Archives for category: African Consumer

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Nigeria’s current retail consumption is listed at $388 billion per year and could rise to $1.4 trillion per year by 2030 according to a report by Mckinsey’s Global Institute. To achieve that estimate and sustain it Nigeria’s retail industry is going through drastic change. Retail growth is being fuelled by the increase in the size of the Nigerian population, more than 80 million of Nigeria’s 170 million citizens live in or close to urban areas, increasing disposable incomes among certain segments of the population, and the drive by the government to modernize retailing. International retailers have also helped growth through their investments and the expansion of international retail stores throughout the country. A report prepared by international management consultancy AT Kearney in 2014 labeled Nigeria, along with Gabon, as offering the best retail investment opportunities in Africa.Shoprite

The Nigerian government has played a significant role in the growth of modern retail. Like most African countries, Nigeria has a huge informal economy, with large open markets where items are sold, including food and clothes, electronics, and phones to name a few. There are also many small neighborhood stores, ranging from large to small operators, as well as kiosks, roadside food sellers and street hawkers. Because of high unemployment and other factors the informal economy has traditionally played a large role in Nigeria. Nigeria‘s informal retailing channel is believed to be worth billions of naira, much of which is untaxed and unaccounted for in the nation‘s GDP. The government has made a commitment to place its focus on the formal economy and modern retailing and has implemented new policies discouraging open air street retailing.Crowded Oshodi Market in Nigeria

The new phenomenon for retail in Nigeria is large shopping or “mega” malls. The first mega mall in Nigeria was launched in 2005, when South African grocery chain Shoprite and other retailers began trading from the Palms Mall in Lagos. The mega mall concept has been hugely popular in Nigeria as it has become the place to be seen for aspiring Nigerians. These malls have also further increased the trend towards modern retailing.

Although there are now eight shopping malls spread throughout Nigeria, with others still to come, retailers have found the high rent at these locations to be a major detriment. These malls have shown a steady turnover in merchants. Also many of the Nigerians who love to come to the mall and be seen, cannot afford the products that are being sold at the high end international merchant retail stores that occupy the malls. Mall in Nigeria

Another retail channel that is experiencing high growth is internet retailing, or ecommerce. Mobile phones are ubiquitous throughout Nigeria and more Nigerians are shopping via their mobile devices. Nigeria is the largest mobile market in Africa and the 10th largest in the world. 71 million Nigerians access Internet via their mobile phones according to statistics released by the Nigerian Communications Commission (NCC) and Nigeria was number eight among the top 10 internet user countries in the world. Nigeria’s internet subscriber base rose from 48.2 million in June 2013 to 67.4 million in June 2014. This represents a density of 40 percent, placing the country above the African average of around 16 percent, as estimated by McKinsey & Company.

Ecommerce companies that operate in Nigeria, such as Jumia and Konga, have shown tremendous growth over the last few years. Jumia recently secured $150 million of fresh investment from its shareholders and both companies are currently selling over 100,000 items on their sites. Nigeria’s ecommerce industry is now worth over $1 billion and Nigeria’s Minister of Communications Technology, Dr. Omobola Johnson, has said that Nigeria’s e-commerce market has a potential worth of $10 billion. Even with the ecommerce industry being young and facing logistical issues, this is another potential channel for a retailer to actively engage the Nigerian consumer and see real growth and revenue.

Not all international retailers entering the Nigerian market have been successful. In November 2013, international retailer Woolworths announced it was pulling all of it’s supermarkets and department stores out of Nigeria. Woolworth’s found the environment to be challenging and  failed to lure Nigerian consumers.  Woolworth’s initially entered the market in 2012 but high rental costs, duties, and a complex supply chain process made it difficult to succeed. In order for international retailers to be successful one needs to understand the regulatory environment, the challenges of doing business in Africa, the tastes and habits of the Nigerian consumer, and whether or not your business is a good fit for the market.

