JOHANNESBURG – Nowadays, Africa’s economic potential – and the business opportunities that go with it – is widely acknowledged. Poverty and unemployment are still more widespread than in other emerging markets, but accelerating growth since 2000 has made Africa the world’s second-fastest-growing region (after emerging Asia and equal to the Middle East).
With rapid economic growth have come more prosperous consumers – and vice versa: 45% of Africa’s total GDP growth in the 2000’s (before the financial crisis erupted in 2008) came from consumer-related sectors of the economy. It is expected that, by 2020, more than half of African households – almost 130 million – will have discretionary income to spend (or save), up from 85 million today.
Moreover, Africa has the world’s fastest-growing population – and the youngest, with more than half under 20 years old, compared to 28% in China. The United Nations estimates that the continent will account for more than 40% of global population growth through 2030, with the working-age population expected to surpass that of China by 2040.
Given these trends, the continent’s consumer industries are expected to grow a further $410 billion by 2020 – more than half the total revenue increase that all businesses are expected to generate in Africa by the end of the decade. But, for many companies entering Africa or seeking to expand there from a local base, the challenge now is to obtain a better understanding of the market and its consumers.