Market Opportunities and Trends for Exports in the...

November 2017

Market Opportunities and Trends for Exports in the African Continent

© 2017 Glasgow Consulting Group

Vishal Pandey

Director – MENA

Glasgow Consulting Group

Relevant experience

• Vishal is a Dubai based Growth + Competitive Strategy expert who has lived and worked in the UK, India and across

the Middle East. He has over 15 years of experience across the Middle East, Africa and the Indian sub-continent in

consulting, market research and sales & marketing across a diverse set of industries.

• Previously with Deloitte Consulting’s Dubai offices, he was part of a team responsible for strategy and operations

assignments across the Middle East and North Africa region. He has also worked for a Dubai-based regional market

research and advisory firm in addition to working with Colliers International, Oberoi Hotels & Resorts and Taj Hotels

Resorts & Palaces.

• Vishal has worked on hundreds of b2b research + strategy engagements mostly across MENA and South Asia

region. He is a recognized Growth + Competitive Strategy expert and has been numerously interviewed on the

subject. He contributes frequently to several regional and global publications in the areas of growth and competitive

strategy, policy, retail and real estate. Vishal holds a MSc in Real Estate and Regeneration from the University of

Glasgow, a UNWTO Themis degree in Tourism and International Cooperation for Development from The George

Washington University and a Degree in Hotel Management. He is also often invited to be a speaker at key Middle

East and South Asian foreign investment, innovation, growth strategy and retail industry conferences.


Content

2

Importance of Research

Country Snapshot

Sector Overview

© 2017 Glasgow Consulting Group 3

Topics

1

2

3

4

5

6

7

8

9

10

Political stability and country attractiveness

What is competition doing

Localising the product

Risks in the business

Know your customer

Undertake a feasibility and Return on Investment (ROI)

Scale of growth

Manpower availability and quality

Legal Aspect

Pricing and positioning


Political stability

and country

attractiveness

1


Source: GCG Research

5

Political Stability and Country Attractiveness

Political

Technological

Legal

Economic

Social

Environmental

- Tax laws/breaks for MS and clients (e.g. EOC situated in Dublin)

- Business cycle (willingness of companies to invest in software)- Disposable income (effects expenditure on home PCs and software)- Exchange rates

- Level of IT education (willingness to use/buy/upgrade software)- Income distribution (affordability of home PCs)- Lifestyle (importance of PCs to the workplace and home)

- Innovation - Developments in Linux- Speed of obsolescence

- Competition laws (e.g. Netscape case among others)- Foreign trade regulations

- Impact of Microsoft investments on the environment – ethical policy of cash management division

- Consumer resistance of global corporation

• It is often possible to identify many of the potential PESTLE factors for an organisation, with very limited

knowledge of the market in which it operates.

• SOME FACTORS WHICH MAY EFFECT MICROSOFT



6

Sample Analysis

Sample Parameters

• Market Size

• Country Risk

• Market Saturation

• Time Pressure

• Income levels

• level of development

• Economic structure

• Unemployment

• Corruption

• Rule of Law and Government

• Finance development

• Economic development

• economic freedom

• Globalization

• Internal and External balances

Political Stability Index Global Retail Development Index

Company

Parameters


Who are the

competitors and

what are they

doing

2



Competitors

8

Competitive Analysis Framework

Competitor Profile

Objectives

Growth rate

Market share

Technology

Finance

Organizational Structures

Strategies

Current products and services

Location of company

Type of customers

Type and name of supplier

Advertising or marketing campaigns

Capabilities & Resources

What is the competitor capable of?

What is it not capable of?

Refer to SWOT analysis

Reveals how companies CAN act

Assumptions

Past experience with a product

Industry Trends

Future beliefs about a competitor, or

Regional Factors

What drives the competitor What is the competitor capable of doing?



Demand and Supply

9

Demand and Supply Relation

5

Pri

ce

Quantity

Supply

Demand

Equilibrium

Determinants of Demand• Product’s Own Price

• Consumer Income

• Prices of Related Goods

• Tastes

• Consumer Expectations

• Population

• Advertising0

Determinants of Supply• Product’s Own Price

• Prices of Related goods

in Production

• Input prices

• Technology

• Expectations

• Number of sellers

• Taxes and subsidies



Marketing Sizing

10

Potential Market Opportunity

Total Addressable Market

Segment Addressable Market Expected Share of

Addressable Market

4 ways to think about market size. Knowing the level of detail necessary to address your concerns is key to

properly scoping the problem and approach


Source: GCG Research, AT Kearney

11

Sample Analysis

“Bayt.com” Analysis

Roadmap Clients

Geography and Influence

Site Visitors

Profile

Sample Pricing


Localising the

product

3



Localising the Product

13

Localization Strategy

Local taste and preference

• Adopt local taste and food preference

Local language branding

• Use local language in branding

• Ensuring brand translates well into other languages, consider which colours are favoured in various markets

Marketing Language

• Modify your marketing language to make it clear that you’re international

Focus on Localization, Not Just Translation

• To truly be an expert at localization, your company must work to adapt its business to the culture of each of

its individual target markets



Sample Analysis

14

Tim Horton Analysis

Tim Horton - Canada Tim Horton - UAE


Pricing and

Positioning

4



Pricing

16

Price Analysis Techniques

Comparison of Competitive Bids

By asking three or more suppliers of their prices for the same product, we can determine if a particular price is

reasonable. However, this does not preclude total cost analysis

Comparison of Prior Quotations

This is particularly helpful when timing of the acquisition is critical and solicitation of the competitive quotes would

delay the procurement. An explanation of why comparison of prior quotations was used must accompany this

procedure

Comparison of Published Price List

This method should only be used for materials that are sufficiently similar to items or services are available to the