Understanding Nigeria is key. The Nigerian consumer market is largely defined by the super-rich and the super-poor. Nigeria is among the most unequal countries in the world in terms of income distribution. Although income inequality limits the overall consumer market by concentrating purchasing power with the rich, there is a booming luxury market in Nigeria. Wealthier Nigerians are attracted to well-known brands which are perceived as being of high status. Luxury car Nigeria

There is also a growing middle class, albeit nascent, with rising spending power. By 2030 Nigeria will be home to almost 12 million middle-class households. Going by the National Bureau of Statistics’ average of 5.7 people per household, this would account for over 68 million people. The Mckinsey Global Institute is forecasting 35 million households to be earning more than $7500 a year by 2030, greatly expanding the middle-income bracket. This provides great promise for merchants looking to enter the market and appeal to a broader segment.

There are tremendous opportunities for modern and westernized products due to Nigeria’s relatively young population and their love of western brands. This young and trendy segment of the population has an intrinsic demand for products that appeal to them in a more modern retail setting or outlet. Sales via informal channels such as open markets will decline, while sales via formal retailing channels will increase with the changing population needs and rising demand for convenience.

The key offering of both kinds of new retailing concepts is convenience: modern retail store channels offer hassle and haggle free shopping in a comfortable environment, while internet retailers also offer stress free shopping. Convenience will be a key benefit as shoppers do not have to brave the heavy traffic of major cities in Nigeria. They can now visit modern retail facilities at malls or buy something online and have it delivered to them at their home. The future of retail in Nigeria is in the here and now and will continue to see an upward trend.

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Ecommerce in Nigeria
Nigeria is the largest country by population in Sub-Saharan Africa and it also has the biggest economy. By 2030, one in every six Africans will be Nigerians, and Nigeria will have one of the 25 largest economies in the world. One area to look for continued growth and real opportunity is E-Commerce or M-Commerce (Mobile Commerce). In 2014 Nigeria recorded over $2 million worth of online transactions per week and close to $1.3 billion monthly. Nigeria’s e-commerce market is developing rapidly, with an estimated growth rate of 25 percent annually.

According to an online researcher, emarketer, while e-commerce across the rest of the world is growing at 16.8 per cent, Africa’s e-commerce space is growing at a rate of 25.8 per cent – making it the fastest growing in the world. Nigerians are notorious for their love of shopping. The Euromonitor Nigeria in a 2011 report revealed that Nigerians spend $6.3 billion per year on clothing. In a recent survey conducted by Philip Consulting 38 percent of Nigerians prefer to buy products through the internet. Middle class consumers are the biggest purchasers online. Nigeria’s middle class now accounts for 28 percent of the population, and the middle class are well educated, with 92 percent having completed a post-secondary school education. This middle class is brand conscious and tech savvy and their technology of choice is a mobile device.

Mobile phone shopping
A Terragon Group study in 2014 shows 63 per cent of Nigerian internet users had bought at least one item online. 60 percent of these buyers claimed to have used their mobile phones for these purchases. 86 percent of the respondents to the Terragon Group study claim to carry out research about an item before making a purchase, and 80 per cent pointed at mobile as their major platform for research. Mobile is the first and major point of access for all internet activities. Nigeria is the largest mobile market in Africa and the 10th largest in the world. 71 million Nigerians access Internet via mobile phones according to statistics released by the Nigerian Communications Commission (NCC) and Nigeria was number eight among the top 10 internet user countries in the world.

connectivityOne of the keys to growth in e-commerce is connectivity. Internet access in the past has been spotty at best, but is getting better. Nigeria’s internet subscriber base rose from 48.2 million in June 2013 to 67.4 million in June 2014. This represents a density of 40 percent, placing the country above the African average of around 16 percent, as estimated by McKinsey & Company. Nigeria’s internet access market is set to witness a huge boost, as the federal government has set the target of a five-fold increase in broadband penetration by 2018. This is continued good news for e-commerce in Nigeria and Nigeria’s Minister of Communications Technology, Dr. Omobola Johnson, has said that Nigeria’s e-commerce market has a potential worth of $10 billion with about 300,000 online orders currently being made on daily basis.

Even with all the potential and the good that is currently happening there are still core issues. The lack of basic infrastructure, the failed postage system, power supply, expensive broadband internet and poor road networks are greatly inhibiting the rapid growth of e-commerce business in Nigeria. Nigeria’s notoriety for online fraud has further hindered growth. In 2005, PayPal closed all Nigerian accounts and denied registration to any user traced to a Nigerian IP address. PayPal has since changed that policy and entered the Nigerian market this past summer. Outdated myths can be hard to shake and unfortunately some still see Nigeria as a haven to scam artists and fraud. Another area of concern is cybercrime. The lack of legislation that specifically targets cybercrime or cyber security has no doubt continually hampered accelerated growth in the e-commerce sector. Legal intervention will need to be raised to deal with future nefarious activities online.

