Download as PDF, PPTX
Uploaded byFahhan Ozcelik
Africa - SOYSAL v.2.1
This document discusses the economic potential and opportunities in Africa. It notes that several international organizations predict Africa is on the brink of significant economic growth, similar to previous growth periods in China and India. The document outlines some of the key drivers of business development in Africa, such as high growth economies, urbanization, and the developing middle class. It also discusses some of the main challenges to business development, including diversity of consumers, poor infrastructure, governance issues, and income disparities. The document argues that Africa represents a major opportunity for multinational corporations and that significant economic growth and development is underway, especially in cities across the continent.
Africa - SOYSAL v.2.1
- 1. Africa The Final Frontier, on the Brink of Economic Takeoff… with Billion Consumers & Growing Faster… November, 2014 Emerging Market Consulting
- 2. “Africa could be on the brink of an economic takeoff, much like China was 30 years ago, and India 20 years ago”; World Bank -‐2013 “Economic activity in sub-‐Saharan Africa has continued to grow robustly – on the back of supportive external demand conditions and strong growth in public and private investment – and the outlook is elected to remain favorable for the lion’s share of the region’s countries.” IMF -‐ 2014 World Bank says – Africa is great opportunity now! IMF says – The World is in a mess but not Africa !
- 3. What we are going to talk about !
- 4. African Markets KeyDrivers for Business Development are; 1. High Growth Economies & Urbanization 2. Regional Economic Consolidation 3. Developing & Sizeable Middle Class 4. Market Oriented On-‐going Reforms Key Drivers for Business Development
- 5. Key Challenges for Business Development African Markets Key Challenges for Business Development are; 1. Diversity of Consumers 2. Poor Infrastructure 3. Weak Governance & Corruption 4. Severe Income Disparities
- 6. In a Struggling World for Growth Africa Stands Out
- 7. The Rate of Growth Significant in All Countries
- 8. Billion Consumers & Growing Faster than China & India
- 9. Africa Wants to be Europe ECOWAS The Economic Community of 14 West African States (ECOWAS) is one of the strongest regional economic blocks on the African continent => NIGERIA The Southern African Development Community (SADC) is an inter-‐governmental organization headquartered in Gaborone, Botswana. Its goal is further socio-‐economic cooperation & integration as well as political and security cooperation among 15 Southern African States. => SOUTH AFRICA The East African Community (EAC) is an intergovernmental organization comprising Mive countries in African Great Lakes Region in Eastern Africa: Burundi, Kenya, Rwanda, Tanzania & Uganda => KENYA
- 10. Consumer Diversity Rather than just a continent, Africa must be viewed as 54 separate and distinct countries with a wide array of political, economic, geographical, cultural and social features. Even a single country like Nigeria has over 250 different ethnic groups and over 500 languages
- 11. Across the ConInent Young Middle-‐Class is Emerging By 2020, more than half of African households are projected to have discretionary income, rising from 85 million households today to almost 130 million in 2020. “Ethiopia, Nigeria and South Africa are expected to provide the largest numbers to the new middle class in the coming years.” AfDB “We are dealing with a mostly young, dynamic target market that is becoming globally connected through the internet and mobile phones and they are understanding brands a lot more,”
- 12. Target SEC: Trendy Aspirants & Progressive Af[luents
- 13. Fast Growing PotenIal, but “One Size Does not Fit All” “No single African consumer.” “7 types of consumers can be grouped in 3 tiers based on monthly income and average spending.” Nielsen “The household spending in Africa is projected to increase from $860 billion in 2008 to $1.4 trillion in 2020” McKinsey.
- 14. Affordable, Tried & Same Brand vs. InternaIonal with respect to Local COMMON CONSUMER ATTRIBUTES IN 3 BIG SUB_SAHARAN AFRICAN MARKETS
- 15. MNC are More Interested than Ever in Expanding into Africa
- 16. A RevoluIon is Underway in Retail Top Companies investing in SSA Retail Market FOOD: Shoprite* – South Africa Pick n Pay – South Africa Spar – Netherlands Nakumatt* – Kenya Uchumi – Kenya Naivas – Kenya Tuskys -‐ Kenya Associated British Foods –UK Wal-‐Mart – USA (through SA Massmart) NON-‐FOOD: Burberry – UK Hugo Boss – Germany Woolworths – South Africa Edgars – South Africa Foschini – South Africa Mr. Price – South Africa Sheet Street – South Africa * Shopping Mall Developer
- 17. OpportuniIes Lie Beyond; tradiIonal markets of Cairo, Jo’burg & Cape Town Africa’s extra people are Slocking to cities. Some 40% of Africans are city dwellers now, up from 30% a generation ago. By 2025 the number is likely to be 50%.
- 18. Income DispariIes by Countries; BUT CiIes paint much different picture than NaIons The demographic pro[ile of these cities can be much different than the national level picture, posing interesting market opportunities According to EIU data, per-‐capita expenditure was higher in all 25 African cities studied, than in their respective nations. Citizens in cities spent 94.4% more, per capita, than their countrymen as a whole
- 19. Major Challenges ‘DO’ Remain;
- 20. Infrastructure; SIll a Major Gap but Developing Rapidly
- 21. South Africa, Nigeria & Kenya Highlights 3 Big Markets South Africa: GDP: $350Bn Pop. 48Mil. PPP $ 11,500/cap 60% of Retail Sales in Formal Outlets Retail Market : 14.4% of GDP -‐ $50Bn Growth Rate : 8.9% in Non-‐Food -‐ 2013 Key Players: Jet, Mr. Price, Edgars, Ackerman Pep, Woolworths, Hugo Boss -‐ Non-‐food Nigeria: GDP: $521Bn Pop. 177Mil. PPP $ 2,800/cap 10%* of Retail Sales in Formal Outlets (est.) Retail Market : 16.0% of GDP -‐ $83Bn Growth Rate : 9.2% in Non-‐Food -‐ 2013 Key Players: Shoprite, Game, Mr. Price, Pep, Woolworths, Hugo Boss – Non-‐Food * Import Ban for Clothing & Furniture lifted on Dec 2011 Kenya: GDP: $53Bn Pop. 44Mil. PPP $ 1,800/cap 30% of Retail Sales in Formal Outlets Retail Market : 15.0% of GDP -‐ $8Bn Growth Rate : 6.5% in Non-‐Food -‐ 2013 Key Players: Nakumatt, Woolworths JV w/Deacon, Massmart, Mr. Price, Sheet Street – Non-‐Food
- 22. Recommended Strategic PrioriIes & IniIaIves Strategic Priorities Strategic Initiatives 1. Build the Brand for Long-Term Business 2. Focus Where it Matters. 3. Develop Locally Relevant Approach 4. Maximize the ROI with Supply Chain Integration & Economies of Scale 1. Build the Brand for Long-‐Term Business 1. Target Long-‐Term Local Operator Partners 2. Tailor Value-‐Proposition to Target Market with Affordability in focus. 2. Focus Where It Matters 1. Enter into Key Economic Regions & Key Countries in Africa 2. Build critical-‐mass in Cities offering best opportunity 3. Develop Locally Relevant Approach 1. Ride both the ‘Youth Movement’ & ‘Margin Generator’ niche. 2. Product offer to local attributes 4. Maximize the ROI with Supply Chain Integration & Economies of Scale 1. Develop local logistic hubs & suppliers in Economic regions & expand stores in parallel.