general public and whose price would appear in a published price list

Prices Set by Law or Regulation

Prices are set by a law or regulation. When this occurs, there is usually a "pronouncement" of some form type that

references the pricing structure

Rough Yardstick Comparisons

This technique uses a rough comparison between like items based on measurable similarities such as price per

pound, cost per horsepower or price per test sample



Positioning

17

Porter’s Generic Strategies

Cost leadership Differentiation

Cost focus Differentiation focus

Co

mp

eti

tive

Sc

op

e

Lower cost Differentiation

Bro

ad

ta

rge

t

Focus strategies

Narr

ow

ta

rge

t



Sample Analysis

18

Pricing and Positioning Analysis


Risks in the

Business

5



Risks in the Business

20

Risk factors

Growth forecast

Assessment of variance (%) from baseline forecast for growth in 2017

Sovereign risk level

Country risk indicator comprising credit risk, investment expropriation risk and political stability risk

Corruption risk

Based on Transparency International Index of level of corruption

Food and beverage investment restrictiveness

Index of restrictions on foreign ownership in the food manufacturing sector, covering equity restrictions,

screening/approval restrictions, operational restrictions and restrictions on employment of foreign personnel

Quality of investor protections

Index of the quality of protections for investors, comprising directors’ liability, shareholder lawsuits, extent of

disclosure, and legal protection for investment



Sample Analysis

21

Sample Risk Mapping


Know your

customer

6



Know your Customer

Customer Analysis

Customer

Buying

behaviour

Needs and

Desires

Attracting

Your

Customer

Trends

Demography

New vs

returning

customers

Customer segmentation

Sample:

Age group

Nationality

Affect the customers buying

behaviour

• Social

• Psychological

• Personal

Differentiate between

customer needs and desires

The best way to attract new

customers and keep them

coming back to you

Emerging customers behaviour

towards specific product

One of the most important

analysis for your

organization which depicts

your quantitative success is

the new vs returning

customers matrix



Sample Analysis

24

Al Mandoos Analysis

UAE Customers KSA Customers


Undertake a

Feasibility and

Return on

Investment (ROI)

7



Market and Feasibility Study

26

• Conduct a Debt Capacity Study

• Identify Key Service Lines

• Establish a Coordinated Timeline

• Build Realistic Revenue Projections

• Recognize Staff as a Key Expense

Reasons to conduct a financial feasibility study

• Gives focus to the project and outline alternatives

• Narrows business alternatives

• Identifies new opportunities through the

investigative process

• Identifies reasons not to proceed with the project

• Enhances the probability of success by addressing

and mitigating factors early on that could affect the

project

• Provides quality information for decision making

• Provides documentation that the business venture

was thoroughly investigated

• Helps in securing funding from lending institutions

and other monetary sources;

• Helps to attract equity investment

Best Practices in Conducting a Feasibility Study



Return of Invest (ROI)

27

Four key factors for success

Articulate precisely your objectives in managing ROI

and optimize their execution

Consider carefully your management objectives by

considering two lenses to view the portfolio:

Realizing ambitions, which requires clarity on

targets, strategic objectives and roadmaps; and

Optimizing value which requires a balanced set of

portfolio measures

Clarify accountabilities and governance approach

Put in place clear accountabilities and governance

systems for managing ROI, such as empowered

cross-functional bodies, single-point responsibilities

for valuation and suitable Control functions in order

to ensure consistency of approach

Take account of cannibalization and the “cost of doing

nothing”

Ensure that the value impact of new innovations on

existing core business is properly considered, both

in terms of possible competition with core products,

and potential deterioration of core business if the

innovation is not implemented

Use consistent logic and match valuation methodologies

with levels of risk and uncertainty across the portfolio

Use ‘single truth’ key data sources, consistent methods,

shared ownership across functions, post-launch feedback,

and tailor the approach to the scale of the investment. Use

assumption-focused approaches such as Discovery-

driven planning to cover high uncertainty parts of the

portfolio, and use external comparisons as reality checks



Sample Analysis

28

Sample of Financial Analysis


Scale of Growth

8



Scale of Growth

30

Scaling up

Growth and sales goals

What is the master franchisors commitment to the principal – how many stores and in how many years

Franchising strategy

What is the franchising strategy

Financial Investment and Resources

What are the investment commitments

A Commitment To Training & Standardization

Keeping a brand live and kicking

Coordinated Action Through Conscious Leadership

Role of leadership


Manpower

availability and

quality

9



Manpower

32

Manpower planning

High turnover of staff business

What do we do to hire and manage the best of staff

Attracting talent

How do we attract the best of talent

Is there a Franchisors commitment to supply some staff

What's the best way to manage it

Training & Development

Who to make staff as brand ambassadors


Legal Aspect

10



Legal Aspect

34

Understand the Country Business Regulation

Register a Fictitious Business Name/DBA

Create localized commercial agreements

File for Trademark Protection

Documents required for business licence

Review industry-specific regulations to ensure compliance and certifications are obtained if needed

Open a Bank Account to Start Building Business Credit

Taxation

Learn About Employee Laws



Business Format

35

Types of Business Format

Capabilities & Resources

What is the competitor capable of?

What is it not capable of?

Refer to SWOT analysis

Reveals how companies CAN act

Sole Proprietorship

Partnerships

Corporation

Limited Liability Company


Content

36


Country Snapshot

Sector Overview


Introduction to the African Import and Export Market

37

Introduction

Africa is the world's second largest and second most-

populous continent, Asia being the first. The continent

includes Madagascar and various archipelagos.

It contains 54 fully recognized countries, nine territories

and two facto independent states with limited or no

recognition.

Africa's average population is the youngest amongst all

the continents. The median age in 2012 was 19.7,

when the worldwide median age was 30.4 Algeria is

Africa's largest country by area, and Nigeria is its

largest by population.

