New consumption opportunities: business value and development impact

The rewards are great. A recent United Nations Global Compact report found that revenue from sustainable products range between 7 percent and 40 percent for companies across a wide range of sectors26. Accenture and NBI developed a detailed economic model for Africa that allows us to track the effect of these percentages for each sector in Africa. The model produced a wide range between conservative and aggressive benefit scenarios. If we take the lowest end of the benchmark range for African companies (7 percent), this translates into an estimated $186 billion per year in revenues27. An extreme example, DuPont reported 9.8 percent overall revenue growth from 2007 to 2011, while its portfolio of “sustainability-advantaged” products grew 5.5 times that rate, and now makes up 30 percent of DuPont’s total revenue28. Though low income consumers (subsistence and floating) offer a significant opportunity in terms of their sheer volume, the middle and affluent classes provide the best opportunities for differentiation and market share. At the lower end we see innovative models overcoming basic access barriers (e.g. Kenyan mobile money transfer solution M-Pesa), while more affluent consumers leave room for very different product options, allowing companies to compete on brand and price differentiation.

The opportunity is not only for consumer-facing sectors. We are seeing increasing demand for business-to-business offerings, such as green buildings in markets where energy availability and efficiency are concerns. Healthcare group Netcare will spend ~$160 million to expand facilities during its 2015 financial year in expectation of strong demand for hospital services. The group has also secured a ~$41 million loan from Nedbank and the French Development Agency to convert 35 of its 50 hospitals to solar power. It expects the conversion to solar to deliver ~$80 million in saved costs over 10 years.

Impact The NBI has published a set of principles that describe high functioning economies. The project team are conscious that not all opportunities can be quantified in terms of dollar amounts. Hence each opportunity category has been assessed against these 7 high level principles. Scaling new solutions can result in significantly increased access to products and services that can drive development. Increased trade in solutions that address a critical market gap can, for example, give lower-income groups better access to products and services that fulfil basic needs such as food, clean water, education and access to healthcare.

 

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