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The global supermarket
The investment case for Africa almost always takes the long view, especially when it comes to thinking about serving consumers on the continent.
Yes, it’s true Africa’s macro environment has slowed down overall, in spite of several bright spots. But investors who, for example, are thinking about significant infrastructure or developing a healthcare system, will tell you quietly the correlation with the macro environment of the day may not be as strong as one might think.
The rate of growth of Africa’s middle class consumers might slow but the absolute numbers will keep rising. That’s a huge opportunity. Overall, McKinsey projects household consumption will grow at an average rate of 3.8% from 2016 to 2025 to reach some $2.1 trillion. A lot of that growth will be driven by the continuing urbanization of the continent. The UN estimates African cities will add an additional 24 million people every year between 2015 and 2045.
Supermarket chains like South Africa’s Shoprite and Kenya’s Nakumatt, might be tiny blips on the global retail stage today, but the consumer markets they serve are attracting the attention of investors ready to play the long game. It makes sense if you’re looking at the growth of the consumer base. Also, today, the informal economy of open street markets still dominates 90% of retail in large countries like Nigeria and Kenya. In other words, it’s a near safe bet that there’s plenty of room to grow.
This week, Nakumatt, which is East Africa’s largest retailer, sold a 25% stake to a yet-to-be named international investor. The family-owned business also hired a former veteran of UK’s largest retailer Tesco, which is a sign of Nakumatt’s operational and corporate targets—or perhaps reflects the ambitions of its mystery investor. Africa’s top retailer, Shoprite, as we noted last month, has continued to expand across the continent and is now looking to become even larger with another merger.
Supermarkets are generally a very local business and as McKinsey explains, retail is one of a few industry sectors that African-owned companies can grow big revenues faster than global peers and do so more profitably as the market opportunity expands. Now’s a good time to make that bet.
Yinka Adegoke, Quartz Africa editor
Stories from this week
Some answers for Donald Trump’s questions about Africa. President Trump’s transition team sent four pages of questions about Africa to the US State Dept and the Pentagon. Quartz Africa’s writers provide some answers to the queries about China, trade, humanitarian aid and anti-terrorism campaigns.
Collaboration is key for African mobile operators and local start-ups. African telecom companies continue to lag behind in innovation, while start-ups struggle to reach their potential due to limited financial resources. But to close these gap, working together is the one solution that benefits all finds Abdi Latif Dahir
How does your African passport rank in the power stakes? Traveling to almost any region of the world is notoriously difficult for African passport holders. Yet, not all African passports are born equal, notes Lily Kuo. But even traveling within Africa is difficult for Africans. The border limitations still exist because African nations are not yet ready to deal with the socio-economic and legal challenges that come with open borders, writes Jackie Bischof.
Nigeria latest internal security challenge. For years, the terrorist group Boko Haram posed the biggest problem to Nigeria’s internal security. Not anymore. As Yomi Kazeem points out, Fulani herdsmen faced with rapid desertification and seeking fertile grazing have engaged in deadly pastoral conflicts that have been responsible for more deaths than Boko Haram last year.
A tribute to an enigmatic pop star. The Nigerian musician William Onyeabor, who died this week, shunned interviews throughout his career in the seventies. But as Tayo Popoola notes, 40 years later, Onyeabor’s brand of African funk, blended with a tinge of Afrobeat, made him a huge favorite for DJs and tastemakers from London’s Hackney to Brooklyn’s Williamsburg.
The bad habits making Africans sick. Healthcare in Africa has long focused on communicable diseases such as Malaria and HIV/Aids. But as Lynsey Chutel reports, bad diet, smoking, lack of exercise and excessive weight are threatening the health of Africans across the continent.
CHART OF THE WEEK
Kenya’s national electrification push is taking less than half the time it took America. Kenya added 1.3 million households to its electricity grid last year, raising the percentage of connected Kenyans to 55%, from just 27% in 2013. It hopes to have 95% of homes with universal access by 202o, seven years from when its program started.
Other Things We Liked
Are colonial era laws still holding Africa back? In many places across Africa, it is still common to see judges wearing blonde, British horsehair wigs alongside their black judicial robes. As Maya Berinzon and Ryan Briggs ask in the Washington Post, 60 years after independence, do these inherited colonial rules and social norms hold African countries back?
Why coming home to your country is sometimes harder than living away. Enuma Okoro left the United States, where she was born, and where she was sickened by the blatant and systematic racism. But arriving in Nigeria, her ancestral homeland, Okoro writes in Aeon, was even harder than living away.
The most dangerous job in journalism is being a reporter in Egypt. Reporters behind bars in Egypt receive scant attention—and more so, if they worked for media outlets sympathetic to former president Mohamed Morsi. In Foreign Policy, Kristen Chick profiles journalist Abdullah al-Fakharany, who has been behind bars for three years with no worldwide campaign for his release, no celebrity power and diplomatic statements on his behalf.
Keep an eye on
Turkish president tours East and southern Africa (Jan. 22-25). President Recep Tayyip Erdogan will begin a four-day, three-country visit to Tanzania, Mozambique and Madagascar. Turkey has both political and economic ambitions behind its push for a greater presence in Africa, including the establishment of 34 embassies in sub-Saharan Africa.
UNESCO International Scientific Committee meets (Jan. 23-28). The UNESCO International Scientific Committee on the history of Africa will hold its fifth meeting in Havana, Cuba. The event was launched in 1964 as a way to challenge and remedy (paywall) the general ignorance surrounding Africa’s history, and to promote an African perspective.
Power Tech Africa (Jan. 30 – 31). The Power Tech Africa conference will take place at the end of January in Nairobi, Kenya. The conference will bring together stakeholders to identify potential renewable sources, implementation of smart grid and off-grid technologies and how to create reliable power transmission.
Our best wishes for a productive and thought-filled week ahead. Please send any news, comments, African blond judge wigs and William Onyeabor cowboy hats, to africa@qz.com. You can follow us on Twitter at @qzafrica for updates throughout the day.
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