The IMF projected Africa to be the world’s second

fastest growing region from 2017 to 2020, with Africa

being home to 6 of the 10 fastest growing countries in

the world.

According to the Mckinsey Global Institute forecast, the

expected growth for Africa is massive and exponential.

The business spending in Africa is expected to grow

from USD 2.6 Trillion to USD 3.5 Trillion by 2025.


Five Key Sub-Saharan African Consumer Segments

38

Source: Accenture Analysis


Top Trade Destinations in Africa

39

South Africa Tanzania

Egypt Angola

Kenya Namibia

Algeria Botswana

Morocco Senegal

Nigeria Zimbabwe

Ethiopia Cote d'Ivoire

Tunisia Mali

Ghana Madagascar


South Africa

40

Top Import Products Top Export Products

• Crude Petroleum

• Cars

• Refined Petroleum

• Platinum

• Cars

• Coal Briquettes

73.7 69.1 33 33 294 13.2k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

South Africa is the 33rd

largest export economy in

the world and the 49th

most complex economy

according to the Economic

Complexity Index (ECI). In

2016, South Africa

exported $69.1B and

imported $73.7B, resulting

in a negative trade balance

of $4.57B. In 2016 the

GDP of South Africa was

$294B and its GDP per

capita was $13.2k.

China a1 US2 Germany3

China1 Germany2 US3

Top Export Destinations

Top Import Origins

South Africa


Algeria

41


• Wheat

• Packaged Medicaments

• Cars

• Petroleum Gas

• Crude Petroleum

• Refined Petroleum,

47 29.9 43 46 156 15.1k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Algeria is the 46th largest

export economy in the

world and the 73rd most

complex economy



2016, Algeria exported

$29.9B and imported $47B,

resulting in a negative

trade balance of $17B. In

2016 the GDP of Algeria

was $156B and its GDP

per capita was $15.1k

Italy a1 Spain2 US3


China1 France2 Italy3

Top Import Origins

Algeria


Egypt

42



• Petroleum Gas

• Cars

• Gold

• Crude Petroleum


57.7 22.4 39 52 336 11.1k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Egypt is the 52nd largest


world and the 51st most

complex economy



2016, Egypt exported

$22.4B and imported

$57.7B, resulting in a

negative trade balance of

$35.3B. In 2016 the GDP

of Egypt was $336B and its

GDP per capita was $11.1k

UAE a1 Saudi

Arabia2 Italy3

China1 Germany2 Russia3


Top Import OriginsEgypt


Morocco

43



• Cars

• Wheat

• Cars

• Insulated Wire

• Fertilizers

41.5 22.6 46 51 101 7.84

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Morocco is the 51st largest


world and the 71st most

complex economy



2016, Morocco exported

$22.6B and imported



$18.9B. In 2016 the GDP

of Morocco was $101B and

its GDP per capita was

$7.84k

Spain a1 France2 Italy3


Spain1 France2 China3

Top Import Origins

Morocco


Nigeria

44




• Cars

• Petroleum

• Crude Petroleum


39.5 47.8 53 49 481 6k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Nigeria is the 49th largest


world and the 107th most

complex economy



2015, Nigeria exported

$47.8B and imported


positive trade balance of

$8.26B. In 2015 the GDP

of Nigeria was $481B and

its GDP per capita was $6k

India a1 Spain2 South Africa3

China1 US2 Netherlands3


Top Import Origins

Nigeria


Ethiopia

45



• Delivery Trucks


• Coffee

• Dried Legumes

• Gold

19.1 1.71 57 91 72.4 1.73k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Ethiopia is the 91st largest



complex economy



2016, Ethiopia exported

$1.71B and imported



$17.3B. In 2016 the GDP

of Ethiopia was $72.4B and


$1.73k.

US1 Saudi Arabia2 Germany3

China1 India2 US3


Top Import Origins

Ethiopia


Tunisia

46



• Petroleum Gas

• Cars

• Insulated Wire

• Crude Petroleum

• Non-Knit Active wear

18.8 12.9 59 59 42.1 11.6k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Tunisia is the 59th largest



complex economy



2016, Tunisia exported

$12.9B and imported



$5.89B. In 2016 the GDP

of Tunisia was $42.1B and


$11.6k

France a1 Italy2 Germany3

France1 Italy2 Germany3


Top Import OriginsTunisia


Ghana

47


• Cars

• Delivery Trucks

• Cement

• Gold

• Cocoa Beans

• Coconuts

11 10.5 69 64 42.7 4.29k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Ghana is the 64th largest



complex economy



2016, Ghana exported

$10.5B and imported $11B,

resulting in a negative

trade balance of $508M. In

2016 the GDP of Ghana

was $42.7B and its GDP


Switzerland1 India2 UAE3


China1 US2 UK3

Top Import Origins

Ghana


Tanzania

48



• Palm Oil


• Gold

• Raw Tobacco

• Coconuts

7.85 4.74 76 77 47.4 2.79k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Tanzania is the 77th


the world and the 83rd




2016, Tanzania exported

$4.74B and imported



$3.11B. In 2016 the GDP

of Tanzania was $47.4B

and its GDP per capita was

$2.79k

Switzerland1 India2 South Africa3

China1 India2 South Africa3


Top Import Origins

Tanzania


Kenya

49



• Cars


• Tea

• Cut Flowers


17.6 5.3 77 107 63.4 3.09k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Kenya is the 107th largest



complex economy



2015, Kenya exported

$5.25B and imported



$12.3B. In 2015 the GDP

of Kenya was $63.4B and


$3.09k.