Nigerians shopping
There are tremendous opportunities for e-commerce growth. In Nigeria shopping is a task that takes an incredible amount of time and effort. Many wealthy Nigerians still travel abroad to shop. Some of the reasons for going abroad are limitations on what one can buy online and the challenges associated with online shopping systems. Increased internet access, more affordable data costs, mobile connectivity, the convenience offered by online shopping, and a better product offering should attract more Nigerian consumers to make use of e-commerce sites. Two of Nigeria’s largest e-commerce sites, Jumia and Konga, have seen continued growth and as more players enter the market not only will the consumer benefit, but the Nigerian economy should benefit as well.

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nigeria-location-mapWhat lies beneath the surface of a troubled country?
People may question why would a company consider doing business in a country like Nigeria with poor infrastructure, frequent terrorist attacks, political instability, corruption, fraudulent internet activities, and more than 40% of the population living below the poverty level. What benefits could the country possibly have that outweighs such turmoil?

Most people only see the negative aspects of entering an African nation. However, to see the opportunities you have to look beyond the common perceptions and recognize the true market potential.

The most valuable resource
Africa is known for its abundance of resources such as oil, gas, gold, and diamonds, but what may be the greatest asset is often overlooked– the people. Africa is home to 1.11 billion people making it the second largest and second most populous in the world.

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Lagos, Nigeria

Nigeria is the largest country in Africa and ranked 7th worldwide in terms of population with 173.6 million people as of 2013. Not only is the population large but it is also young, entrepreneurial spirited, and growing. Roughly half the population is reported to be 19 years of age or younger. Interestingly, Nigeria reportedly has the highest total entrepreneurial activity in the world; many Nigerians tend to be innovative and business oriented by nature.

Growth and investment in a rising nation
Nigeria’s projected growth rates rival the top emerging economies – even the renowned BRICS nations.

In April 2014 Nigeria surpassed South Africa as the largest economy in Africa, with a GDP of $510 billion in 2013, $190 billion more than the GDP of South Africa. GDP grew by 7.4% in 2013 up from 6.5% in 2012 and is forecasted to achieve an average growth rate of 7.1% through 2030. Nigeria is ranked as the 26th largest economy in the world and is on track to break the top 20 by 2030. Nigeria plans to invest heavily in 5 major economic sectors to sustain growth: agriculture, trade, infrastructure, manufacturing, and liquid production of oil and gas.

The impressive growth has recently attracted investors all over the world. According to Frontier Market Sentiment Index report in the Wall Street journal, Nigeria is the number one frontier market in terms of attracting investment interests from European and American multinationals. Citing an average of 3 out of 10 major companies having Nigeria on their watch list. Large multinationals such as Dominos, YUM! Brands, and P&G are examples of businesses planning to further expand their current presence in Nigeria because of their success.

With an unsaturated market and promising future, Nigeria is considered an “economic sweet spot” for business.

A mobile hot spot  
The combination of the market size, age, and growth offers great potential to become the most lucrative mobile telecom markets in Africa. The industry accounted for more than a quarter of the GDP in 2013.

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Nigeria is ranked 8th in internet usage worldwide with over 67 million users, the majority accessing the web through their mobile phones as many do not have desktop computers and broadband issues remaining prevalent. Nigerians with their adaptive instincts have leap-frogged several technological product cycles; one instance is many people are buying cell phones before having a landline for their household. Nigeria has over 120 million mobile phone users with over 70% market penetration and is predicted to continue to grow substantially. Although mobile phone penetration is rapidly increasing, only about 25% of the population owned a smartphone in 2013 but this number is expected to increase as technologies become more affordable and as the middle class rises.

The mobile service carrier industry is fiercely competitive with main operators MTN, Airtel, Globacom, and Etisalat battling for market share. However, opportunities in other areas within the mobile sector such as applications, content, and payment methods are immense and profitable. Nigerians use their mobile phones for work, entertainment, and social media beyond typical talk and text features. Nigerians are the leading country in Africa in terms of social media use with well over 11 million users with over 6 million members on Facebook’s site alone. Nigeria ranks the 4th in terms of Facebook membership growth rate.

