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The Challenges in Conducting Market Research in AfricaPresentation By:

Neal SandinSenior Project DirectorSIS International Research

September 2008

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Foreword …………..………………………………………...…...3Infrastructure …………..…………………………………….......4Cultural Barriers ……………..……………………………...….12Government Bureaucracy ………………..…………………..18Security Issues...………………………………...... …………...20Informal Economy ……………………………...... ……………22Limited Financial Resources …………………….. …………..23Limited Technical Resources …………………… …………...24Recommendations ……………………………….. …………...25

Table of Contents

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• Market research in developing countries has a variety of interrelated barriers.

• By knowing the challenges of gathering and analyzing market intelligence, business opportunities come to the fore.

• Africa is taken as a lens; the learnings here can be applied to other developing and emerging regions.

ForewordForeword

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InfrastructureInfrastructure

• It is estimated over 80% of the populations in sub-Saharan Africa is rural based. – Poor transport and road system– Lack of ICT (telecommunication, electricity, et al.)– Low levels of literacy.

• Africa lags behind in the use of ICT, has low telephone penetration, access to internet and high tariffs. African research is still largely dependent on face-to-face interviews.

• “Studies shows that 97% of the population in the rural villages surveyed already knew about mobile telephony, and 50% had used a mobile phone. By contrast, only 33% knew what a computer was and only 3% had ever used one.” Ericsson survey Tanzania 2005.

Primary Road

Network

Data are from 2003 or later

Source: African Marine Atlas (http://iodeweb2.vliz.be/omap/OMAP/index.htm)

Primary Road Map

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Secondary Road Map

Source: African Marine Atlas (http://iodeweb2.vliz.be/omap/OMAP/index.htm)

Data are from 2003 or later

Secondary

Roads

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Source: Wikipedia.org

Population Density

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• Africans wait ~5 years for a fixed telephone, in some countries 10+ years.• ~ 2.5 million Africans are currently on waiting lists for fixed telephone lines• By early 2007- mobile users constituted almost 90% of African telephone

subscribers– Building cell phone infrastructure relatively less expensive than rolling out

landline connections to every home– In Kenya mobile telephony Giant Safaricom established a joint venture in May

2000 by October 2007 the company had over 8million subscribers and made a profit of a quarter a Billion USD, it has become the largest company within the East African region in only 6 years of operation.

• Still has one of the world’s lowest mobile penetration rates

Source: http://www.marketresearch.com/product/print/default.asp?g=1&productid=1587984

Telephone Infrastructure

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1976-2001 % Growth in Telephone Penetration

Negative

0% – 200%

More than 200%

Source: http://www.ifpri.org/PUBS/ib/ib32.pdf

(Per 100 Inhabitants)

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Top 10 Internet Countries in Africa (March 2008)

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Internet Penetration in Africa (March 2008)

Source: www.internetworldstats.com

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Cultural BarriersCultural Barriers

• The varied country-to-country cultural practices and norms in the continent pose a challenge in many areas and in particular ruralAfrica. – In Djibouti and other Muslim countries it would be difficult to for a man to

conduct FGDs with women. • During the Holy month of Ramadan for Muslims, research should be

suspended in predominantly Muslim countries. – In 2008, this falls within the month of September.

• Depending on the information required one may hold back vital responses to a survey as it may be in conflict with their cultural beliefs – Common among the Bantu in Sub-Saharan Africa, it is considered bad

manners in many African cultures to disclose your wealth or the number of children in your household.

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Ethnic & Language BarriersEthnic & Language Barriers

• High percentage of rural populations rely on tribal dialects. – Forcing market research agencies to translate the questionnaire

into different languages

• Respondents may not be receptive to an interview from a person perceived to be from an ethnic group. – Market research agencies need to widen the variety of field staff

according to their tribe.– In Kenya, after the recent poll violence, regional teams have had

to be reshuffled with regard to interviewer ethnicity

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• Over 1,000 languages– However, there are populations of people that speak English, French and Portuguese – 4 major language families native to Africa

1. Afro-Asiatic2. Nilo-Saharan3. Niger Congo4. Khoisan

Source: Wikipedia.org

Language Diversity

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# of Languages Spoken by Country

Source: http://www.ethnologue.com

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– In 2000, the average literacy rate in Sub-Saharan Africa was 52 per cent for women and 68.9 per cent for men.

