A new consumer market survey conducted by research firm, McKinsey, jointly carried out with TBWA shows that the steady growth of Africa’s population, coupled with the growing optimism of the continent’s future and the increase of the middle class will play decisive roles in what the continent’s fate will be.
Damian Hattingh, an associate at McKinsey & Company was reported to have said that Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies. He observed that the emerging middle class had begun to go beyond pursuing basic needs to spending at discretion. He also stated that profit margins in Africa are some of the highest in the world and the presence of more players in the market will narrow the gap down.
Titled, “The Changing Face of the African Consumer,” the report shows that early entry into African economies provides an opportunity for global businesses and brands to create markets, influence customer preferences and establish brand loyalty.
The McKinsey study indicates that there are more opportunities and markets for consumer goods in many African economies and these opportunities will in turn fuel long term growth.
The purchases of the average African household are expected to expand as the continent realises economic growth, in order to drive higher consumption in consumer-oriented sectors.
According to the World Bank, the economic growth of Sub-Saharan Africa remains strong and is expected to rise above 4.9 percent recorded in 2011.
The McKinsey research study, which surveyed 15,000 consumers across 10 countries, concentrated on the cities reputed to have a higher per capita spend. Studies running through five major industries showed that food and beverages offer the biggest opportunities for the consumer market in Africa as well as non-food consumer goods, including textile.
The study showed that most African household spent 30 percent of their money on groceries, with 10 percent going to clothing, 6 percent on telecommunications and the rest on other needs.
According to the report, food and consumer goods are expected to account for $185 billion in 2020. As we speak, the food and beverage industry currently stands at $406 million and is expected to grow to $543 million during this period.
Mr. Hattingh hoped the research would change the perception that Africa is a dumping ground for cheap goods as their consumers’ interest research showed that people in the region do not want cheap goods, but quality products at the best possible prices. The report showed that 17 percent of Kenyans would buy local goods as long as the quality was good, South Africa stood at 12 percent while Nigeria and Ghana stood at 11 percent. This is seen as an opportunity for Africans to build local brands of good price and quality.