The narratives have always portrayed Africa as the Dark Continent — tales full of wars, hunger, strife, and poverty. Here, the new age of pandemics, terror, and mass migration has been in the limelight for decades. In fact, in the global market, Africa’s business potential has always been misapprehended and undervalued.
But now, the scenario is not the same; the continent is overcoming all its challenges and moving towards growth. By presenting an immense business opportunity to the world, it is aiming to become the world’s next big market.
In recent decades, Africa has gone through an amazing business transformation. Several enterprises emerged across its diverse regions and established the continent as “Africa — a land of opportunities” instead of “Africa — a land of threat”. The continent encompasses 700 companies that have annual revenue of more than $500 million - 400 companies have reached over $1 billion. Moreover, according to the World Bank’s 2019 Doing Business index, five out of 10 most progressed countries exist in Africa, and one-third of all reforms recorded globally were in sub-Saharan Africa.
So, what are those driving factors, which led to such a drastic business transformation in Africa? How the continent has been shaping its destiny and presenting exciting opportunities to global businesses? To dig out answers to these questions, you have to deep dive into the whole article.
The fastest-growing population and urbanization is one prime reason.
At present, Africa’s population is 1.2 billion and is expected to grow 1.7 billion by 2030 and 2.4 billion by 2050. With this increasing population, more and more people are migrating from rural to urban cities in search of better living conditions, higher quality educations, and greater economic opportunities. According to a report published by the African Development Bank Group more than 40 percent of people are currently living in cities, which are projected to reach 80 percent over the next two decades.
These increasing trends represent that development, growth, rise in investment, innovation, skilled labor, and higher incomes are in high-priority for the continent’s bright future. It provides immense opportunities for different sectors including food, beverages, pharmaceuticals, financial services, healthcare, and education to establish and grow their business in Africa
Industrialization and robust manufacturing sector
According to policymakers and scholars, robust manufacturing industry is a key driver for Africa’s economic growth and development — accounts for about 10 percent of its GDP. It is a major factor that helps the continent to achieve its goal of becoming the next big economically developed continent.
Hence, to unlock the potential of the manufacturing field and facilitate industrialization, the African government has introduced the African Continental Free Trade Area policy (AfCFTA). African Continental Free Trade Area is a single market for the free trade of goods and services, which provide small and medium-sized enterprises (SMEs) direct access to the new market, increase economies scale, and facilitate export diversification. By attracting a large volume of workers and placing them into productive and decent-paying jobs, it aims to drive sustainable growth and development in the continent.
Before Africa, China, UK, France, Japan, and the U.S. have also adopted this strategy and experienced rapid structural transformation, development, eradication of poverty, and unemployment.
Great Opportunity for Fast-Moving Consumer Goods (FMCG)
The Fast-moving consumer goods (FMCG) industry is one of the largest industries across the world — characterized by companies that supply low-cost products that are high in demand. It is also called Consumer Packaged Goods (CPG), which relies on narrow profit margins, competitive branding, and global reach.
To establish an FMCG brand in any region, it is mandatory to have the following key attributes.
- A dense population
- The spending power to purchase cheap goods
- An understanding of their brand competition
- Supporting infrastructure to facilitate sales
Considering these aspects, Africa provides a great opportunity for the FMCG industry to establish and grow.
Currently, Africa is the home to 1.2 billion people, which is projected to be double (2.4 billion) by 2050. The continent’s consumer expenditure has grown at a compound annual rate of 3.9 percent since 2010 and reached $1.4 trillion in 2015, which is expected to be $2.5 trillion by 2030.
Out of 54 African countries, seven countries including, Nigeria, Ethiopia, the Democratic Republic of Congo, Egypt, Tanzania, Kenya, and South Africa are expected to capture half of Africa’s population. And, 43 percent of the population will become a middle or upper class.
From these figures, it is clear that the Fast-moving consumer goods industry, which produces low-cost products with a short shelf life are constantly in high demand. And it has a great future in Africa. It presents opportunities for existing brands to fortify their consumer base with distinguished advertising and expansion of distribution. By targeting the low-income tiers of population and middle-class households the industry aims to cater to all sections of the population.
Though Africa has been fighting for decades to overcome its challenges, it is also taking all the necessary steps to progress in the world. Its people and government are working hard to show Africa neither as a threat nor as a failure, but as an opportunity.