“Africa is fast becoming a consumer continent and very attractive to investors”, said Wole Obayomi, head of consumer and industrial line of business for KPMG in Nigeria, in a statement.
“While specific markets for entry should still be defined by their diversity, the continent is densely populated with a rising middle class of urban dwellers. In fact, an average 40 percent of the one billion populations – which consists of the working class or entrepreneurs and members of households – have an average disposable income of between two dollars and 20 dollars a day.”
According to KPMG, the continent’s youth will be the essential driving factor for growth in Africa’s consumer markets, and are also likely to play a key role in defining consumption patterns of consumer goods.
(VIDEO: Luxury goods consumption on the rise in Africa)
“If we look at Nigeria, for instance, about 45 percent of the country’s current population of 170 million is said to be under the age of 15, and it is projected that 70 per of the population will be under the age of 35 by 2030,” Obayomi explained.
Multinational retailers have also begun the exodus into the continent to cash in on its growing middle class. According to a 2013 Deloitte report, Africa's middle class is expected to grow to 1.1 billion in 2016, accounting or 46 per cent of the continent’s population.
Africa’s young urban dwellers in particular have been described as the ‘Afropolitan’ or ‘sophisticated African consumer’, and are starting to develop a mounting preference for sophisticated shopping. Their shopping palate in turn creating a demand for the globe’s more popular fashion and electronics brands.
“The Afropolitan consumer is enthusiastic to stay on top of market leading trends, where they are fashionable and brand-conscious. However, they also want value for money, or may be price-sensitive, and will look for the best deals,” said Obayomi.
“These consumers are therefore keenly interested in convenience shopping, either online or in malls rather than the traditional open markets, as these commerce models increase accessibility for them to make an informed choice or purchase.”
(READ MORE: Africa's appetite for luxury goods to be sated)
According to Deloitte, however, despite the positive statistics and a continent, 61 per cent of the continent’s population still survives on less than two dollars a day. This should nonetheless not be a deterrent for companies seeking to gain an African footprint, as it gives room for creative and affordable entrepreneurial products.
“Investors cannot have a narrow view of their market entry approach. There’s no denying that urban Africa holds immense opportunities,” said Obayomi.
“Investors should examine their strategy, product, design and marketing plans through the lens of these insights to be able to adapt according to the growing trends for long-term and fruitful organic growth,” concludes Obayomi.