This document provides strategies for companies to consider when entering African markets. It discusses understanding the market opportunity in Africa through developing insights on consumer spending trends, behaviors, and segments. It also outlines steps for crafting an effective market entry strategy, including developing the right product or service value proposition, overcoming sourcing and manufacturing challenges, establishing effective distribution, and optimizing marketing and promotion. The overall framework presented includes gaining market insights, defining the value proposition, determining the market entry strategy, addressing sourcing and production issues, choosing the best distribution approach, and deploying marketing campaigns.

1. Africa Market Entry:
Strategies for consideration
By Grant Hatch, Pieter Becker and Michelle van Zyl

2. 2 | Africa Market Entry: Strategies for consideration
Table of contents
Introduction
Unlocking Africa’s potential
Understanding the market opportunity
Developing the right value proposition
Crafting a market entry strategy
Overcoming sourcing and procurement
challenges
Choosing the best manufacturing strategy
Developing effective distribution
Optimizing marketing and promotion
Conclusion
3
4
6
8
9
11
12
13
14
14

3. Rapidly improving income levels, infra-
structure, and business environments
promise to drive continued growth
in Africa’s consumer markets. In fact,
consumer spending is expected to
reach nearly $1 trillion in 2020,
according to a 2011 Euromonitor
report. However, most companies need
to adjust their strategies and expectations
when entering the continent. Logistics
can be unreliable and infrastructure
readiness lags behind much of the
developed world. As a result, fully
understanding a company’s potential
opportunities on the continent can be
challenging. Executives intrigued by
the prospects of competing in Africa
need solid advice on why the region’s
consumers are attractive, which segments
they should focus on, and how they
can capture the market’s potential
most effectively.
In this article, Accenture presents
concrete steps and recommendations
leaders can use to tailor their strategies
to the challenges and opportunities they
will encounter on the African continent.
3
Introduction
Companies searching for new emerging market growth
opportunities should not overlook Africa. While the continent’s
sheer size would merit attention, Africa offers much more
than real estate alone: Since 2000, Sub-Saharan Africa has
experienced consumer spending growth of 4 percent per
year, which propelled it to $600 billion in 2010.

4. Companies can use a simple
framework to execute this entry
strategy effectively, regardless of
the markets or segments on which
they choose to focus. As shown in
Figure 1, the framework encompasses
the full lifecycle of doing business in
Africa, from gaining insights on the
biggest opportunities to deploying
effective marketing campaigns that
support the company’s offers.
Understanding the
market opportunity
The first step toward participating in
the African opportunity mandates that
companies develop a deep understanding
of the market, the competitors they will
face, and the consumers they will serve.
For example, while the continent’s
wealth of natural resources will
undoubtedly continue to be important,
the most significant contributors to
market growth are changing, with less
reliance on exports and more reliance
on domestic demand in the form of
consumer spending and imports. Despite
currently low per-capita income levels
in Africa, average wages are growing,
giving rise to an emerging middle class
that will become more demanding as
income levels and spending increase.
This rapid and sustained rise in consumer
spending results from three key forces:
A population forecast to reach almost
2 billion by 2050.1
In 2005, Africa had an estimated
population of more than 920 million,
which increased to an estimated 1
billion in 2010. By 2050 the population
is expected to increase to almost 2
billion. Furthermore, between 2010
4 | Africa Market Entry: Strategies for consideration
Unlocking Africa’s potential
A company’s market entry plan must clearly reflect the role
Africa will play in its broader corporate strategy, and focus
on which countries it makes sense to enter, in what sequence,
and with what timing.
Figure 1. Seven key market entry steps
1. Market
opportunity
Strategy
2. Value
proposition
3. Market
entry
strategy
4. Sourcing
Execution
5. Manu-
facturing
6. Distribution 7. Marketing
and
promotion
Do we
understand
our target
market?
Do we have the
right product/
services to
offer?
How do we
enter the
market with
minimal risk?
Do we source
locally or
import?
If we produce
locally, do we
use local
manufacturers
or do we build
capacity?
How do we
deliver our
products or
services to our
customers?
How do we
ensure that
there is demand
for our prodcut/
service?
Key Questions
What influences the African
consumer’s purchasing choice?
What do they buy?
Where do they buy?
How do they buy?
When do they buy?