Nigeria is in a great position to benefit from worldly economic trends including the rising demand from emerging economies, growing demand for global resources, and spreading the digital economy. Despite the continued problems within the nation Nigeria continues to display impressive economic growth rates, a growing middle class, and a youthful population that embraces technological developments making the market extremely attractive for business.

Please visit our “Mobile Market Look” series and our look at the Kenyan mobile market

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This will be the first in our new series, “Mobile Market Look”, where we look at mobile markets in Africa and other emerging countries around the World. Kenya is one of the hotbeds in terms of mobile innovation and sophistication and we hope you enjoy this article and please feel free to leave any comments you may have.

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Africa has been growing at an unprecedented rate and Kenya is one of the fastest growing tech and mobile markets in the World. Known as “Savannah Silicon Valley”, Kenya is home to over 500 startups in the mobile and digital industries. Kenyans are extremely tech savvy and 70% of the population owns a mobile phone, with 16 million Kenyans accessing the internet through their phones. Nairobi, the capital of Kenya, is home to the ihubs, incubator space for the tech community that includes 10,000 members an over 150 incubator start-up companies. Companies such as Google, Intel, and Samsung have a presence in Nairobi and IBM set up its first African Innovation Lab in Kenya. If you are in the mobile or tech industry, whether as a company or an investor, Kenya is a country you should get to know and want to do business in.

Kenya is the most developed economy in East Africa with a good education system and a strong business environment. Kenya is a young country with 70% of the population of 44 million people under the age of 35. Kenya also has its issues as 50% of the population lives in poverty and unemployment, although officially listed as 10.5%, can be as high as 40%. There are obstacles, but there are also opportunities. And no opportunity is bigger in Kenya at this time than the mobile money and mobile payment market.

Kenya’s Mobile Market Landscape

Kenya phones Kenya has the most sophisticated mobile money ecosystem in Africa, and maybe the World. Infrastructure improvements, and lack of rigid regulations by the Central Bank of Kenya and the government, have led to market growth and an increase in digital services. M-Pesa, established by Safaricom in 2007, started the current mobile payment revolution and now transacts over $5 billion annually which accounts for 17% of Kenya’s GDP. Over 2 million mobile money transactions take place every day and according to MEF studies mobile money and mobile payments still present the greatest opportunity for growth in Kenya. It is estimated that 85% of the population has used mobile money at some point and most Kenyans prefer mobile money to cash because of the ease of use and the safety. Most African nations are cash-based and people still carry large sums of cash on them, especially when they are sending money to relatives in remote parts of the country, so mobile money offers a safer and easier alternative. Kenya’s financial institutions have picked up on this and are jumping on the bandwagon and creating their own mobile money products. Equity Bank has its own M-Kesho mobile money product and I&M Bank has its own prepaid Safari Card available on the M-Pesa platform.

Even with growth and prosperity Kenya faces security issues and economic problems. There have recently been terrorist attacks on the Kenyan coast by Al-Shabaab, a Somali terrorist group associated with Al-Qaeda, and no one should forget the terrorist attacks that took place at the Westgate Mall in Nairobi over a year ago. The country has a high poverty rate and weak infrastructure and on the business side there is a lack of capital and belief and faith by investors towards the Kenyan market, and also the Sub-Saharan African market as a whole. Even the mobile market is experiencing its own issues. There is a current price war which has benefited the consumers by leading to decreased prices and more mobile subscriptions, but has created lean profit margins and less profitability for the mobile operators. There is also the concern of the dominance of Safaricom and M-Pesa who currently has the dominant mobile marketshare of 70%. Other mobile operators such as Airtel, Yu, and Orange have a presence but pale in comparison to Safaricom.ihub Kenya

Obstacles do exist, but even with these problems and many others the mobile industry in Kenya is experiencing good times. Mobile phone penetration is 78% in Kenya and Africa had an annual mobile growth rate of 82% between 2000 and 2013, highest in the World. There are currently 500 million mobile subscriptions in Africa and there is expected growth in subscriptions of 50% over the next 5 years. Kenyans have also taken to smart phone technology and 67% of all phones sold in Kenya are smartphones. Kenyans like to listen to music, play games, look for sports updates, and watch TV and video on their phones. They also like social media and Kenya has the second most Twitter users in Africa behind South Africa and the second most Facebook users in Africa behind Nigeria. So the promise and potential is bright and the opportunities for business and investment is maybe the best it has ever been. Kenya is definitely a place you should want to be!

