Africa is on the cusp of a consumer boom

29Nov 2018
Editor
Dar es Salaam
The Guardian
Africa is on the cusp of a consumer boom

Now is the time for businesses to invest in Africa and those that wait too long risk missing out, according to a new report from Deloitte, the business advisory firm-

With high growth economies like China, India and Brazil showing signs of slowing, the report says businesses are increasingly looking to the fast growing markets of Africa to offset this reduction. Indeed, over the next five years 15 African countries, including Nigeria, Ethiopia, Uganda, Tanzania and Zambia, are likely to outpace Chinese growth.Until now Africa’s economic story has been focused on natural resources and commodity exports. In 2013, eight of the continent’s 12 fastest growing economies were not dependent on oil or mining. In future, it will more likely be driven by consumers as rising incomes and urbanisation support growth in domestic demand. This transformation coincides with the growth of the African middle class: a more optimistic, connected and brand conscious population.According to a research at Deloitte right now Africa is where South East Asia was 30 years ago – on the cusp of a consumer boom. “By 2030, over half a billion Africans are projected to be middle class. The population is also dominantly young, with 680 million, or 60 per cent of the total African population, aged below 25. These younger Africans will play a critical role in the continent’s economic development not only because they will want increased connectivity and access to a wider choice of food, consumer goods and entertainment, but also as they bring a more innovative and entrepreneurial mindset.Africa’s population is becoming increasingly clustered in large urban centres, and urbanisation will be a key driver of economic activity. Many urban areas will cross national boundaries, linking major populations and creating sizable markets and trade opportunities.Deloitte’s research shows that across the four fastest growing markets in Africa, nearly a quarter of young consumers said buying well-known brands makes them feel good, while one in four say they can afford to buy the latest gadgets, which points to an awareness and appetite for branded goods and high end products. It is also predicted Africa will have 334 million smartphone subscriptions by 2017, presenting a huge opportunity for consumer businesses operating there.Despite the many infrastructural challenges that Africa faces, Africans have shown they are willing to innovate. For example, Africans have leapfrogged poor or no fixed line infrastructure and moved straight to mobile, which has seen the fastest growth in the world over the last five years. Despite significant growth prospects, Africa remains complex and carries risk. There are 54 countries with different markets and challenges, and issues like poor governance, a lack of infrastructure, fragile security and unreliable logistics can make strategic planning difficult. West Africa has also been the subject of heightened concerns about the spread of Ebola. However, Africa is making progress, with widespread democracy and fewer conflicts suggesting the dominant trend is positive.