being a key factor to success in Africa, and considered how well competitors are aware of this, French companies may have to review their whole business model in order to better adapt to African market’s actual conditions,” the report suggest.