In stark contrast to most of the rest of the world, the African economy is growing at a rate that qualifies it to be called the second fastest-growing region on earth. The continent has severely attracted international capital and provides a good return on these investments even though it is still plagued with gaps in infrastructure and security. But, going forward, the game may be changing such that Africa’s success will only be guaranteed if it plays by a different set of rules.
This is the submission of global consultancy Deloitte in its latest report on Africa. Essentially, the report assesses how the African market has developed, how perceptions of Africa have changed, and how consumers are responding to a period of rapid economic growth. In this changing tide, business strategies need to be tailored to the specifics of each market or sub-region if they are to succeed. According to the report, the consumer opportunity in Africa rests on five key pillars: the rise of the middle class, exponential population growth, the dominance of youth, rapid urbanization and fast adoption of digital technologies.
An increasingly diversifying African economy has supported an emerging middle class that has driven demand for consumer goods and services as well as luxury brands. With expected growth rates of about 8 percent per annum, rising consumer demand is forecast to add $1.1 trillion to African GDP by 2019, and Ethiopia, Uganda, Mozambique, Nigeria, South Africa and Egypt are positioning to leverage this. Within 12 years since the dawn of the current millennium, the continent’s aggregate household final consumption expenditure grew at an average annual rate of 10.7 percent to nearly hit the $1.3 trillion mark. In 2013, there were over 375 million middle class people living in Africa, or 34 percent of the population, and the report projects a possible half a billion middle class African citizens by 2030.
A significant proportion of Africans are aged between 15 and 24, about 200 million citizens or 20 percent of the population. This specific demographic segment is projected to grow to 321 million by 2030 and blow up significant opportunities across the continent for consumer goods. The current trend is that of Africans becoming increasingly brand sensitive and choosing quality over price in many instances, this is surely an incentive for the producers of these goods.
Africa’s population is also increasingly clustered in large urban centers, and urbanization will be a key driver of economic activity. According to the report, many urban areas will cross national boundaries, linking major populations and creating sizable markets and trade opportunities.
The growth of mobile digital technologies has allowed Africans to leapfrog poor landline infrastructure and evolve into a world leader in mobile technologies such as the mobile internet and mobile money. The mobile channel has become the primary channel for accessing the Internet, and there still exists a lot of room for growth seeing as just about 20 percent of the African population is online.
With these trends in place, the Africa of the next decade promises to be a significantly transformed and super connected continent filled with creative youngsters and tremendous opportunities for all.
By Emmanuel Iruobe
