The African consumer market is regarded as the Next Investment Frontier with a population of a billion plus people. Africa is home to some of the World’s fastest growing economies and is the second fastest growing region of the World next to Asia. With this growth has come prosperity and rising incomes. Sub-Sahara Africa’s GDP, Gross Domestic Product, is predicted to reach $2.6 trillion by the year 2020.
The continent has also seen a steady annual growth of GDP of 4.5% over the last decade, much higher than the developed World during that same time. It is also estimated that close to 128 million households across the continent will have increased discretionary income and that consumer spending will increase to $1.4 trillion by 2020. Discretionary income is defined as $5,000 or more per year and where 50% of spending is on non-food items.
Businesses are trying to capture the rising middle classes in Africa. Euromonitor estimates that there are over 313 million middle class consumers in Africa and that this group is growing. The population is also expected to double by 2050, and is urbanizing rapidly with an expanding working age population. Sub-Saharan Africa also has a large youth population with 62 percent of its citizens under the age of 25.
Young and Digital
These youth consumers are digitally savvy and brand conscious. They desire quality brand name products and are sophisticated in their knowledge of these products. Technology is at the forefront for this age demographic and their technology of choice is the mobile phone.According to a McKinsey & Company African Consumer Insights Survey, 25% of all urban consumers, which is a market of nearly 80 million people, access the internet daily from their mobile phones.
Mobile is playing a huge role in this part of the World. I spoke with Denis Bogere, a native of Jinja, Uganda and a graduate of the John W. McCormack Graduate School of Policy and Global Studies at UMass-Boston. “How much would you like to pay? It may seem to be simple logic but that phrase implies that a African consumer cannot be put in one singularity. In Uganda consumers have diverse needs along the lines of affordability. There are three prime consumers in Uganda: the poor, middle class, and rich and their consumer habits are affected by aspects such as income. However, regardless of their differences in lifestyle, ability and purchasing power of goods and services these consumers share a common thread which is their affinity for mobile technology. The mobile phone has not only become the basis for communication and connectivity, but also for money transfers for daily purchases. The growth potential that mobile technology offers the key to unlocking the mind of an Africa consumer which may as well help in understanding the future of the mobile industry and its growth potential.”
In this article I have looked at the growth of Africa, the rising middle class, the youth consumer, and the importance mobile technology plays on the continent. This a 2-part series and I will next look at the obstacles still facing Sub-Sahara Africa and what the continent can do to ensure continued and sustainable growth.