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The Rise Of The African Consumers

Rise Of The African Consumers

Africa’s consumer facing industries are expected to grow by more than $400 billion by 2020.

The single-largest business opportunity in Africa will be its rising consumer market.

Africa’s consumer facing industries are expected to grow by more than $400 bilion by 2020.
That would account for more than half the total revenue increase that all businesses are expected to generate in
Africa by the end of the decade.

The world has caught on to the potential of this surging consumer market. But many companies, particularly those
new to the continent, have little idea how to translate the opportunity into action.

Africa’s economic growth accelerated in the years following 2000, making it the world’s second fastest growing region after emerging Asia and equal to the Middle East.

The African market opportunity is concentrated, with 10 of 53 countries – Algeria, Angola, Egypt, Ghana, Kenya, Morocco,
Nigeria, South Africa, Sudan, and Tunisia… Accounting for 81% of Africa’s private consumption in 2011.

Private consumption in Africa is higher than in India or Russia; it rose by $568 billion from 2000 to 2010. From 2012 to 2020, consumer-facing industries are expected to grow a further $410 billion, representing the continent’s largest business opportunity.

Apparel, consumer giids, and food are expected to account for $185 billion, or 45%, of that amount. This is due in part to urban Africans spending a large share of their budget on food and groceries, more than consumers do, on average, in Brazil, China, India, and Russia.

Explosive Population Growth

Africa has the world’s fastest-growing population and is projected to account for more than 40% of global population growth to 2030, according to the United Nations.

A Youthful Market

Africa also has the world’s youngest population more than half its inhabitants are under 20 years old, compared with only 28% in China. 16 to 34 age group already accounts for 53% of income and the
consumption habits of youth are quite different from those of their elders; younger people in Africa, for example, are more
likely to search for information online (67% of 16 to 24 year-olds are online, compared with 32% of the 45- and-older group) and to seek products and stores that reflect the right image.

An Emerging, Optimistic Consuming Class

By 2020, more than half of African households are projected to have discretionary income, rising from 85 million households today to almost 130 million in 2020. Sub-Saharan Africans are the most optimistic – 97% of Ghanaians, for example, said they will be much better off in two years.North Africans, on the other hand, are generally less optimistic about the future, with only 10% to 15% of respondents saying they will be much better off in two years, which is unsurprising given the uncertainty generated by recent political turnmoil in the region.

Healthy Urbanization

With 40% of its population living in cities, Africa is more urbanised than India (30%) and nearly as urbanised as China (45%). By 2016, over 500 million Africans will live in urban centers, and the number of cities with more than 1 million people is expected to reach 65, compared with 52 in 2011.

  • Urban spending is increasing twice as fast as rural spending and is projected to account for a disproportionately large share of future growth.
  • Urban per capita incomes are, on average, 80% higher than those of countries as a whole. In Ghana, for instance, only 29% of households have disposable income of more than $5,000; this increases to 55% in Accra. Higher productivity of urban workers accounts for the difference.
  • Cities are more densely populated and, as a result, consumers are easier to reach.

A Modernizing Retail Trade Structure

There are signs that the formalisation of retail will dramatically increase in coming years. Experience from around the world shows that retailing starts to expand when a country’s GDP per capita reaches $750 and really takes off at a GDP per capita of $3,000.

Surging Digital Usage

More than 50% of urban Africans said they have accessed the Internet in the last four weekes, on par with figures for urban China and Brazil. In urban Kenya, for example, Internet penetration stands at 70%, propelled by affordable mobile broadband and high penetration (95%) of Internet-capable mobile devices.

Serving the African Consumer

Africa’s large, fast-growing population, combined with rising consumer disposable income, offers companies an enormous opportunity.

Africa comprises 53 countries with more than 2,000 dialects and languages. As a result, viewing it as a single market is unlikely to get results.

Africa’s business and economic growth potential is widely acknowledged. The issue for companies now is how to obtain a better understanding of the market and its consumers.

Source: [Mckinsey]

Written by How Africa News

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