USA1 Uganda2 Netherlands3


China1 India2 Japan3

Top Import Origins

Kenya


Angola

50


• Special Purpose Ships

• Excavation Machinery

• Cars

• Crude Petroleum

• Diamonds

• Coal Tar Oil

16.9 34.2 80 58 102 7.39k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Angola is the 58th largest


world. In 2015, Angola

exported $34.2B and


in a positive trade balance

of $17.3B. In 2015 the

GDP of Angola was $102B


$7.39k

China a1 India2 US3


South

Korea1 China2 Portugal3

Top Import Origins

Angola


Namibia

51



• Diamonds

• Delivery Trucks

• Diamonds

• Copper Ore

• Non-fillet frozen fish

6.54 4.52 80 78 10.3 10.6k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Namibia is the 78th largest



complex economy



2016, Namibia exported

$4.52B and imported



$2.02B. In 2016 the GDP

of Namibia was $10.3B


$10.6k

Switzerland1 South

Africa2 Botswana3


South

Africa1 Botswana2 China3

Top Import Origins

Namibia


Botswana

52


• Diamonds



• Diamonds

• Nickel Mattes

• Insulated Wire

6.1 7.32 82 71 15.3 16.7k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Botswana is the 71st


the world and the 82nd




2016, Botswana exported

$7.32B and imported


positive trade balance of

$1.22B. In 2016 the GDP

of Botswana was $15.3B


$16.7k

Belgium1 India2 South Africa3

South

Africa1 Namibia2 Canada3


Top Import Origins

Botswana


Senegal

53



• Crude Petroleum

• Rice

• Gold

• Non-Fillet Frozen Fish

• Cement

5.5 2.5 84 84 14.8 2.57k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Senegal is the 84th largest


world and the 63rd most

complex economy



2016, Senegal exported

$2.54B and imported



$2.93B. In 2016 the GDP

of Senegal was $14.8B


$2.57k.

Mali1Switzer

-land2 India3

China1 France2 India3


Top Import Origins

Senegal


Zimbabwe

54



• Corn


• Raw Tobacco

• Gold

• Nickel Ore

5.2 2.8 85 83 16.3 2.01k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Zimbabwe is the 83rd






2016, Zimbabwe exported

$2.83B and imported



$2.37B. In 2016 the GDP

of Zimbabwe was $16.3B


$2.01k

South

Africa1

Mozam-

bique2 UAE3


South

Africa

1 China2 India3

Top Import Origins

Zimbabwe


Mali

55



• Cement


• Gold

• Prepared Cotton

• Sheep & Goats

3.8 2.84 92 82 14 2.12k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Mali is the 82nd largest



complex economy



2016, Mali exported

$2.84B and imported



$953M. In 2016 the GDP of

Mali was $14B and its GDP


South

Africa1 Switzerland2 UAE3

Senegal1 France2 China3


Top Import Origins

Mali


Madagascar

56



• Rice


• Vanilla

• Raw Nickel

• Cloves

2.79 2.18 96 85 10 1.51k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Madagascar is the 85th


the world and the 81st




2016, Madagascar

exported $2.18B and


in a negative trade balance

of $609M. In 2016 the GDP

of Madagascar was $10B


$1.51k.

France1 US2 Germany3


China1 France2 Mauritius3

Top Import Origins

Madagascar


Cote d'Ivoire

57


• Crude Petroleum

• Rice


• Cocoa Beans


• Cocoa Paste

9.4 12.7 101 75 31.8 3.51k

Import

($ Bn)

Export

($ Bn)

Import

Rank

Export

Rank

GDP

($ Bn)

GDP per

capita ($)

Cote d'Ivoire is the 75th






2015, Cote d'Ivoire

exported $12.7B and

imported $9.4B, resulting in

a positive trade balance of

$3.29B. In 2015 the GDP

of Cote d'Ivoire was $31.8B


$3.51k

Netherlands1 US2 France3


Nigeria1 France2 China3

Top Import Origins

Cote

d’lvoire


Content

58


Country Snapshot

Sector Overview


Top Sectors in Africa

59

Fish

Sugar

Automobile

Computers and other IT products

Clothing and Fashion

Cereals & Agricultural Products

Instant Foods

Energy Drinks

Pharmaceuticals

Stationary & Paper

Broadcasting Equipment


Fish – Trends

60

• The AFRICAN continent is an important market for fish, accounting for around 11% of

global volume of imports

• In value terms, until 2010, Africa imports were around 3.8% of the global value

Highlights

Overview

• Imports of dried, salted and smoked fish has remained low, as the demand is likely met through domestic

production which is processed and consumed locally

• Tilapia is one of the most exploited inland water fish species in tropical to sub-tropical ecosystems of

Sub-Saharan which has huge demand owing to the supply gap, population rise, and increased knowledge of the

“goodness” of tilapia products

• Fresh, chilled and frozen fish accounts for close to 90% of imports on average.

• The most commonly imported fish has been fresh, chilled and frozen mackerel accounting for about 40%

• Egypt the biggest aquaculture producer of tilapia in the whole continent but it has been excluded from the

analysis as it falls outside Sub-Saharan Africa


Fish – Opportunities

61

Source: International Trade Centre

Overview African fish importers of 2016:

$450.3

million

$422.2

million

$296.8

million

$295.8

million

$282.2

million

$246.5

million

$157.2

million

$125.8

million

$115.7

million

$91.4

million

Nigeria

Egypt

Côte

d’Ivoire

Mauritius

Cameroon

South

Africa

Morocco

Ghana

Benin

Seychelles

• Tanzania is looking to other countries to import

fish which includes, Spanish mackerel, king

mackerel, blue fin tuna, albacore tuna and squid

• China and Malaysia are already significant fish

importers to Tanzania

• The national government knows that demand for

fish exceeds domestic production and the Ministry

of Agriculture, Livestock and Fisheries of Tanzania

have stated the annual shortage of fish at 400,000

tons

• Another country that calls for an opportunity is

Nigeria

• The major problem facing the Nigerian fishing

industry is in its inability to satisfy the demand for

tasty yet inexpensive animal protein

• Nigeria's marine biological resources are

limited and the Gulf of Guinea is among the

poorest in the whole of West Africa


Sugar – Trends

62

Source: BMI Research

• Africa is not the largest producer

of sugar but it embraces one of

the best production facilities

• While Africa is a net importer of

sugar, there are five African

countries that are consistently

ranked amongst the lowest cost

sugar producers in the world,

which are Zimbabwe, Zambia,

Malawi, South Africa and

Swaziland

Highlights

Sugar production and consumption(‘000 tonnes)

