With more than 900 million consumers, the continent of Africa is one of the world's fastest growing markets. It is a remarkable marketplace with massive needs and surprising buying power. Africa could justifiably be called the "last frontier".
"While we consider Africa one of our most important markets, we are very aware that it is often overlooked as a place to conduct a sustainable business"
CEO, DIAGEO plc
Why is Africa so often overlooked by companies as a potential source of new and profitable business? In our wide experience of the continent it usually comes down to one of five overriding beliefs (or a combination of them all):
To some extent each of the above statements carries an element of truth … but then one could well make similar justifiable statements about many other parts of the world where these same companies are already doing profitable business.
In fact the roll call of successful international companies who regard Africa as a critical region in their global business reads like a Who’s Who of the business world. Alongside Diageo, the list could include Coca Cola, Unilever, Proctor & Gamble, Shell, Schlumberger, Exxon Mobil, Colgate Palmolive, British American Tobacco, MTN and Standard Chartered … not a bad list of success stories in any context!
AFRICA RISING was born out of our belief that if companies move beyond the "glass half empty" view of the continent (corrupt, poor, unsafe) to the "glass half full" view (relatively untapped, dynamic, hungry for progress), the opportunities for profitable business are everywhere. Just think, in a country like Nigeria where power supply is so erratic Coca Cola manages to serve consumers with chilled drinks in remote rural areas! Their glasses are quite literally full to overflowing!
Africa is a continent of surprising economic potential when one gets beyond the hype and the misinformation; most people would not believe that if Africa was a single country it would have a GDP per capita $200 greater than India, one of the 4 BRIC countries we hear so much about. In fact, 20 of the countries on the continent do have per capita GDPs in excess of that of India. And it is not just India. 10 African countries have a per capita GDP higher than that of China, another BRIC member. Does that sound like a continent with no business potential?
The challenge companies face in Africa is two-fold, the first part easy the second far more difficult. The easy part is identifying opportunities in the market, be it to satisfy existing consumer demand or to create new demand where there is an unsatisfied need. The difficult part is often finding a business model which delivers an affordable consumer offering whilst satisfying the company’s profit aspirations. A difficult but far from impossible task, which is why most of the companies mentioned earlier have been able to successfully craft profitable businesses for themselves in Africa. The business model challenge encompasses not only the product and brand but also the channels to market strategy. Much of the trade in emerging Africa is still highly fragmented which requires companies to take a long, hard look at how deep they want to penetrate into the various areas and at what point cost efficiency takes the place of sales effectiveness in the equation.
Africa is a continent full of latent opportunities just waiting to be tapped into. The trick is knowing how to tap and where!
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