African Consumer Sentiment 2016: The Promise of New Markets

African Consumer Sentiment 2016: The Promise of New Markets

          
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African Consumer Sentiment 2016: The Promise of New Markets

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    Given the negative headlines that dominated news coverage about Africa in 2015, the casual observer might conclude that the outlook for business there is gloomy. But nothing could be further from the truth. If projections hold, Africa will have over 1.1 billion consumers by 2020—more than the populations of Europe and North America combined. And incomes are growing. In 2020, Africa will have twice as many affluent consumers as the UK. What’s more, our research shows that African consumers are very optimistic and eager to spend. A wide range of products and services have already found enthusiastic buyers. And certain products—like mobile phones—are a greater priority than food in some regions.

    Among the highlights from our 2015 survey: Rural areas and Ethiopia are two emerging markets with growing potential; we explore the opportunities and challenges of each. And 75% of African consumers with Internet access are online every day—most using mobile phones; as a result, the growing market for mobile financial services could explode, especially given that consumers lack access to traditional banking services. We look at what it will take to capture these opportunities.

    For multinational companies (MNCs) hoping to capitalize on the continent’s growing consumer market, one of the biggest challenges is finding answers to the following critical questions:

    • What income levels drive consumption?
    • Where is demand growth coming from?
    • What products and brands command a premium?
    • Where do shoppers buy specific items, and what is the status of e-commerce?
    • How do consumer preferences and behaviors differ in different countries?
    • Which emerging markets bear watching?

    These are exactly the questions we’ll be answering in this year’s African Consumer Sentiment report—the go-to guide for companies seeking an inside track—and in future installments of the series. In 2015, The Boston Consulting Group and BCG’s Center for Customer Insight polled 11,127 consumers across 11 African countries. The consumers we interviewed represent a broad range of ages, incomes, education levels, and household types. Besides exploring the attitudes, budgeting, and spending behaviors of Africans, we looked at where consumers shop and tracked the effect of income levels on the purchase of specific products.

    The result is a detailed, quantitative database that supports the theory of emerging consumer classes—not one, but many—across the continent. Africa’s countries, markets, and consumers have varying tastes, preferences, and behaviors. Understanding these differences is critical when trying to make inroads. For instance, the market for washing machines in Kenya is limited because of a broad skepticism that machine-washed clothes are as clean as hand-washed clothes. Insights such as these can help guide companies as they develop strategies for reaching and engaging Africa’s diverse and growing consumer base. We’ve divided our findings into four sections:

    • “Consumer Pulse Check”: An overview of the survey findings on buying behaviors, brands, and purchase influencers
    • “The Connected African Consumer”: Mobile Internet access, new business opportunities, and the growing market for mobile financial services
    • “Market Watch”: The Market Attractiveness index and a deep dive into the emerging markets of rural Africa and of Ethiopia
    • “Channel Insights”: Where Africans are shopping for specific products, and how to penetrate traditional trade outlets

    Except for the discussion of emerging rural markets, the data in this report focuses on urban consumers.

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