494

735

290 317 310

490525

833

550

322 315

550532

884850

342323

607

KenyaProduction

KenyaConsumption

EthiopiaProduction

EthiopiaConsumption

TanzaniaProduction

TanzaniaConsumption

2013 2016f 2019f

Overview

• Sugar price has steadily risen across East Africa, which has caused dissent amongst consumers and

producers

• In Uganda, it has risen from $0.98 to settle between $1.21 and $1.41 per kilograms over the past year, with

producers blaming the high cost of producing sugarcane for the increase

• Sugar productivity is higher in the south east of the continent, given better climatic conditions for sugarcane

growing

• The region also exports some sugar to the European Union in favorable trade deals


Sugar – Opportunities

63


Overview African sugar importers of 2016:

$783

million

$618.4

million

$567.6

million

$490.3

million

$431.5

million

$288.9

million

$222.5

million

$205.9

million

$201.2

million

$175.8

million

Algeria

Nigeria

Egypt

Morocco

South

Africa

Somalia

Kenya

Ethiopia

Djibouti

Angola

• Although the continent of Africa is a net importer of

sugar, it includes countries that are mainly

exporters, e.g. Zambia and South Africa

• The export success has come about in part as a

result of preferential access to the European market

for Least Developed Countries in particular

• However, reforms in the EU sugar policy, which

include reductions in the EU reference price and

the elimination of EU production quotas by 2017

present a challenge to the sector in the future,

with a likely re-orientation of trade to other African

countries, and an increase in domestic demand. In

the year 2016, the African continent imported USD

5.5 billion worth of sugar


Automobile – Trends

64

Source: Deloitte Research

• The rapidly growing African

continent attracts a great

number of automobile

companies and dealers

• The high rate of economic

growth and urbanization has

led to a subsequent rise in

income levels

Highlights

Vehicles in use in Africa, 2014Overview

South Africa, 22%

Algeria, 12.10%

Egypt, 12.10%Nigeria, 8.40%

Morocco, 8%

Libya, 6.10%

Congo, 4.30%

Tunisia, 3.30%

Kenya, 2.90%

Ivory Coast, 2.10%

Rest of Africa, 18.10%

42.5 Million Vehicles in use

• The automobile manufacturing is not a very big industry in the continent and the few that exist focus

their business on high-end buyers which leaves a gap in the market for inexpensive used vehicles for

the bigger percentage of buyers

• Japan and South Korea had dominated the automobile market in Africa for long, however, in recent

years there has been a penetration of USA and Chinese automobile brands too

• The market is still very ripe for harvest and the opportunities are endless considering the fact that the percentage

of vehicle ownership is still very low


Automobile – Opportunities

65


Overview African automobile importers of 2016:

$3,300

million

$2,500

million

$2,000

million

$917

million

$594.1

million

$460.4

million

$426

million

$349.4

million

$319.4

million

$188.5

million

South

Africa

Egypt

Morocco

Algeria

Tunisia

Nigeria

Kenya

Ethiopia

Ghana

Mauritius

• Due to limited disposable income and the high cost

of new vehicles, second-hand vehicles dominate

the continent’s automotive retail sector which

are mainly imported

• Based on a market research conducted by GCG

for an automotive company it was estimated

that in African countries (Ethiopia, Kenya,

Nigeria) at least 8 out of 10 imported vehicles

are used vehicles

• For instance, one of the highest ranking products

on the list of items that can be imported to Nigeria

are vehicles

• This is because although almost 50% of the middle

class households in the country still do not own a

car, they should be in a position to change that

within the next few years according to current

economic trends

• Africa imported USD 13.6 billion worth of cars in

the year 2016


Computers and other IT products – Trends and Opportunities

66

• Africa has one of the highest rates of growth in the market for IT products worldwide

• As a result, multi-national manufacturers have concentrated their efforts on the market,

producing in great quantities items specifically targeting the African market

Highlights

Overview

• The UAE has the largest share of the export market and a big advantage being its strategic position

relative to the African continent that implies low transportation costs

• Furthermore, the regulatory requirements governing the trade over both countries have served to favor the cycles

of demand and supply

• But increasingly IT in Africa today is being used as it should be for the importation and production of vitally

needed information

• Information represents power in both the economic and political spheres, yet it has been estimated that

at least 90% of data on Africa may reside on databases in the West

• Another vastly unexploited export opportunity to Africa is in the sale of IT products. This has largely

been the result of an ongoing computerization trend that has taken a hold throughout the

continent

• South Africa’s computer market for instance is valued at more than $1 billion

• A big reason being that many organizations are changing from the traditional desktops to the more

personal and portable laptops and ultra-books.


Clothing and Fashion – Trends

67

Source: Mckinsey & Co.