5. and 2050, Africa’s active/working age
population will grow from 56 percent of
the continent to 66 percent—a striking
contrast to more mature continents
whose populations are aging and moving
into the dependent category (i.e.,
65 years or older).2 Expansion of the
economically active population will
lead to increased demand for goods
and services.
Significant decrease in poverty.3
By 2020, Accenture estimates that
poverty levels in Africa will fall to 20
percent of the population from nearly
45 percent in the 1980s. Poverty fell
for both landlocked and coastal countries;
for mineral‐rich and mineral‐poor
states; for countries with favourable
or with unfavourable agricultural
resources; and for all nations regardless
of colonial origin. In fact, GDP in Africa is
growing even faster than the continent’s
meteoric rise in population.4
5
Rapid urbanization.
Africa’s growing and increasingly
wealthy population is becoming more
urbanized as well. By 2050 almost
two-thirds of the population will live
in cities, compared with 40 percent in
2010.5 Urbanization, in turn, will lead
some African consumers to purchase
more goods and services, and will
make it easier for companies to reach
consumers with products, services,
and communications. Rapid growth in
population and urbanization will also
place additional constraints on the
Africa’s infrastructure requirements,
mandating greater levels of planning
and urban investment from public and
private sector players alike.
Furthermore, three key trends are
allowing consumers to buy more and
enabling companies to reach them
more effectively:
Improving access to consumers
via mobile technologies.
Consumers in Africa are becoming
easier to reach due to a remarkable
uptake of mobile services: By 2012
almost 50 percent of Africans (more
than 500 million people) will own
a mobile phone, compared with 30
percent in 2008.6 This significant
mobile adoption by consumers has
made it easier for companies to reach
them through mobile marketing
campaigns, contests and promotions.
Furthermore, consumers are more
savvy because they are now linked
to the rest of the world through their
cell phones and no longer isolated.
In addition to improving access to
consumers, the mobile revolution has
created a booming industry that employs
and provides income for hundreds of
thousands of people. One example of
this is the significant drive in Kenya to
open new business call centres.

6. 6 | Africa Market Entry: Strategies for consideration
A healthier and more stable
business environment.
Fewer conflicts, more democratic
elections, higher economic growth
rates and improved business regulation
make Africa more business-friendly
every year. This fact has been recognized
by the World Bank’s 2009 Ease of Doing
Business report, which highlighted
Africa as a continent that is making
strides toward becoming a business-
friendly regulatory environment.
A loosening of trade restrictions.
Trade among African countries in the past
has been slowed by the hefty tariff
barriers that countries impose on imports.
However, the global drive for the rapid
opening of borders to regional and
international trade is forcing African
countries to open up their borders for
imports. Africa has fostered a number
of formalized trade blocs that have
been the catalyst for loosening trade
restrictions between member states
and the global economy in general.
While this development bode well for
African market entry, companies need
to be aware of potential pitfalls. For
example, because Africa has a large
informal economy with a prevalence of
cash transactions, accurate, representative
data on consumer spending is sparse.
But firms can bridge this gap by
creatively tapping into local networks
to gather insights, partnering with
academia and companies that possess
usable customer data (e.g., banks and
telecommunications providers), and
by designing market-facing pilot
“experiments” that feature risk mitigation
mechanisms. Companies also need to
be prepared literally to “walk” the markets
and gain insights from talking to street
vendors and observing consumers. They
can thus build a qualitative model of
how each market operates—a necessary
but very different approach to that
used to understand developed markets,
which primarily relies on analyzing
large volumes of quantifiable data.
CfC Stanbic, a division of Johannesburg-
based Standard Bank Group, provides
an example of how this is done. One
of the key aspects of doing business in
Africa is the predominance of individual,
self-employed vendors: Nairobi alone,
for instance, has approximately 100,000
such businesses. For banks such as
CfC Stanbic, the challenge is loaning
money to the most promising of these
entrepreneurs, many of whom have little
or no credit history. To tap into this
opportunity while reducing its loan
default risk, CfC Stanbic used a tool
that enabled portable psychometric
testing of potential loan recipients,
rapidly assessing their risk tolerance,
ethics and honesty, intelligence, and
business skills. CfC Stanbic also deployed
a mobile workforce to complement its
local banking branches, and further
mitigated risk by using “seed loans”
with “graduation plans,” which allowed
the bank’s business with a given
customer to grow as the customer’s
credibility was established.7

