Understanding the African Consumer

By David Stevens

Much has been made of the development of the African consumer as the driving force of long term African growth.  In 2012, McKinsey’s The Rise of the African Consumer saw the consumer market as the “single-largest business opportunity,” on the continent, and projected consumer-facing industries to grow by $400 billion by 2020. The report goes on to look into the trends in urbanization, demographics, digital use, and values as well as to consider more economic variables such as the penetration of formal banking and the current state of retail trade.

Much of this optimism rests on the continued growth of the African middle class. And while the definition of middle class remains contested, the number of people escaping poverty, even if only tenuously, are increasing. As a result, this group of potential consumers is expected to grow. A 2014 report byDeloitte notes that there were over 375 million middle class Africans in 2013, with that number expected to rise to over 500 million by 2030.  Despite warnings that over 50 percent of these new members survive on between $2 and $4 per day – barely out of poverty — the opportunity for growth in consumer facing goods and services is real.

Combine this tenuous middle class with Africa’s tremendous youth bulge and much of this optimism will rest on the contentment these consumers. Young, educated, and engaged people in Africa’s most important economies must feel that their lives, opportunities, and finances are progressing at a rate that matches the stories that are being told about their country’s, and the continent’s growth. If this happens, the consumer growth boom may in fact come to fruition. However, if Africa’s young feel that opportunity is passing them by, the tenuous politics of the region could turn explosive, bringing African growth to a halt.

Understanding Africa’s Consumers: The PAT/Fireside Survey

The Program for African Thought at the World Policy Institute and Fireside Research has set out to develop a African Consumer Picturebetter understanding of the ambitions and fears that will drive the African consumer class. To do so, we have initiated a series of brief surveys to track the development of this new consumer class as they interact with changing economic and political realities in their countries, regions, and cities.

Our goal is to understand not just who these new consumers are, but to get a sense of their fears, hopes, and ambitions – whether they are optimistic or pessimistic, and whether they realistically reflect their ability to develop into Africa’s economic engine. To do this, we looked at what are perhaps sub-Saharan Africa’s most talked about countries: South Africa, Nigeria, and Kenya, asking respondents a mix of questions about their economic activity, ambitions, and their views on the future. Through this, we seek to gain an understanding of consumer confidence in a region where both politics and exogenous economic shocks can quickly intervene to change optimism into pessimism and hope into fear.

The Fireside/PAT survey utilized the BiNU survey research platform, which allowed us to reach our target respondents via SMS messaging. BiNU utilizes a cloud-based virtual smartphone server that connects with a lightweight app to reach SMS users around the world. Working with BiNU allowed us to effectively engage a large number of respondents in countries that would otherwise be very difficult environments in which to conduct our research.

It is important to state the limitations on this survey up front. Our sample was relatively small (N=503) and was disproportionally male (57.8 percent). Though as we are looking into the consumer class, we can tolerate sample bias towards cell phone users (only SMS-capability is required, not possession of a smart phone) as we feel it reflects the target demographic well. In addition, with roughly two-thirds of our sample employed (of which 60 percent are satisfied with their level of employment), we feel that our sample does, on the whole, paint a reasonable portrait of who we think of when we are consider the African consumer class. However, this survey should be treated as a quick snapshot – one that can identify issues for further examination.

Going Forward

In the coming weeks, we will be identifying a number of issued raised in this first survey, putting them under the microscope, and examining them from the local perspective that can yield important insights into Africa’s rapidly changing economies. In our first article, we will see what the survey has to say on the about Nigerian attitudes towards their new government, and how they feel it will impact their finances.

If you are interested in further probing a specific issue or region, or commissioning a survey of your own, you can reach us atPAT@worldpolicy.org.

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David Stevens is the Director of the Program for African Thought at the World Policy Institute and President of Fireside Research. 

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