• Although Africa is home to

seven of the fastest growing

economies in the world ,

African fashion industry

currently contributes only a

small fraction of what it is

capable off to the continent’s

GDP

• According to the UN and

UNICEF Africa will have the

largest labor force in the world

in the next 3-4 decades

Highlights

Interest to the global buyersOverview

• New imported clothes have gained popularity as a status symbol and are a reserve of the continent’s

wealth with countries like China providing cheaper options of clothing for the general public

• A number of European Companies H&M, Primark, and Tesco – began sourcing some of their garments from

Ethiopia

• Also contributing to the buzz is the renewal of the African Growth and Opportunity Act (AGOA), which

gives certain countries in sub-Saharan Africa duty-free access to the US market

• Apparel buyers today are sourcing basic, large-volume items from Ethiopia, but Ethiopia accounts for a mere

0.01 percent of total apparel exports, according to the World Trade Organization

• The above chart shows that among sub Saharan African countries, Ethiopia and Kenya are of biggest interest to

the global buyers

28

13

13

10

5

8

5

5

5

5

3

8

5

3

3

8

3

5

5

3

Ethiopia

Kenya

Mauritius

Lesotho

Madagascar

Uganda

Tanzania

Botswana

Egypt

South Africa

Swaziland

Start Sourcing Increase Value


Clothing and Fashion – Opportunities

Overview South Africa’s top 10 destination market, 2013

R125.7

million

R115.7

million

R108.4

million

R94.2

million

R62.6

million

R59.0

million

R54.8

million

R37.1

million

R33.7

million

R22.6

million

Zimbabwe

Zambia

Mozambique

United

Kingdom

Angola

Democratic

Republic of

Congo

United

States

United

Arab

Emirates

Nigeria

Kenya

• Secondhand clothes have also for a long time

had a dominant role in this trade providing an

affordable alternative for low-income earners

• Second-hand clothing in Rwanda, better known

as chagua is sold in open air markets, shops, and

by hawkers along the streets

• More than 70% of clothes donated globally end

up in Africa, according to the nonprofit Oxfam

• Rwandans spend more than USD 100 Million

importing clothing, both second hand and new

• However, in 2016, the governments of the East

African Community, proposed a ban on import of

second hand clothes to their regional trade bloc

which would outlaw donations of clothing from

wealthier countries by 2019

• The law has not been passed yet

• South Africa's clothing industry has suffered

due to challenging manufacturing conditions

and costs, with the local industry unable to

compete with the influx of cheaper clothing

from China and other countries

Source: Quantec

68


Cereals & Agricultural Products – Trends

69

• Africa imports 20% of its cereal needs, despite having a quarter of the world’s arable

land

• In 2003, most African states signed the Maputo Declaration, which commits

governments to allocating at least 10% of their budget to developing agriculture, but only

Burkina Faso, Malawi, Mozambique, and Zimbabwe, had met the quota in 2014

Highlights

Overview

• There has been an interesting change in the ranking of the top five agricultural importing countries

• In 2016 Egypt (17%) and Algeria (12%) were still the two main importing countries but South Africa became the

third largest African agricultural importer, importing 10 percent of total African agricultural products for the year

• Agricultural imports increased by 9 percent between 2001 and 2016, which can be attributed to an increase

in the demand for cereals, animal and vegetable fats & oils, sugar & confectionery and meat & edible offal

• These products are mainly imported from Brazil, France and Argentina

• Only two products showed decrease in imports: Finishing agents (-3%) and vegetable plaiting materials (-3%)

• In 2016 the main importers of cereals were Egypt, Algeria, Nigeria and South Africa

• These products were mainly wheat and muslin and maize and corn imported from Brazil, Argentina, France,

Canada, Ukraine and Russia and rice imported from Thailand and India


Cereals & Agricultural Products– Opportunities

70

Overview Top wheat importers in the world(in ‘000 tonnes)

11,500

9,100

8,100

7,300

6,700

5,800

5,700

5,500

4,500

4,300

Egypt

Indonesia

Algeria

Turkey

European

Union

Brazil

Japan

Iran

Mexico

Nigeria

• It is interesting to note that African countries import

numerous agricultural products, more concerning is

that many products being imported are products

which are highly protected in African countries like

wheat, maize and sugar

• The high incidence of imports for these products

has been attributed to the inability to produce

enough locally

• Furthermore, over 80 percent of Africa’s

agricultural products are being produced by

smallholder farmers who produce 70 percent of

the continent’s food supply

• African countries mainly export cocoa, edible

fruit and nuts, coffee and tea and vegetables to

the rest of the world

• African countries do not feature under the top

supplying countries for any of these markets

• Egypt is the world's leading importer of wheat in the

world which amounted to 11.5 tonnes in 2015-16

• The data on consumption itself also shows a huge

opportunity for potential cereal exports into Africa.


Instant Foods – Trends

71

Source: Canedian Research

• Africa has the most diverse food and cuisine on the planet. Its US$ 313 billion food and

beverage markets are projected to reach US$ 1 trillion by 2030

• Outside traditional open-air markets, food in Africa is largely a spin of the non-African

globe: Marie biscuits from Dubai, butter from Ireland, rice from Thailand which is

reflected in an annual food import bill that is almost double that of the sector’s export

earnings

Highlights

Overview

• Japanese Nissin Food Holdings, started selling instant noodles produced by its Indian unit in Kenya in 2013

• Nissin has defined its main target audience as middle-income people

• The African Development Bank defines the middle class as people earning between $4 and $20 a day

• Some 434.7 million people, or more than 30% of Africa's population, are projected to join this group by 2020

• The humble instant noodle, Indomie from Indonesia is a giant in Nigeria, Africa's second largest economy

where it controls 74% of the market. And that's actually a drop from 2006 when Indomie had a near monopoly

of the instant noodle market in Nigeria. It's so ubiquitous that, for many Nigerians, all noodles are Indomie

• In South Africa too, instant food is a big hit. Dried & Instant Noodles market in South Africa registered a

positive compound annual growth rate (CAGR) of 4.78% during the period 2011 to 2016


