AFRICANGLOBE – Africa’s burgeoning middle class is providing a boost to demand for consumer goods, and is offering attractive investment opportunities for investors, says financial services firm KPMG.
South African food and clothing retailers, among others, are well placed to benefit from the surge in consumption in the continent, having established a strong presence in many countries.
KPMG’s head of consumer and industrial markets in Nigeria, Wole Obayomi, said on Monday that Africa’s rising consumer market would be its single-largest investment and business opportunity on the continent in coming decades.
“Africa has the world’s fastest-growing population and is projected to account for more than 40% of the global population growth in 2030,” Mr Obayomi said.
“With these numbers, continued improved gross domestic product (GDP) growth, rising national income and subsequently rising household incomes and purchasing power, will create immense opportunities on the continent for investors,” he said. “Africa is fast becoming a consumer continent.”
According to Mr Obayomi, youth would drive growth in Africa’s consumer markets.
“If we look at Nigeria, for instance, about 45% of the country’s current population of 170-million is said to be under the age of 15 years, and it is projected that 70% of the population will be under the age of 35 by 2030,” he said.
“These demographic attributes will not be materially different amongst other African countries. Manufacturers and exporters of affordable good quality consumer products should be looking to Africa as part of their business expansion strategies,” he said.
Mr Obayomi recommended that investors enter the market with affordable branded, low-to mid-market products, and target the mass market in the major commercial cities first, to entrench their business in the short term.
Later they should look to introduce higher-end products that compete favourably on price and quality with the same or equivalent products that well-off consumers would normally travel to Dubai, Europe and the US to purchase.
Mr Obayomi noted that the need for investment in modern physical retail trading infrastructure offered significant investment opportunities to retail property developers.
By: Linda Ensor