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African SMEs and Entrepreneurs – the time is now!

Africa is quickly emerging as a top contender for business expansion in large company ventures. In many ways, Africa has been referred to as the “next Asia” with strong investment growth. After all, the continent is home to 7 of the 10 fastest growing economies in the world. The future has been looking much brighter for Africa, especially in the last decade where we have seen Africa’s GDP more than double.

According to EY’s recent attractiveness survey for 2014, Sub-Sahara Africa places in second place.  Three years ago in 2011 SSA was listed 3rd from last on the same list. This year, North America is the only region that ranks ahead of Africa in terms of investment attractiveness.

Growth within these nations not only provides incentive for foreign direct investment (FDI) from all over the world, but also more importantly provides immense opportunities for African entrepreneurs across the continent. EY also cites Intra-African investment and development as a major source of growth for the continent.

Inherently Africa has a high level of risk associated with business investment with many nations battle political instability, corruption, and problems associated with the lack of proper infrastructure. All of these factors contribute to the risk in conducting business in Africa which is eminently complex. In the past, such issues have resulted in the hesitation by global companies from exploring expansion into African nations. However in present day, it appears investors have been able to see beyond negative headlines of nations such as Nigeria, Kenya, and Sudan due to the market potential outweighing many of the risks.

Africa micro business While many large size multinational enterprises (MNEs) such as Nissan, H&M, and Burger King are making headlines for their decisions to expand into Africa for business ventures, the success behind these rapidly growing countries is largely due to SMEs, small and medium sized enterprises. Several MNEs have recently been attracted to the region due to significant improvements in regulatory, legal, and business systems. However, according to IFC and World Bank reports, over 90% of all businesses in Sub-Saharan Africa are SMEs. Aside from this, there is also the informal market of micro businesses that are largely unaccounted for.

With the exciting growth of the mobile phone industry, it presents a major opportunity for Sub Saharan companies to prosper. MMIT, Mobile Media Info Tech, a Nigerian software provider of mobile payments is an example of how Nigerian entrepreneurs and SMEs can benefit from the recent growth trends. With the significant increase in cell phone users, mobile opportunities are abundant. MMIT quickly entered the market by creating M-Wallet and M-Diaspora products.  These products allowed Nigerians to use their mobile phones to pay for products, acting as a mobile wallet, and our M-Diaspora product which allowed ex-pat Nigerians in the United States and United Kingdom to send money to friends and relatives in Nigeria. MMIT saw the opportunity and benefit of mobile payments, a technology that has revolutionized the African consumers’ lack of banking access and dependency on carrying cash.

With the overwhelming majority of the business landscape being SMEs, they are instrumental to the growth of the economy within the Sub-Saharan region. African SMEs growth and development helps create the desperately needed jobs within the formal economy which can ultimately boost economic growth and stability. Although things are looking up, reports of high unemployment rates in SSA, particularly among the youth, continues to plague the continent. The need for the creation of jobs and infrastructure is still in dire need to foster the current economic growth and to sustain it.  Therefore, it is imperative that they do not ignore these rising opportunities created by the economic growth of the past years.

Business in Africa is challenging and varies significantly from country to country which further adds to the degree of difficulty for foreign entrants. African companies have many advantages that they can capitalize especially in terms of market knowledge, understanding of consumer behavior, and realizing what innovations can revolutionize the African way of life. African companies partnering with foreign companies is another smart option for both sides of the spectrum as local African business are able to fill many of the gaps that large MNEs cannot always fill. With new economic developments and increasing incomes, consumers are demanding access to more goods more than ever before. African entrepreneurs and SMEs should seize the opportunities before the MNE’s flood gates open.

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New mobile payment product M-Iflo launched to minimize risks as it is of great concern in the African markets.