7. 7
Developing the right
value proposition
Once they understand the market, leaders
need to create a differentiated, attractive
offering that takes into account the
special nature of African markets. For
instance, because of lower income levels,
price remains the key consideration for
the majority of African consumers—a
reality all offerings must reflect.
In addition, community and family are
strong elements of African culture, and
companies need to make sure their
branding and promotional efforts
resonate with these values. Potential
initiatives could include introducing
corporate social responsibility and
sustainable development programs
that position the firm as something
more than just another shopping choice.
Consumer goods giants such as Unilever
and P&G have excelled at understanding
and meeting the unique needs of
African consumers. Unilever, which
aims to serve all African consumers
(including those living on less than
$1 each day), had to find a profitable
way to make its products available and
affordable for the poorest Africans. To
achieve this goal, the company created
the “small unit packs/low unit price”
concept, which involves selling much
smaller than usual packets of detergent
or salt. This strategy has allowed Unilever
to reach the volumes required to support
expansion while capturing the loyalty
of lower-income customers. It has also
prevented the margin-eroding resale of
its bulk products in smaller portions.
Unilever collaborates closely with local
wholesalers who not only help the
company to supply Africa’s informal
market but also provide it with market
insights and customer feedback. Unilever
has embedded corporate social respon-
sibility in its strategy to further boost
the brand’s relevance with Africans.8
Key Questions
Should we have a distinctive
value proposition or simply
follow our competitors?
Which aspects of our value
proposition will be distinctive
(price, product, place, promotion)?
Do we offer a distinctive value
proposition for each consumer
segment or follow a broad
approach to all segments?
Is our value proposition
economically viable?

8. 8 | Africa Market Entry: Strategies for consideration
Overcoming sourcing and
procurement challenges
Companies have to develop a stable,
cost-effective supply chain that enables
them to meet local needs and over-
come local challenges—all while
maintaining profitability. No small
feat, since importing raw materials or
finished goods into Africa is hampered
by many of the same hurdles that
make market entry difficult, including
corruption, complex regulations, high
taxes, and substantial import fees.
Furthermore, Africa’s roads and basic
infrastructure are often poor, which
increases the cost of distribution,
while its ports are often congested
and inefficient.
To overcome these barriers, companies
need sourcing partners with strong links
to the community and high levels of
intelligence regarding local preferences
and issues. They also need to invest in
the capacity and capabilities of these
partners, establishing training and
incentive programs that enable them
to fulfill the company’s brand promise.
Global brewing giant, SABMiller has
been able to overcome the challenges
of sourcing in Africa by setting up
cooperatives with local farmers to
supply barley and cassava to suit the
tastes of different consumer segments.
SAB Miller has also signed long-term
contracts to buy crates from a local
producer, as well as locally produced
cans. By 2012, the company hopes
to source from and work with up to
45,000 African farmers.9
Key Questions
What is the cost and benefit of
sourcing locally versus importing?
Is the required raw material
available in the target country?
Are substitute raw materials
available in the local target
country?
What degree of local investment
(skills & financial) is required
to integrated local suppliers
into your value chain?
Crafting a market
entry strategy
While Africa has shown tremendous
improvements as a consumer market,
many barriers to entry still remain.
Corruption is a ongoing concern, for
example, as are the lack of infrastructure
and local talent, burdensome regulations
and bureaucracy. To choose the right
strategy for overcoming these hurdles,
leaders must assess risks and then
decide whether to establish a stand-
alone business, enter via an acquisition,
seek partnerships and joint ventures, or
participate by licensing the firm’s products
and services to another company.
Each approach has its pros and cons.
Entering via a greenfield investment
(i.e., going it alone) can result in the
biggest payoff if successful, but presents
the riskiest choice for companies that
lack local market knowledge, access
to distribution channels or political
connections. Conversely, while entering
Africa via an acquisition can be expensive
and time consuming, it can also
provide immediate access to existing
networks and distribution channels
and the opportunity to gain deep local
market insights that companies can
scale up to address other markets.
Partnering provides a faster way of
gaining access to local market knowl-
edge and distribution channels, but
selecting the right partner requires a
careful appraisal of ownership, control,
pricing and local partner capabilities.
Licensing offers the least risky and
lowest-cost option to expand market
reach, but carries a high brand risk and
limits the potential to exploit local
market opportunities.
Key Questions
Does the market entry strategy
align with global/regional
guidelines?
What is your level of risk/
reward propensity?
How quickly do you want to
scale up in the target country
(incremental versus big bang)?
What degree of local knowledge,
skills and networks are needed?

