Why is the African consumer an attractive proposition? The new African consumer is a force to contend with and represents an opportunity no company can afford to ignore. Since 2000, consumer spending in Sub-Saharan Africa has grown at a steady four percent per year, reaching nearly $600 billion in 2010. The market is expected to be worth $1 trillion by 2020.1 While mineral resources will undoubtedly continue to be important, the most significant contributors to growth are changing, with less reliance on exports and more reliance on domestic demand (consumer spending and imports). Despite current low per capita incomes in Africa, average income is growing, giving rise to an emerging middle class that will become more demanding as income levels and spending increase.
“At JD Group, we look for two predominant characteristics before considering entry into any market, inclusive of the African market. Firstly, we look at current and projected potential in terms of demand forecast in the short, medium and long term, assessing the sustainability of the underpinning drivers for demand carefully. Secondly, we closely evaluate the capacity and capability of the market to enable core business processes such as logistics, infrastructure, regulatory and legal policies, financial systems and political stability to ensure effective service delivery to the envisaged client base.”
A population forecast to reach almost 2 billion by 2050.2 In 2005, Africa had an estimated population of more than 920 million, which increased to an estimated 1 billion in 2010. By 2050 the population is expected to increase to almost 2 billion. Furthermore, between 2010 and 2050, Africa’s economically active population will grow from 56 percent of the continent to 66 percent—a striking contrast to more mature continents whose populations are aging and moving into the dependent category (i.e., 65 years or older).3 Expansion of the economically active population will lead to increased demand for goods and services.
• Significant decrease in poverty.4 By 2020, Accenture estimates that poverty levels in Africa will fall to 20 percent from nearly 45 percent in the 1980s. Poverty fell for both landlocked as well as coastal countries; for mineral‐rich as well as mineral‐poor countries; for countries with favourable or with unfavourable agricultural resources; for countries regardless of colonial origin. GDP in Africa is growing even faster than the continent’s meteoric rise in population.5
• Rapid urbanization. Africa’s growing, increasingly wealthy population is becoming more urbanised. By 2050 almost twothirds of the population will live in cities, compared with 40 percent in 2010.6 Urbanisation, in turn, will lead African consumers to purchase more goods and services, and will make it easier for companies to reach consumers with products, services, and communications. Rapid growth in population and urbanization will place additional constraints on the infrastructure requirements of Africa. This will require greater planning and urban investment which will require both public and private sector participation.