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According to their websites, there are just 24 Shoprite supermarkets and 14 Spar stores serving the whole of Nigeria compared with 2,000 stores of both in South Africa. That disparity between Africa’s largest economy and its most advanced, is highlighted as an example of the huge opportunity for growth in Africa’s consumer market by Washington DC think tank, Brookings Institution in a recent paper titled Africa’s Consumer Market Potential.
Even as we’ve regularly referenced the fact Africa has had some of the world’s fastest-growing economies in the last two decades, what has sometimes been overlooked is the data point of consumer expenditure growing even faster in many of the countries.
The factors driving that growth are as evident from research as they are anecdotally: increasing affluence, fast-growing population, rising urbanization rates, and the rapid spread of access to the internet and mobile phones, among others. Africans’ consumer spending grew by a compound annual rate of 3.9% between 2010 and 2015 where it topped out at $1.4 trillion. It’s expected to reach $2.1 trillion by 2025, then $2.5 trillion by 2030.
Much of the growth and increase in value will be driven by the transformation of local markets from the dominant informal retail and distribution systems to the formal markets. Brookings says this means that as a share of Africa’s total economy, “consumer spending is now the fastest-growing source of demand” compared to government and business spending.
But there are still limits for now as the average African consumer still has relatively low purchasing power which means the biggest rise in household spending for the short term will come from with fast-moving consumer goods (FMCG) with low prices and a short shelf-life and constantly in high demand.
The changes are coming sooner than you might think. Brookings says by next year more than half of all African households will have discretionary income—that’s around 130 million families. This will be driven by the five largest consumer markets—Nigeria, Egypt, South Africa, Morocco, and Algeria—who the African Development Bank estimates will have 56 million middle-class households with disposable incomes of nearly $680 billion.
— Yinka Adegoke, Quartz Africa editor
Stories from this week
Nigerians are worried about a possible internet shutdown ahead of general elections. Nigerians have shared concerns over the possibility of a government-sanctioned internet shutdown, and are looking into methods of staying online in case of a blockage. The fears come after the controversial suspension of Nigeria’s chief justice over corruption allegations in a move that has drawn widespread criticism at home and abroad.
The 19th century Kingdom of Hayti was the Wakanda of the Western hemisphere. On Jan. 1, 1804, an army led by former enslaved Africans in the French colony of Saint-Domingue staved off France’s attempt to bring back slavery, and declared themselves independent and free forever. That was of course, Haiti. But a few years later in northern Haiti, an army general created the breakaway Kingdom of Hayti as a haven from racism and French influence.
The work of African scientists keeps being sidelined for international “parachute” researchers. There is long-running practice of research groups from the global north conducting research in poorer parts of the world, publishing findings in prestigious journals—and giving little or no credit to their local collaborators. But a team of African scientists are working together to leverage more equitable relationships with international partners.
Sky high tariffs are not slowing down rice imports in Nigeria. Rice, Nigeria’s most popular staple meal, has become a centerpiece of the government’s plans to achieve food sufficiency and boost local agriculture. But 70% tariffs and a $150 million loan scheme for local rice farmers have not proven enough to stem imports as consumption continues to outstrip local production and supply, Yomi Kazeem writes.
Private equity investors are making a bet on Afrobeats’ rapid rise up the global charts. One of Nigeria’s leading independent music labels has received a “multimillion dollar” cash injection from private equity investors looking to ride the Afrobeats global wave, Joey Akan reports. It’s the latest in a streak of growth for Nigeria’s music industry and its stars who are gaining fans across the world.
US issues visa ban on Ghanaians. The Trump administration has issued a ban on Ghanaians from being eligible for certain visas in a dispute over the West African country’s “lack of cooperation” in accepting its citizens ordered to be removed from the United States. The US government said Ghana has “denied or unreasonably delayed” accepting its expelled citizens.
Chart of the Week
Ethiopia doesn’t have Africa’s busiest airport—yet. Ethiopia this week succeeded in tripling the size of its main airport with help from China, writes Abdi Latif Dahir. But the distinction of Africa’s biggest and busiest airport—for now—belongs to South Africa, whose three top airports served more than 37 million people in 2017 alone.
Other Things We Liked
The problem with the CFA Franc isn’t necessarily about France. Last month, two Italian government officials sparked a debate over comments about continuing French colonization in Africa because of the West and Central African CFA currencies used by 14 former colonies. The “problematic” CFA is still underwritten by the French treasury and has been a source of controversy with young African diaspora and elites at home, writes economist Kako Nubukpo for Le Monde (French). But he explains there as many pros as there are cons.
A closer look at the United States’ “new” strategy in Africa. Much of the coverage on the John Bolton “Prosper Africa” speech last month was on the role of China as an adversary on the continent. But Col. Chris Wyatt, director of African Studies at the US Army War College, argues this is the wrong focus for Africans to dwell on. “The new strategy seems far less a “strategy” and much more akin to a “philosophy” for engagement in Africa, one which Africans should take now of if they want cooperation with Washington.”
What exactly is the right model for African development? The received wisdom in recent years has been African countries will develop by following the Asian/Chinese model of deploying their hordes of cheap labor to factories and other forms of physical industry. But as Marlous van Waijenburg and Ewout Frankema note in African Arguments, it is increasingly clear that opportunity has passed. The authors think it would be likely be more productive to use African-designed development strategies focused on neighbors.
ICYMI
NYU Africa fellowships. The fellowships allow New York University undergraduate and graduate students the opportunity to undertake research in fields as diverse as tourism, political economy, or development. (Feb. 28 & Mar. 1)
Opportunities to study in China. South African students seeking bachelors and graduate degrees can apply for scholarships to study at Chinese institutions starting in the 2019/20 academic year. (Mar. 15)
Keep an eye on
Kenyan nurses to begin strike (Feb. 4). Nurses in two dozen out of 47 counties will walk out of hospitals in a row with local governments over payments, dealing a blow yet again to the country’s health system.
Social Media Week Lagos (Feb. 4-8). The conference will bring participants from all across the world to discuss ideas and trends to boost businesses in an increasingly connected world.
*This brief was produced while listening to Dorobucci by Mavins ft Don Jazzy, Tiwa Savage, Dr Sid, D’Prince, Reekado Banks, Korede Bello, Di’Ja (Nigeria)
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