9. 9

10. 10 | Africa Market Entry: Strategies for consideration
Choosing the best
manufacturing strategy
In addition to solving sourcing problems,
a company must develop a robust and
relevant manufacturing strategy. Such
a strategy should either feature strong
partnerships with local producers or
focus on the development of in-house
manufacturing capacity close to a
company’s target markets.
While the right manufacturing strategy
should be specific to each company’s
context, capabilities, and goals, a few
general guidelines can nonetheless
be useful. For instance, companies
doing business in Africa should act to
improve the stability of key resources
by introducing term contracts, making
upstream acquisitions to lock in supply,
and investing in diversified geographical
sources to minimize disruptions. Building
trust-based relationships with local
producers is also important, as is the
provision of technical support and
training to local manufacturers to
ensure high standards for locally
sourced raw materials.
DUFIL, the largest manufacturer of
instant noodles in Nigeria, provides
an example of how foreign brands
can be manufactured successfully in
Africa. Its Indomie brand, originally an
Indonesian brand of instant noodles,
has been a runaway hit in Africa, and
in Nigeria in particular. In 2008, the
company introduced a new flavor
tailored to local tastes, which became
very popular among Nigerian consumers.
However, challenges related to importing
key ingredients made it difficult for
the company to meet demand for this
new product.
To overcome these challenges, Indomie
embarked upon a backward-integration
strategy. The company invested in
world-class local production facilities
and tapped local sources and its own
manufacturing capabilities to source
raw materials. Today, the brand is
being produced in nine ultra-modern
factories in two key locations in Nigeria,
with plans to expand aggressively.
Because of its ability to respond quickly
to local demand, Indomie has captured
70 percent of the Nigerian instant
noodle market.10
Key Questions
Is there a cost advantage of
producing products locally?
Is local skills and capacity
available to produce your
products?
What level of investment is
required to produce products
locally at the required global
quality standards?
Is there a strategic logistics
benefit of setting up a manu-
facturing capability (e.g.,
setting up in Kenya to service
other East African markets)?

11. 11
Developing effective
distribution
Given that more than 60 percent of
Africans live in rural areas and have
limited access to transportation, simply
reaching the final consumer can be
extremely costly and difficult. Poor
roads and limited infrastructure can
make delivering products or services to
consumers a daunting task. As a result,
companies should build strong sales and
distribution networks by leveraging
a mix of third party, wholesale, and
direct-distribution models.
Companies can effectively reach rural
consumer segments by employing
local residents to act as agents, or
by partnering with local organizations
with links to rural markets.
Mobile operator MTN is a seasoned
veteran of doing business with rural
African consumers, with operations
in 21 markets across Africa and the
Middle East (plus Afghanistan). To
boost its market share among rural,
low-income Africans, MTN has created
services tailored to their needs through
a network of local agents, established
kiosks in rural areas, and has given
agents motorbikes to reach the most
remote areas. MTN has also developed
lower denominations when selling airtime,
reflecting the low and unpredictable
income of many African consumers.
Because of these kinds of innovative
distribution and promotional activities,
MTN has captured a significant portion
of Africa’s low-income consumer
segments, which represent crucial
market entry points.11
Key Questions
What are the main consumer
purchase points (e.g., open-air
markets, public transport hubs,
rural towns etc.)?
What is the frequency of
consumer purchases at these
points?
Are there existing distribution
networks that service the main
consumer purchase points?
What is the best distribution
method to reach consumers
where existing networks
don’t exist (e.g., trucks, local
agents, etc.)?

12. 12 | Africa Market Entry: Strategies for consideration
Optimizing marketing
and promotion
Companies accustomed to stimulating
demand through Western-style
marketing and promotional approaches
will have to rethink their go-to-market
strategies for the African market.
The majority of African consumers
buy from informal street vendors and
kiosks, and they often make purchases
in a more erratic, ad-hoc pattern than
Western consumers. Furthermore,
traditional media such as television
and radio, do not always reach these
masses, particularly those living in
rural areas or urban slums. In much
of Africa, weak infrastructure limits
access to media, whether TV, websites,
or social media, making such interactions
comparatively rare events.
As a result, companies should identify
strong local partners to help them
access informal markets and obtain
the information they can use to refine
their offerings and messages. They
should spend their marketing budgets
wisely, being mindful that TV, radio
and print campaigns will not have
the same impact that they would in
developed markets. In particular, when
attempting to reach lower-income
segments, companies need to ensure
that their promotions and marketing
efforts are focused on the community,
and are visible in the market through
relevant media and campaigns such as
radio and contests, respectively.
Key Questions
What are the available marketing
channels in country?
What is the preferred marketing
channel for each target
segment (e.g., TV vs. radio)?
What level of education
(i.e., practical use and benefit
of product) is required in
communications materials?
Do the product/service marketing
take into account community
endorsements (e.g., use of local
community celebrities)?