Instant Foods – Opportunities

72

Overview

• The demand for processed food in Africa is expected to increase seven-fold over the next 25 years,

according to a Michigan State study in the United States

• In Africa's increasingly urban spaces, middle class consumers are eager for the convenience and

flavour that processed food delivers

• Whilst for the poor, it's both aspirational and in some cases economical like Indomie

• Kellog's (world's biggest cereal maker) announced a $450 million joint venture with Tolaram Group to

develop breakfast foods and snacks for the West African market, with the focus on Nigeria

• Instant food demand in Zambia is significantly increasing. In addition, Zambia is becoming

increasingly urbanized (approximately 49% of the population live in cities)

• Zambia also has a very aspirational and growing youth market that is not tied to old traditional foods; and is

willing to try out new products if the price is right

• There is a massive opportunity in this sector for companies that manufacture instant food and are looking to

penetrate into African countries

• The key to success is to keeping the brand fresh by constant introductions of new flavors

(especially in regards to noodles) and increasing the target range of products to its consumers


Energy Drinks – Trends

73

• Africa has become a major playground for energy drinks manufactures. The energy drink

market for Africa is projected to grow at a CAGR of 2.8% in the forecasted period

• In Africa, the total market for non-alcoholic beverages – of which energy drinks form an

integral – was estimated to be worth $54.6 billion as at 2013 according to a study by

Euromonitor International

Highlights

Overview

• Secondly, since energy drinks are most popular among youth and according to the United Nations, the

population of African youth between the ages of 15 and 24 is about 126 million out of an estimated

population of about 1.6 billion people

• What this figure indicates is that Africa and especially Nigeria and South Africa promises a good return to

investors willing to invest in local production of beverages and energy

• There are a few but very important factors that makes venturing into the manufacturing of energy drinks in Africa

for local consumption a smart investment decision

• Firstly, the disposable incomes of average Africans are gradually on the increase which increases the

chances of Africans spending more on things like beverages and energy drinks that are easily affordable

• South Africa is the major growing market for the local as well as the international companies like

MoFaya Energy Drinks, Red Bull, Coca-Cola and Monster Beverage Corporation

• Concerning other regions in Africa, Energy drinks have become increasing popular in Cameroon in the last

decade and this trend has showed no signs of slowing down in the coming years.


Energy Drinks – Opportunities

74

Overview

• Though the market seems saturated, it is still at a very nascent stage with room for several different

brands to enter the market with different flavors, bottle designs and promotion strategies

• According to a research report published by Canadean, total consumption of non-alcoholic

beverages in Africa in 2013 was 51,559 million liters (13,473 million gallons)

• Applying a multiplier to that consumption volume; average price of $1.06 per liter (combination of on and off

trade sales values), the value of the non-alcoholic beverage industry in Africa was estimated at $54.6 billion

USD

• Therefore, given the undersized $54.6 billion USD valuation of the African non-alcoholic beverage market,

the potential size of this industry is tremendously huge

• While there are several foreign brands of energy drinks such as Red Bull (Austria-based) and Monster

Energy (US-based) on the African market, there are a few brands that are made in Africa and have become

very popular among consumers on the continent

• An example of the locally made brands of energy drinks is the MoFaya which was introduced into

the market in 2014 and it’s made in South Africa.

• Energy drink consumers are top athletes, students, and in highly demanding professions as well as long

drives. These beverages are to be consumed in moderation and with healthy diet to feel the benefits


Pharmaceuticals – Trends

75

Source: Mckinsey & Co.

• The world is ever in search of more

affordable drugs and Africa is no

exception to this rule. Human health

in this continent is a big concern

with a majority of its populace being

unable to afford required medical

care

• Moreover, there is a huge gap in the

demand and supply chain here as

the level of production is still very

low

Highlights

Pharma industry growth in Africa, in US$ BillionOverview

• In the year 2015, the pharmaceutical industry in Africa jumped to $20.8 billion in 2013 from $4.7 billion a

decade earlier and according to Mckinsey & Co the market will be worth $40 billion to $65 billion by 2020

• In many African countries, generic drugs are gaining market share at the expense of over-the-counter and

branded products

• In the year 2015, Kenya imported pharmaceutical goods worth around 476 million U.S. dollars. On the other

hand, pharmaceutical exports of the same country were worth 87 million U.S. dollars

• Between 2013 and 2020, prescription drugs are forecast to grow at a compound annual growth rate of

6%, generics at 9%, over-the-counter medicines at 6%, and medical devices at 11%

• South Africa remains as the best established region for pharmaceutical manufacturing in sub-Saharan

Africa

• The East African region’s 65 manufacturers have only been able to satisfy around 30% of market demand,

leaving imports to satisfy the other 70%

14.537.6 45.1

58.73

6.57.1

7.8

17.5

44.1

52.2

66.5

2010 2020,base 2020,realistic 2020,optimistic

Others

Top 15Countries

CAGR: 14.4%

CAGR: 11.7%

CAGR: 9.8%


Pharmaceuticals– Opportunities

Overview Top importers of pharmaceuticals in Africa , 2016

$1,900

million

$1,900

million

$1,700

million

$1,200

million

$782.7

million

$595.4

million

$556.6

million

$437.4

million

$371.1

million

$345.8

million

Egypt

South

Africa

Algeria

Nigeria

Ethiopia

Kenya

Morocco

Tunisia

Tanzania

Democratic

Republic of

Congo

• Pharmaceutical products constitute a big bulk of

Indian exports to Africa. This is largely due to the

fact that it is one of the world’s biggest

manufacturing hubs for generic drugs

• The export traders in this country are keener on selling

on the international platform more than locally as the

profit margins are significantly higher on the former

• The country’s banks are rising to the occasion by

providing suitable financing options to aid these

endeavors because their trade with Africa accounts for

about 20% of their business

• Improving healthcare systems are driving a rising

demand for drugs for chronic diseases which is

expected to reach US$30 billion in sales by 2016

and potentially US$45 billion by 2020

• Changes in Africa’s economic profile show an

increased demand for Chronic care drugs and a shift

towards treatments for non-communicable diseases

(NCDs) and HIV/AIDS

• Indian and Chinese manufacturers focus on

competitive prices and, by acknowledging the

potential for generics, have encouraged some of the

larger Indian manufacturers such as Ranbaxy, Cipla

and Dr Reddy to invest mainly in East Africa

76


Stationary & Paper – Trends

77

• Enterprising traders have found a large market for stationery items in Africa. This rise in

demand has been informed by the increased number of academic institutions and the

thirst for education in Africa that is currently taking root in all of its corners