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MMIT in partnership with Bango, a leader in mobile payments, has officially launched a product called M-Iflo to revolutionize the security of mobile payment environment in Sub-Sahara Africa. The M-Iflo product provides a safe payment solution that enables online transactions for digital content, which will unlock many opportunities in the world of mobile payments for Africa.

Africa is rapidly becoming a mobile hot spot with many consumers’ displaying their natural ability to quickly adapt to new technologies introduced to the market. The product is tailored to the African market by directly addressing the concerns surrounding the safety of payments and reducing the risks of transactions, which remains a barrier to doing business for new entrants into African markets. As a result of merchants’ fears regarding the technological and political risks factors, Africa has in many ways been limited or excluded from many of the break through technologies within the areas of mobile commerce and mobile billing. Jide Akindele, CEO of MMIT commented on these issues explaining, “unfortunately corruption remains a substantial risk within the mobile money industry in Sub-Saharan Africa. This has resulted in a reluctance from the world’s app stores and mobile brands to engage the African market.”

M-Iflo essentially is an intermediary between mobile merchants and mobile wallet providers. The product acts as a payment verification portal that provides a secure way for mobile content providers to reach African markets. This enables consumers of mobile wallets to select their wallet provider as a form of payment at the check out page of the transacting website. M-Iflo additionally allows those without mobile wallets to buy content from major app stores by using a top up card that can be purchased at retail outlets. Upon purchase of the top up card, codes are provided for the customer to enter upon checkout of a merchant site to complete the transaction online.

M-Iflo minimizes associated risks with online transactions and allows merchants to be paid up front, thus creating a work around to the common complexities of conducting business in Africa. This addresses app stores and merchant concerns of payments being held up in one country based on bureaucracy, fraud, or changes in regulation. Bango CEO Ray Anderson said: “There’s a smartphone boom in Africa and a frustrated demand for digital content. App stores and other merchants have been waiting for the reassurance of M-Iflo, which limits the risk of doing business in Africa, and has been designed to suit the ‘cash up front’ instincts of the African market.”

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M-Iflo has already integrated with major mobile wallet providers in Africa, including Mobipay in Kenya, Stanbic IBTC Mobile Money in Nigeria, and is working to add more to the list of partners. Jide Akindele, CEO of MMIT stated, “Merchants in the western market are yearning for a suitable payment process platform that minimizes their risk in the African market. We believe that our M-Iflo platform gives our clients that capability to do so. We look forward to opening up access to content store owners that are looking at the African market via Bango and MMIT’s Mobile money payment processing platform.”

MMIT is looking forward to this summer as the product officially launches in Nigeria with Stanbic within the coming weeks followed by Kenya’s launch later this summer.


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Is your business is targeting the youth of Sub-Sahara Africa?  If not, then your business is missing out on the largest and fastest growing youth consumer market in the World.  According to a Mckinsey & Company study over 50% of Africans are under the age of 20 and over the next decade this group will grow faster than any other youth group in the World.

In 2013 Africans aged 16-34 accounted for 65% of the consumer spending in Sub-Sahara Africa, or SSA.  A quick profile of this youth consumer shows that they are online and tech savvy, image-conscious, prefer quality first, price second, are brand conscious, mobile, and they are digital.  And their digital technology of choice is the mobile phone.Image

Mobile Technology is the de facto technology of choice for the youth of Africa.  For this article I define the youth of Sub-Sahara Africa, SSA, as anyone between the ages of 14-34.  For this group the mobile phone is a passport to a flexible new world that is much desired.

Their mobile phone defines their status and distinguishes their place in society.  The more expensive your mobile device the richer you are, the cheaper your device, the poorer you are. Most young people initially buy low cost, low brand devices, such as Techno, or Huawei, but once they save up enough money they go for a more expensive, nicer looking phone.  Youth consumers in SSA are very brand and image conscious and their mobile device is proof of that.

Another key trend is mobile devices no longer just being phones.  Mobile devices have now become tablets, phablets, and phonblets.  SSA youth are using their mobile devices to view, store, and create mobile content. Even though more youth are using mobile devices daily, only 20% of a phone’s functionality is actually being used according to mobile tech industry analysts.  Of that 20% however, more than 70% of that usage is for communication (email, SMS, social networking, downloading games, music and video apps, etc.).