13. 13
East African Breweries Limited (EABL)
has employed a tailored marketing
approach to become East Africa’s
leading branded alcohol beverage
company. While younger consumers
initially perceived its Tusker Lager
beer as old-fashioned, EABL turned
this perception around to the point
that it became the biggest brand in
East Africa. The company had a limited
marketing budget, and knew that the
impact of traditional TV- or radio-
based advertising would be limited
within East Africa. So, to maximize
the return on its marketing resources,
EABL focused on a single, high-impact
platform that would resonate with
younger consumers: Tusker Project
Fame, a reality show focused on
regional talent. To overcome limited
access to TVs, EABL sponsored “viewing
bars” where the show was screened
in conjunction with promotions on
EABL drinks. It also held contests to
boost audience engagement. EABL
provided training and branded material
to retailers to ensure that the brand
was delivered successfully to target
consumers. It also leveraged mobile
and Internet technology: the company
generated more than 1 million SMS
votes and Web traffic of approximately
70,000 hits per week.12

14. 14 | Africa Market Entry: Strategies for consideration
Conclusion
As the African opportunity grows more attractive, companies
are devising creative ways to gather the market insights
they need to craft compelling consumer offers that can both
meet the needs of African consumers and generate robust
revenue and profits. Experience shows that successful
organizations employ a structured approach to understanding
and doing business with the African consumer. By focusing
on the distinctive needs, behaviors, and preferences of
consumer segments and by applying a systematic approach
to market entry and ongoing success, firms can capture
the African opportunity on their own terms, in the process
ensuring long-term profitable growth.

15. 15
Grant Hatch is a senior executive in
the Strategy service line in South
Africa and is responsible for building
its profile as a thought leader in the
South African marketplace. Grant
also leads the products management
consulting business in South Africa,
which includes a focus on retail,
consumer goods and services, automotive,
industrial, travel and transport sectors.
Grant is an experienced strategy
consultant and business leader with
highly developed analytical and team
leadership skills. He has a strong
financial analysis background and
a demonstrated ability to build
relationships and deliver strategy
at executive level. He has managed
strategy assignments across a range
of industries including financial
1 UN Population Division, 2010
2 UN Population Division, 2010
3 Maxim Pinkovskiy, Massachusetts
Institute of Technology Xavier Sala-
i-Martin, Columbia University and
NBER, 2010
4 Maxim Pinkovskiy, Massachusetts
Institute of Technology Xavier Sala-
i-Martin, Columbia University and
NBER, 2010
5 UN Population Division, 2010
6 Africa Mobile Fact book, 2008
7 Source: Standard Bank Group—
Kenya SME Pilot. www.hks.harvard.edu/
var/ezp_site/storage/fckeditor/file/
pdfs/centers-programs/centers/cid/el/
gem-2010/presentations/Standard_
Bank_Group_SME_Pilot.pdf
About the authors
References
services, mobile telecoms, telecoms
infrastructure, fast moving consumer
goods, pharmaceuticals, electricity
distribution, agro-processing and
diamond mining.
grant.hatch@accenture.com
Pieter Becker is a consultant in the
Strategy service line and part of the
Africa Strategy Team, focusing on
growth strategy and execution in the
products industry group. Pieter has
worked in various countries across
Sub-Saharan Africa to assist clients
to expand their operations and reach
in Africa. Pieter has been with Accenture
for more than 3 years and is based
in Johannesburg.
pieter.j.becker@accenture.com
8 Source: “No whitewash: Unilever’s
drive to dominate Africa,” Jasson
Nissa, April 2003
9 Source: “African group brews new
customers,” http://www.ft.com/cms/
s/0/c55f7318-f957-11de-80dc-
00144feab49a.html#axzz1En8JK3ob
10 Source: “Noodles War: Indomie
and the competitions,” stocknewsline,
December 2009
11 Source: “Distribution is the name
of the game,” Mats Thoren, Ericson
Business Review, February 2007
12 Source: EABL Annual Report, 2010
Michelle van Zyl is a manager in the
Strategy service line and part of the
Africa Strategy Team, focusing on
corporate strategy in the products
industry group. Michelle has primarily
focussed on developing client relation-
ships within East Africa, and has assisted
a number of clients to improve top
line growth. Michelle has been with
Accenture for more than 3 years and is
based in Johannesburg.
m.van.zyl@accenture.com

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