Africa’s rising middle class

Business In Africa Pays - Ghana

Meet Your Nichewww.meetyourniche.com

Introduction

Meet Your Niche

www.meetyourniche.com

A connection and consultancy platform connecting companies to insights, ideas and people

Working with key local trusted advisors across key regions in Latin America, Sub Saharan Africa, the Middle East and SE Asia.

Insights on how to meet your niche, trends, competitors and culture…

• NICHE – who are they types of people looking to buy in your selected region and what are their characteristics

• TRENDS – what are the external factors affecting these people which might affect how you develop your product or service - governmental, political, consumer etc

• COMPETITORS – who is already on the ground in your region of choice and what are they doing? What will be your USP?

• CULTURE – it’s not so easy to drop a product or service into a new region without identifying language differences, cultural nuances and be sensitive to local tastes

Africa’s rising middle class

• What does middle class mean?

• European standards vs. African

• What issues/trends arising from a rising middle class?

The Figures

Facts versus Real Life• 46% of Ghanaians are now classed as middle classed compared to the African average of 34%

• According to African Development Bank - 27% - $2-4 dollars – known as the floating class - fragile always at risk of falling below poverty line

• The diaspora now transmits more money into Africa than foreign direct investment, aid to Africa, and portfolio investment in stock market and bond markets. That supplemental income from the diaspora is enabling that floating middle class to consume more.

• Many Africans are optimistic about their economic future; 84 percent say they will be better off in two years.

• Internet use is far greater than anticipated—more than 50 percent of urban Africans say they have accessed the Internet in the last four weeks, on par with reported usage in Brazil and China

• African consumers demand quality products and are brand conscious, belying the view that the continent is a backwater where companies can sell second-rate merchandise.

• African consumers want the latest fashions and a modern shopping experience.

What trends are arising?

• Urbanisation

• Expanding workforce

• The rise of the African consumer

Urbanisation

• In 1980, just 28 percent of Africans lived in cities. Today, 40 percent of the continent’s one billion people do—a proportion roughly comparable to China’s and larger than India’s.

• By 2030, that share is projected to rise to 50 percent, and Africa’s top 18 cities will have a combined spending power of $1.3 trillion.

Young Population• A youthful population is certainly fertile

ground for innovation, dynamism, and creativity. Yet everything will depend on generating enough jobs to satisfy the aspirations of the rising generation.

• This calls for a single-minded focus on improving education—and, in particular, on the potentially massive effects of technological change on employment. Looking ahead, factors such as the internet revolution, the rise of smart machines, and the increasing high-tech component of products will have dramatic implications for jobs and the way we work. Yet governments are not thinking about this in a sufficiently strategic or proactive way.

Christine Lagarde – The Dimbleby Lecture

• Africa at the opposite end of the spectrum compared to ageing countries like Europe, UK and Japan – a youthful continent

• The continent has more than 500 million people of working age. By 2040, their number is projected to exceed 1.1 billion—more than in China or India—lifting GDP growth.

• Add in the rise of entrepreneurship and the need for the youth to become job creators

• Africa’s middle class is strongest in countries that have a robust and growing private sector as many middle class individuals tend to be local entrepreneurs.  The establishment of stable, secure, well-paid jobs, and higher levels of tertiary education further drives middle class growth

The rising consumer

• Not only is Africa’s middle class crucial for economic growth, but they are essential for the growth of democracy and will play a key role in rebalancing the African economy.

• Consumer spending by the middle class has reached an estimated $680 billion in 2008 – or nearly a quarter of Africa’s GDP. By 2030 this figure will likely reach $2.2 trillion and Africa will comprise about 3 per cent of world-wide consumption.

• By 2014, the number of such households could reach 106 million. Africa already has more middle-class households (defined as those with incomes of $20,000 or above) than India.

What are the opportunities?

What are the opportunities

- Luxury Goods food and drink

After Asia and part of Europe and US, countries in Sub Saharan Africa as consuming congac  

- Variety of consumer durables - altered and tweaked to the African tastes - perhaps shame a few examples of how to do this properly

http://blog.cognac-expert.com/african-cognac-market-nigeria-south-africa/

http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/The%20Middle%20of%20the%20Pyramid_The%20Middle%20of%20the%20Pyramid.pdf

• Quality retail infrastructure - frustrating for goods in but also opportunity for property devs the Poor retail infrastructure: a challenge and opportunity

• One of the problems that international brands may face is finding suitable retail space. In most cases, shopping malls and supermarkets only exist in large urban areas in Africa. “This seriously hampers efforts of international consumer goods companies to communicate and distribute to a wide audience,” explained Hodgson. “However, construction companies and property developers should not overlook the vast opportunities presented by this infrastructure shortage.”

•Financial offerings - mortgages, loans for business or personal and credit cards - as well as proper financial management education to increase opportunity for savings

•Education and jobs  - Africa has a youthful population of over a billion people. This population is expected to double by 2050, and is urbanising rapidly with an expanding working age population

•There is an opportunity for private schools to go above and beyond state school offerings, a push for more vocational and academic centers to cultivate create

•Personal development and soft skills

- technical competence, quantitative, numeracy skills, career development in institutions

- Application form theory into practice isn’t there

Conclusion - Key Takeaways

1. Develop local and relevant high quality product

2. Identify the right price point

3. Focus where it matters for your business

4. Build a strong brand

5. Be specific with your target market

Meet Your Nichewww.meetyourniche.com

Local and relevant products and services

• http://trendwatching.com/africa/trends/hyperactivebrands/

• http://trendwatching.com/africa/trends/5trends2014/

• http://trendwatching.com/africa/trends/seedfun/

Identify the right price point

Focus where it matters for your business

Cities offer the best opportunity: urban Africa is forecast to contribute nearly 40 percent of GDP growth. But companies may be wise to bypass high-profile megacities, such as Cairo, Johannesburg, and Lagos, for midtier cities, like Abidjan and Rabat, which are

more accessible, have less competition, and offer better profit margins http://www.mckinsey.com/insights/economic_studies/whats_driving_africas_growth

Build a strong brand

Be specific with your target market