The single-largest business opportunity in Africa will be its rising consumer market. A new McKinsey report offers a detailed profile of African consumers, including their demographics, behavior, and needs.
The continent’s consumer-facing industries are expected to grow by $400 billion, representing its single-largest business opportunity, by 2020. In one of the first studies of its kind, McKinsey’s Africa Consumer Insights Center surveyed 13,000 consumers in ten African countries, with a focus on the largest cities. Five categories of consumption were covered: apparel, financial services, groceries, the Internet, and telecommunications.
Here are some highlights from the research.
- Cities offer the best opportunity: urban Africa is forecast to contribute nearly 40 percent of GDP growth. But companies may be wise to bypass high-profile megacities, such as Cairo, Johannesburg, and Lagos, for midtier cities, like Abidjan and Rabat, which are more accessible, have less competition, and offer better profit margins.
- Companies can better tailor products to local markets if they understand what quality means for African customers and know their preferences, lifestyles, and daily needs.
- Since affordability is critical, companies may have to reengineer products to hit a specific price point. The necessary moves may include offering lower-cost versions, smaller sizes, or alternative payment models.
Source: McKinsey & Company