Internet access is also getting better and sites like Youtube and Facebook receive millions of visits and subscribers.  Texting is still prevalent and phones are used more often for texting than voice calls. However texting can now be broadly viewed as messaging. There is SMS and then there are data based free messaging services like Whatsapp, Ebuddy, and BBM that now actively compliment SMS.

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Mobile also provides privacy and control for SSA youth.  Having a phone allows them to keep information from the prying eyes of their parents and family.  According to an InMobi Report in 2012, 47% of Nigerian youth say they love their mobile device because it allows them to keep their information private.

SSA youth also keep their mobile devices on them at all times an according to an InMobi report.  Mobile provides SSA youth with “Found Time”.  Found Time is described as using your mobile device at any time, whether in the bathroom, on the bus, or on your bed to check-in to social networking sites such as Facebook, IRokoTV, etc.social media in Africa

For the business side mobile commerce exists but has not really become part of everyday culture.  Countries where mobile money is strong, such as Kenya and Tanzania, see more activity in regards to mobile commerce, but continent wide this phenomenon has not completely gained steam at this time.  I spoke with Dayo Adefila, CMO of MMIT in Nigeria, on why this current situation exists.  “My guess for why mobile commerce is so low in a majority of countries is the lack of a clear value Proposition.  Merchants are not advertising mobile money acceptance so end-users don’t want any issues with their money.  They basically avoid M-commerce sites.”

Understanding this demographic is vital to understanding the future of SSA.  The technology may change but the consumer habits of tomorrow are being formed today.  The traditional consumer patterns of the West and how companies approach these consumers does not apply to SSA.  The approach taken to reach and speak directly to these consumers is unique and local to SSA and it starts with mobile technology.

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In my first article on the growth of the African Consumer I looked at the emerging middle class of Africa and the role mobile technology has played on the continent.  In this article I focus on the challenges that still exist and look at whether this current growth can be continued and sustained.

A lot of the media has focused on the rise and growth of the African continent and consumer but even with this rise and growth there are still major problems that plague the continent.  There is growth but most of it is a jobless growth.  There is poverty, inequality, health concerns, consumers with lack of resources and capital being excluded from the formal economy (a large percentage of population is part of the informal economy and cash based), a narrow demand structure of those who are part of the formal sector, corruption, and weak infrastructure.

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Also many do not understand that Africa is not a homogeneous region, it is highly fragmented, with many different countries (54 in all), with many different laws, languages, customs, business cultures, and varying degrees of education.  But even with all of these issues and concerns there is great hope and optimism for Africa in the near and long term future.  The biggest question is how to make sure the current growth is continual and sustainable.Image

Some of the key components of continued growth according to Steven Radelet in “Emerging Africa” is: access to information, a better business enabling environment, access to finance, and collaboration of private and public sectors to come together to make these other 3 things become a reality. I will first look at the access to information.  Africa is losing the moniker of the Dark Continent as technology is allowing more people to become informed.  I briefly discussed the use of the mobile phone for the betterment of lives in Africa in my last article.  There is an increase in digital consumers in mobile and this leapfrogging technology is disrupting the traditional and current business models.  Over 80 million people currently log into the internet through their mobile phones and more undersea fiber optic cables are being installed which will allow even more people to be connected in the near future.

Africa needs a stronger and better business enabling environment.  There is a need for harmonization and integration across markets that will allow the growth of inter Sub-Saharan African trade and scalable markets and more regional markets and trade blocks.  One of the major questions that confronts Africa is the creation of regional trade blocks and will these trade blocks allow Africa to become one market?  And does Africa have right institutions and frameworks to create regional trade blocks?  This is a question better answered by policy makers and politicians but it is something to continue to look at and monitor.  Continued growth is also part of the political and macroeconomic stability fostered by governments taking accountability.  Less corruption and more transparency along with democratic rights are important for sustained growth.

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There is also a need for Africans to become manufacturers of what they consume for growth to be sustainable.  The creation of strong manufacturing and industrial base is vital to internal African growth.  Currently Africans are consumers of things they don’t produce and they need to be able to satisfy the needs of their growing and large domestic markets.  There is also a need to change from an import/export model of growth in regards to revenue streams to more domestic growth being spurred by increasing population, urbanization, and increase in income and decline in poverty.  This can be spurred on by a collaboration of public and private sectors, increased financing, and the entrepreneurial spirit that exists in many African countries.

