The African consumer market scene is definitely fast growing and quickly climbing the ladder of urbanization. Africa is set to take the lead on consumer market growth; the continent is fast becoming the home of many of the world’s biggest opportunities.
However, some parts of the continent more than others present a more promising business climate.
The population of Africa has always been enticing to investors as it portends a fertile ground for diversification, expansion and growth. Africa’s population is one that will experience exponential growth in the coming years, according to the United Nations’ “Medium Scenario” projection, 2050 will see the continent’s population rise to 2.5 billion and more than 4 billion in 2050 with a high number of young adults.
This factor serves as the backdrop for the increasing household consumption and increased profitability experienced by 7 countries in the continent; Nigeria, Ethiopia, The Democratic Republic of Congo, Egypt, Tanzania, Kenya, and South Africa.
This increase in population will naturally divide individuals into the cache of middle and upper class as well as change in such division (change from middle to upper class), hence higher purchasing power due to income increase which will be favorable to businesses looking to take advantage of investment opportunities in service delivery and production of goods.
Fast moving consumer goods (FMCG), luxury goods, and online retail or e-commerce present viable avenues for a boom in the continent’s economy.
What is FMCG
The FMCG sector is one large industry in Africa and is currently underserved, as the population of the continent is constantly on the increase. FMCGs are goods that have low shelf life and are in constant demand by consumers, they are also characterised by their low-cost attribute, hence, FMCGs are available to a large scale consumer and are necessitated by everyday need of consumers, some of which are; food, beverages, personal care products, and home care products.
Consumer spending is currently on the high in Africa and this trend is expected to continue in the next decade with consumer spending rising to a high of $2 trillion in the next few years. Africans are known to be brand loyalists which suggest that proper advertisement and impressive marketing strategies will boost consumer loyalty, increasing demand for products, thereby increasing the possibility of price increment on demanded products by manufacturers.
The economic, sociopolitical, and spreading urbanisation in Africa has birthed a considerable number of high net-worth individuals – persons with more than a million dollars in liquid financial assets, which can partially account for Africa’s high taste for luxury.
Millionaires in Africa are expected to rise above fifty-three per cent (53%) which will reflect an average of 2,580,000 by 2024.
Currently, close to 50 global luxury brand stores are domiciled in the continent, some of which are directly operated, such as; LVMH and Richemont.
Nigeria, South Africa, Ethiopia, and Morroco express ravishing appetite for luxury, hence making the continent a lucrative ground for luxury brand investors.
In the same vein, the telecommunications market continues to experience increased growth in Africa. The industry has been experiencing approximately 30 per cent every year in mobile phone connections.
The continent’s mobile market is now ranked the world’s second largest with Asia at the top. The advancement of the telecommunication sector has increased the continent’s access to the internet, an act that has eased Africans into the online shopping world, making the e-commerce sector a viable high-income industry in Africa.
The whopping increase in the foreign direct investment (FDI), which had experienced five times increment between 2000 and 2010 exceeding those of the world’s largest emerging markets, also emphasizes the promising outlook of the vast potential inherent in the African market.
The come back of oil prices in the crude oil market scene will definitely increase the demand of luxury goods and the purchasing power of the continent, hence, it is up to investors to choose their niche.
Nigeria, South Africa, Ethiopia, Angola, Morocco, Algeria, and Kenya are the countries at the forefront of experiencing an increase in production and distribution which should serve as a green light for business owners and investors looking to expand their horizons.