• Gender disparities prevailing in 75 per cent of the countries inthe region.

– Western African countries have lower literacy levels, with Southern African countries being the most literate, which forces reliance upon face-to-face interviews.

• Increases operational costs, although the wage costs for carrying out research fieldwork average at 20USD per day.

Literacy Levels

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Africa Literacy Map

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Government BureaucracyGovernment Bureaucracy

• In most countries, it is a requirement by law to obtain a permit before conducting a study.

– Especially when it comes to demographic, religious and governance questions. – Examples: Sudan, Djibouti, Eritrea and Zimbabwe requires that a questionnaire

to be reviewed by a government agency and in some cases may insist on accompanying the interviewers.

• Permits may take up 21 days to be issued.• Cases of corruption are rampant, illegal searches and confiscation of study

materials are quite common – e.g. In the Democratic Republic of Congo and Angola, one needs a different

“permit” to conduct the same survey in every regional city. • Few African countries conduct regular population census or social economic

surveys with the exception of South Africa and North Africa. – Difficult to determine appropriate methodologies or developing sample.

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Source: 2007 Human Development Repot by the UN- based on 2005 data

HDI: Avg. life expectancy, education index, adult literacy index, GDP at PPP Index, and gross enrollment Index

By comparison, all of Western Europe, North America, and most of South America is above 0.900.

Human Development Index

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Security IssuesSecurity Issues

• Hot spots: – Darfur in Sudan– The Nigerian Oil Delta

• Increasingly becoming a problem in the low income (slums) dwelling areas – Soweto, South Africa– Kibera, Nairobi– Lagos slums

• Slums are characterized by a severe lack of government security and are controlled by criminal gangs who extort money from traders and do not tolerate outside interference.

• Yet, important research needs to be done is such environs.

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• Despite peace accords from civil wars, parts of western Sudan remain volatile

• The Democratic Republic of Congo still in civil war

• Sections of Algeria are off-limits

• Barundi, Zimbabwe, Sierra Leone, and Liberia should also be considered with caution

Source: http://www.africatravelguide.com

Areas of Unrest

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Informal EconomyInformal Economy

• Particularly within Sub-Saharan Africa, the informal retail market accounts for over 50% of all retail trade in all categories.

• Continued existence of the barter trade• Challenge in:

– Estimating market size, volumes and trends – Identifying their product route to the market – Tracking and monitoring consumer habits and behavior

• In Tanzania, the total milk productions stands at over 1.1 billion liters, however only 14% finds its way to the formal market channel

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• A large percentage of financial institutions are very cautious in financing service-related institutions.

• Most agencies are hampered in expanding developing operations.• With the exception of multinational affiliated agencies, most

research agencies are forced to bill fees to finance operations with little resources left over for key aspects such as:– Staff development – R&D and innovations – Technical upgrades on software and hardware– Networking and expansion

Limited Financial ResourcesLimited Financial Resources

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• The technical ability of research agencies remains low, with notable exceptions within Northern Africa, South Africa, Kenya and Nigeria. It remains necessary in most countries to accompany, train and supervise fieldwork at local level to ensure quality in delivery.

• Poor access and technical ability in handling hardware and software forces agencies to process data at a central location regardless of location of study.

• The number of local companies engaged in research for their markets remains low.

• The industry at present performs below expectations with local research revenue driven by multinational agencies such as Unilever, Coca Cola and Diageo. The other players include bilateral and non-governmental agencies within Africa.

• Few institutions offering studies at a university level in market research. Kenya has only one institution offers training on MR.

Limited Technical Market Research ResourcesLimited Technical Market Research Resources

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• Communicate with the field team by SMS text, not by email.• Face-to-Face methodologies should be considered first.• Do not rely upon government statistics; NGOs (e.g. IRC) have excellent

reports on social movements and situations.• Contact NGOs who have completed research in the area. Find out who

they worked with and difficulties involved.• Be aware of social mores when assigning interviewers.• Timelines must be flexible, and projects on a best efforts basis.• Monitor political and social situations closely.

– If there is an election, wait until it is over before starting or resuming research– A holiday in a current (or recent) conflict area should be observed closely

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