So for the near to short term I see the major areas of growth and potential growth being: retail, telecommunications, ICT (Information and Communication Technologies), finance services and banking, home and personal care products, agri-business and staple foods.  In my opinion retail can be a key contributor to job creation and in some countries there is already a high demand for retail space by domestic and international retailers.  Also it is important that products are affordable and of great necessity to those that will be consuming them.  I hope you have appreciated the two articles about the growth of the African consumer and if you have any thoughts or ideas you would like to contribute feel free to contact me.

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The African consumer market is regarded as the Next Investment Frontier with a population of a billion plus people.  In 2012 Africa was home to 7 of the 10 fastest growing economies in the World and was the second fastest growing region of the World next to Asia.  With this growth has come prosperity and rising incomes.  Sub-Sahara Africa currently has a GDP, Gross Domestic Product, of $1.263 trillion as of 2011 according to the World Bank, and that number is expected to grow to $2.6 trillion by the year 2020.

The continent has also seen a steady annual growth of GDP of 4.5% over the last decade, much higher than the developed World during that same time.  It is also estimated that close to 128 million households across the continent will have increased discretionary income and that consumer spending will increase to $1.4 trillion by 2020.  Discretionary income is defined as $5,000 or more per year and where 50% of spending is on non-food items.

Businesses are trying to capture the rising middle classes in Africa.  Euromonitor estimates that there are over 313 million middle class consumers in Africa and that this group is growing.Image

The population is also expected to double by 2050, and is urbanizing rapidly with an expanding working age population.  Sub-Saharan Africa also has a large youth population with 62 percent of its citizens under the age of 25.  These youth consumers are digitally savvy and brand conscious.  They desire quality brand name products and are sophisticated in their knowledge of these products.  Technology is at the forefront for this age demographic and their technology of choice is the mobile phone.

According to a McKinsey & Company African Consumer Insights Survey, 25% of all urban consumers, which is a market of nearly 80 million people, access the internet daily from their mobile phones.

Nigeria is one of the hotspots for mobile and I spoke with Jide Akindele, CEO of MMIT a mobile payment processor based in Lagos on the role of mobile in Nigeria for the West African consumer.  “Our company operates in the Mobile Money space and we are seeing tremendous growth in this area.  Mobile money is shaping up to be something interesting for West African consumers.  Mobile money aggregators are trying to find a niche market that can latch on to these consumers and have a presence in this growing industry.  One mobile money company in Nigeria that has done a great job with this is Paga.  From the beginning Paga put a lot of emphasis on making sure the name Paga was a household name that everyone in Nigeria could recognize, speak about and use has an example when describing the industry. This has been a major plus for Paga and this business model is a wave which all the other mobile money aggregators are trying to replicate.”

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Growth is not only country specific but is regional specific.  East Africa has one of the strongest regional trade blocks on the continent, in EAC, and Kenya has become the IT hub of Sub-Saharan Africa.

Mobile has also played its role in this part of the World.  I spoke with Denis Bogere, a native of Jinja, Uganda and a graduate of the John W. McCormack Graduate School of Policy and Global Studies at UMass-Boston.   “How much would you like to pay? It may seem to be simple logic but that phrase implies that a Ugandan consumer cannot be put in one singularity. Ugandan consumers have diverse needs along the lines of affordability. There are three prime consumers in Uganda: the poor, middle class, and rich and their consumer habits are affected by aspects such as income. However, regardless of their differences in lifestyle, ability and purchasing power of goods and services these consumers share a common thread which is their affinity for mobile technology. The mobile phone has not only become the basis for communication and connectivity, but also for money transfers for daily purchases.  This can partly explain the explosive use of advertising platforms via the mobile.  The growth potential that mobile technology offers the key to unlocking the mind of a Ugandan consumer which may as well help in understanding the future of the mobile industry and its growth potential.”

In this article I have looked at the growth of Africa, the rising middle class, the youth consumer, and the importance mobile technology plays on the continent.  This a 2-part series and I will next look at the obstacles still facing Sub-Sahara Africa and what the continent can do to ensure continued and sustainable growth.

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