Africa: A 21st Century View
In this report, Deloitte assesses how the African market has developed, how perceptions of Africa have changed, and how consumers are responding to a period of rapid economic growth making the case for seizing the opportunities within the continent.
Africa is not one, but 54 countries with different growth rates, infrastructure, trade agreements, tax regulations, culture and levels of technological development. Business strategies need to be tailored to the specifics of each market or sub-region if they are to succeed. This report aims to provide you with insight and data to enhance your understanding of the opportunities and challenges in Africa.
To measure current consumer sentiment, Deloitte surveyed young Africans across four of the fastest growing consumer markets: Egypt, Kenya, Nigeria and South Africa. The research shows that young consumers in the fastest growing markets of Kenya and Nigeria are most optimistic about their personal financial situation, more than in wealthier South Africa and Egypt.
Despite low income levels, young consumers surveyed attach more importance to the quality of products than price. Across the four markets researched, quality ranks higher than value for money when it comes to deciding where to shop. Not only are younger African consumers focused on quality, they are also brand conscious. Deloitte research shows that in some categories, such as food and drinks, local brands are preferred by the younger population. In other areas, such as fashion and cosmetics, quality is linked to international brands.
In recent years a diversifying economy has supported an emerging middle class, driving demand for consumer goods and services, as well as luxury brands. Rising consumer demand, aligned with annual growth of around eight per cent, is likely to add around $1.1 trillion to African GDP by 2019, with Ethiopia, Uganda and Mozambique among the fastest expanding markets, and large economies such as Nigeria, South Africa and Egypt continuing to perform strongly. However, risks remain, including a lack of infrastructure, poor governance, fragile security and unreliable logistics, but conflicts are more localized and democracy is spreading, suggesting the dominant trend is positive. In Deloitte’s view, the consumer opportunity in Africa rests on five key pillars: the rise of the middle class, exponential population growth, the dominance of youth, rapid urbanization and fast adoption of digital technologies.
The results of the survey suggest that Africa is not suffering from a lack of demand, but sometimes from a lack of supply. For companies seeking to invest, Africa remains complex. Companies should be prepared to engage on a long-term basis and to consider a variety of strategies while carefully weighing the risks and rewards. However, where there are challenges, there are also opportunities to innovate and given the potential for growth the continent offers, the business opportunities in Africa could outweigh the risks.