According to a new report from the Boston Consulting Group (BCG) and BCG’s Center for Customer Insight on African Consumer Sentiment 2016, Africa will have twice as many affluent consumers as the UK by 2020 with over 1.1 billion consumers (more than the populations of Europe and North America combined).
The BCG report surveyed 11,127 consumers across 11 African countries who represent a broad range of ages, incomes, education levels and household types. An interesting finding highly relevant for multinationals who are hoping to invest in the continent’s growing consumer market shows how income levels of African consumers have an effect on the purchase of specific products.
The survey showed that 88% of consumers are optimistic about the future. This is a positive highlight as it substantiates that optimistic consumers are more likely to purchase, which helps to drive an economy forward. Optimism is above 90% in the major consumer markets which include Kenya, Egypt and Nigeria. In Africa, the ability to purchase and own products is closely tied to status and a sense of well-being. Particularly in Egypt and Morocco, consumers are buying more “luxury” items such as health and beauty products, appliances, electronics, vehicles, and clothing.
Africans are also more discerning in the way they shop, willing to pay more for quality items and continue to value brands. The purchasing decisions of African consumers are most influenced by spouses, partners, friends and family across most markets.
Internet access is growing rapidly with mobile phones driving the surge in connectivity. Survey findings show that 43% access the internet with their smart phones and mobile usage is growing compared with desktops, laptops and tablets. This growth is creating new business opportunities for e-commerce, online advertising and mobile financial services.
However, with this growth there are still challenges to address in the form of power outages that lead to connection issues and smart companies will have to innovate and adapt to such circumstances by offering mobile purchase applications or offering cash on delivery options.
Today, more than 15% of all Africans over the age of 15 own a mobile phone. For this demographic target, mobile banking will be their first experience with financial services. 75% of Africans don’t have a bank, with mobiles making up for the absence of a banking infrastructure.
By 2019, an estimated 250 million “unbanked” Africans will have mobile phones and a monthly income of at least $500 – generating a projected $1.5 billion in revenues from mobile financial services.
For consumer product companies hoping to enter new markets or increase their share in existing one’s, the market attractiveness index can help to identify the most lucrative growth opportunities.
Survey results revealed that Africa’s rural consumers value quality and are willing to spend more for better cars, electronics, beauty, baby products, spirits and certain foods. Demand for household appliances, mobile phones and clothing is particularly strong. The rural markets are a niche opportunity and it’s advisable for potential investors to evaluate the rural opportunity as it develops.
According to the International Monetary Fund, Ethiopia’s GDP grew by 10.2% in 2015 – making it the fastest growing country in the world. It’s becoming easier to start a business, with the number of days requiring to start a business dropping from 46 in 2004 to 15 today.
Ethiopia’s government is upping its level of investment, having directed about 15% of GDP toward large infrastructure projects. General consumer sentiment is positive with Ethiopians feeling more financially secure with the second highest savings rate in Africa.
Numbers don't lie when it comes to the massive growth that the African market is experiencing. With number's like these it's easy to see why worldwide companies are trying to get their products into the African continent. However, the African Market is like no other with it's unique factors.
This is why we are here for you, at Leads4Africa we can put you in front of the correct person to speak to in order to get your product into the market. With our Professional Databases and Appointment Setting your business can also be a part of the growth of the African Market.