• Since there is a shortage in the manufacturing capabilities for these products, the

demand for these products is being fed by overseas companies

Highlights

Overview

• While theoretically it is possible for African buyers to source their supplies directly from manufacturers in the Far

East, such orders would normally be for at least one container load, if not more

• The fact that Dubai has excellent shipping connections means that African buyers can ship their purchases to

literally any destination on the continent

• Traders from Uganda, for instance, have been buying from Dubai bulk quantities of low-priced exercise books for

schools and distributing the same to nearby countries of Rwanda, Congo and Tanzania

• UAE and Dubai in particular has come to the fore as one of the most reliable suppliers in this sector

giving competitive prices and a suitable environment for import export trade


Stationary & Paper – Opportunities

78

Overview

• Imports of wood pulp paper & paper products in South Africa increased to 1,417.55 ZAR Million in

January from 1,123.52 ZAR Million in December of 2016

• For other African countries as Kenya, stationary imports are very significant. In the year 2015, Kenya

imported 100 million pencils

• Last year market intelligence firm Euromonitor estimated global pencil sales would grow to US$2.7bn. The

world’s largest pencil manufacturer, US-headquartered Dixon Ticonderoga, produces an estimated 1.5 billion

pencils a year

• The tremendous growth of UAE's stationery trade has resulted in the development of a small but significant

manufacturing sector

• A number of stationery items like fax, rolls, exercise books, notepads, box files, computer paper, photocopy

paper, laser printing paper, diaries etc. are now being manufactured in the UAE itself to meet the increasing

demands for these products

• There is still a great opportunity for office supplies, stationary and paper in the African region. The demand

seems to be growing and even though countries are looking at reducing carbon footprints, there is a

big revolution in this industry where stationary now is being made from recycled materials


Broadcasting Equipment – Trends

79

• Broadcasting Equipment is the 11th most traded product and the 237th most complex

product according to the Product Complexity Index (PCI). For Rwanda broadcasting

equipment is its largest import

• Broadcasting equipment is very important in Africa because a majority of Africans get

their information, education and entertainment from primarily radio and then television

• Radio uses more African languages than television and is therefore more accessible

• Television has low penetration because of the high costs of sets, lack of electricity and

weak coverage

Highlights

Overview

• Kenya imported millions of digital video broadcasting (DVB) gadgets in 2012 as the country decided to

migrate from analogue to digital TV broadcasting

• The DVB-T2 set top boxes are gadgets that are fixed on analogue television sets to enable them receive digital

transmission

• The global Broadcast Equipment Market is expected to grow from USD 4.38 Billion in 2017 to USD 5.82

Billion by 2023, at a CAGR of 4.87% between 2017 and 2023 as per a research conducted by Markets &

Markets

• In 2015, servers accounted for 26.0% of total market share; highest when compared to other solutions

• The gadgets were imported mainly from Asia (China and Japan) and Europe. Prices in the international market

varied between 20 and 30 U.S. dollars

• But when imported to Kenya, prices were from between 48 and 90 dollars, because of tax and freight charges


Broadcasting Equipment – Opportunities

80

Overview

• South Africa has the highest penetration of TV sets across Sub-Saharan Africa, at 79.5% at end-2014

• South Africa has a high take up of pay TV services with 47% of TV households subscribing to a pay TV

service

• The only active platforms for TV distribution in South Africa are terrestrial and satellite. South Africa’s

terrestrial TV platform is predominantly analogue

• State-owned Sentech has launched pilot DTT services, with a national launch planned for 2015. To support

this Sentech has deployed its DTT network to 84.2% of the population

• Satellite is the only pay TV platform in South Africa. There are 5.6 million satellite TV subscribers in

South Africa, with a further 800,000 households capable of receiving satellite TV broadcasts

• There are two satellite operators active in South Africa, StarTimes and Naspers. Naspers through its DStv

service dominates the market with 96% market share

• About 61% of households in Senegal have a TV set, which is well above the average for Sub-Saharan

Africa

• The two major TV distribution platforms in the country are analogue terrestrial and digital satellite

• With more than 45 million people, Kenya had at the end of 2014 more than 11 million households

but only one in three (32%) was equipped with at least one TV set which is a luxury

• There is a huge demand of broadcasting equipment in the African continent and currently China is its

largest exporter


Contact information

To discuss on market research and advisory opportunities across Middle East, North Africa and India, please contact:

Vishal Pandey, Director

Glasgow Consulting Group (GCG) I Market Research and Advisory Services

P.O. Box 445190, Dubai, United Arab Emirates

Direct: +971 (0) 4 294 3574 I Mobile: +971 (0) 55 974 4360

Email: [email protected] | Web: www.glasgowconsultinggroup.com

Time zone: GMT +4 hrs I Weekend: Friday - Saturday

We are professional members of:

Glasgow Consulting Group is licensed by the Department of Economic Development (DED), Dubai, UAE. Professional License no: 646110.

mailto:[email protected]

http://www.glasgowconsultinggroup.com/

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