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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.

Anthony Bio for Blogs

 

Most people recognize the abundance of natural resources that the Sub-Sahara African continent has been blessed with.  One resource that most people fail to recognize is Africa’s youth.  This resource might be Sub-Sahara Africa’s, SSA,  most precious and vital for continued growth in the 21st century.  Not only is Sub-Sahara Africa one of the fastest growing regions in the World, it also has the largest youth population in the World.

62% of the SSA population, 600 million people, is below the age of 25, and according to the World Bank the number of 15-24 year olds has risen from 133 to 172 million in the last decade and is expected to reach 246 million by the year 2020.  The Guardian estimates that there are 70 million more Africans under the age of 14 in 2012 than there were in 2002 and by 2022 that number will increase by another 76 million.  The median age in Africa in 2012 was 18 years old, which is 7 years younger than the median age in Asia and 16 years younger than China.O-Funds_1

This young population could be a catalyst for growth, global consumption, and global production, but it could also be a huge risk with the large number of unskilled youth who lack jobs and opportunities, which could lead to political and social unrest like we witnessed with the Arab Spring Revolutions in Tunisia and Egypt.  For this article I will first look at the growth potential and then look at the potential risk factors.

For many years Africa experienced a brain drain.  People were leaving SSA to come West for a better education and opportunities.  Over the last decade that trend is starting to reverse and is now becoming a brain gain as more expats return to SSA looking for opportunities due to economic problems in the West, Africa’s strong economic growth, and those who want to return home and make a difference.

A survey by South African private equity firm Jacana found that 70 percent of African students studying for their MBA’s in the US and Europe plan on returning to Africa after graduation.  These expats are bringing skills and knowledge to the continent that is assisting with its current growth.  Also Africa is doing a better job of retaining its workforce.  Recent statistics compiled by the World Economic Forum indicate that many of Africa’s growing economies have significantly increased the retention of educated workers.  Nigeria is a great example of this.   They were ranked 112th in the World for retaining workers in 2008 but by 2013 they ranked 48th.

The growing youth segment is also digitally savvy.  There is a growing digital revolution taking place and technology is lowering the barriers to entry for expats and business and creating opportunities where none previously existed.   Mobile phone technology is the technology of choice and mobile internet usage in Africa is the highest in the World.   It is projected by 2016 there will be over 1 billion mobile phones in Africa.

SSA is also currently experiencing a technology boom. There are currently 90 technology hubs, labs, incubators and accelerators, in over 20 African countries spearheaded by Kenya’s iHubs in Nairobi.  These hubs are developing an atmosphere where new and innovative ideas are created and shared and where people can network with other like-minded people.

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Of course for all of the positive vibes coming out of SSA there are still lots of problems.  According to the African Development Bank, the youth constitutes about 37 percent of the total labor force, but make up about 60 percent of total unemployment. The risk of displaced youth who cannot find jobs, do not have the proper education, training and skills, could lead to a melting pot of political instability and social unrest.thumb.php

Africa needs to be able to create its own jobs.  Currently Africa lacks an industrial and manufacturing base that produces products for export.  Africa is experiencing a jobless growth and according to a McKinsey & Company study the African continent loses 20,000 skilled workers to developed economies every year because of the lack of skilled jobs and opportunities.

There is also the issue of local workers who are upset with the return of expats to their countries.  They feel the expats are taking the best jobs and opportunities and were not there during the harshest of times.  There is a growing sense of inequality and many feel they lack access to the same opportunities as their expat colleagues who have been educated and have worked in the West.  Many feel Western companies would prefer to hire expats rather than locals if given the opportunity.

There are solutions for these problems.  Africa needs to have youth unemployment treated as a core strategic objective of development policy.  There needs to be favorable and flexible labor laws, a focus on the investment in people through education and training, the creation of a favorable and operational business environment that is attractive to businesses and investors, and a creation of wealth rather than just a redistribution of wealth.  This is of high importance and something SSA needs to get right.  McKinsey & Company predicts by 2040 that Africa will have the largest workforce in the World surpassing India and China.  So the opportunity for growth is great, but the opportunity for risk is also great.

Anthony Bio for Blogs

 

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.

Anthony Bio for Blogs