Middle class Africa: meet the new African consumer

February 22, 2014 by  
Filed under Solar Energy Tips


American politician Steve Forbes was a guest at the launch of Mosunmola Abudu’s new African TV channel. (Image: EbonyLife)

Africa still suffers from the illusion that it’s a difficult place to do business, a dark continent of war, famine and corruption. This short-sighted and misinformed belief has put companies that are just awakening to the economic miracle of Africa, at a disadvantage.

Instead, it is an awakening consumer giant with a growing middle class eager to show off their new-found economic and social status through the purchase of branded goods. On average, 40% of the population of any given African country belongs to what Vijay Mahajan, author of Africa Rising: How 900 Million Consumers Offer More Than You Think, describes as Africa 1 and Africa 2. These are the elite of the population and the growing aspirant middle class.

These are the people who are driving the market for consumer goods, the Africans who told researchers for the Boston Consulting Group they were planning on spending money to upgrade their mobile phones, buy laptops and spend more on entertainment, homes, cars and education in the next year.

Economies across Africa withstood the economic meltdown of 2008 and have grown at an impressive 6%, on average, while old world economies have contracted. The growth is tied to the demand for the riches under the African soil, but only in part. The African middle class has also risen on the growth of Africa’s consumer driven society. Consumer spending accounted for more than 60% of sub-Sahara’s growth last year, according to the World Bank.

Spending spree

And Africa is looking to spend. Or, in the words of Zimbabwean journalist Farai Sevenzo: “…like a recklessly wealthy bride, we look over our shoulders at the orderly queue of suitors seeking a partnership of one kind or another.”

By 2020, the African consumer market will be worth $1-trillion, driven by demands for technology-based goods like smart phones and household appliances, and cars. It is expected that the South African electronics market alone will be worth around $13-billion by 2016. The rising demand is good for tech companies; however, even more appealing is the fact that relative to income, Africans are willing to spend more than Europeans, Americans and Japanese consumers on technology.

This statistic is skewed by the higher cost that Africans pay for goods, which is one of the major challenges that face some companies trying to tap into the market place. The demand for competitively priced technology has led to the growth of companies willing to offer them. Middle Eastern computer companies have been able to carve out market share for themselves as suppliers of low-cost computer equipment. The performance of companies like Huawei, Nokia and Blackberry has outstripped Apple because their handsets are far more affordable.

Another factor in the choices made by the emerging middle class of one brand over another is a product’s suitability to African conditions. The recent discovery of oil in Ghana is often offered as a reason for the growth of its aspirational market; but the reality is that the country still rations electricity and faces constant clean water shortages.

Taking such restrictions into account, South Korean consumer electronics giant Samsung has developed fridges with built in surge protectors and laptops powered by solar energy that have given the company the lead in African markets like Ghana and Kenya. The company has set up manufacturing plants in Africa as well, which has helped to bring down the costs of these goods.middleclass1
Car manafacturers with African production plants are increasing the number of cars and components produced on the continent to supply demand.(Image:Media Club South Africa)


Car manafacturers with African production plants are increasing the number of cars and components produced on the continent to supply demand.(Image:Media Club South Africa)
Aspirational values

And the African market will continue to heat up. Grant Hatch of Accenture explains: “The costs of a lot of technology products have been declining for some time, so products will become even more affordable to the consumer.”

Mahajan’s research came up with an interesting finding: the majority of Africans, those in the group he refers to as Africa 3, worked for the top two groups and over time assimilated their aspirational values.

The African middle class is estimated to number about 350 million and growing. The contest for the hearts, minds and wallets of African consumers is growing in intensity, and local manufacturers are also benefitting from this new-found wealth.

The 2013 African Development Bank’s Development Effectiveness Report showed that the growth of the middle class was in part thanks to better economic governance and a better business climate. While foreign investment in Africa has increased fivefold since 2000, it is the entrepreneurial spirit of Africans that has helped to sustain growth. In the past seven years the number of people delaying the opening of a business has halved and the costs of doing so have fallen by two thirds.

Mabati Rolling Mills started out as a manufacturer of metal roofing sheets in Kenya. As the middle class grew and the housing market exploded, the company grew into the dominant manufacturer in the $180-million Kenyan market. Today it is a conglomerate that exports to 50 countries across Africa and the world.

Mo shows the way

If there is a figurehead for the rising African middle class then it’s Mosunmola Abudu, Africa’s answer to Oprah. Abudu is a Nigerian media entrepreneur and self-taught TV host. Her talk show, Moments with Mo, first aired in 2006, is syndicated across 48 African countries and has had guest as diverse as International Monetary Fund boss Christine Lagarde and former South African president and Nobel Peace Prize laureate FW de Klerk, as well as English football player Rio Ferdinand.

Last year, Abudu launched EbonyLife TV, a continent-wide broadcaster aimed at the growing aspirational African middle class. “Not every African women has a pile of wood on her head and a baby strapped to her back! EbonyLife celebrates style and success while motivating its audience to dream, and dream big,” the glamorous Abudu told press agency AP.

The English-born mother of two wants to change the antiquated view of Africa as “the dark continent”. Programming on her new channel highlights the continent’s wealth of talented entrepreneurs and artists. Her return to Africa and the birth of her media empire began at London’s Marble Arch. “On a whim I asked people what came to mind when they heard the word ‘Africa’. The nicest thing I heard was ‘sunshine.’”

Programming on EbonyLife is targeted at the 18- to 34-year-old demographic, a group Abudu refers to as Africa’s “custodians of the present and future”. But is also the dream demographic of marketers. The original shows cover everything from domestic abuse to skin bleaching and sex tips, with a healthy sprinkling of celebrity gossip, with an African flavour. Her reality series, The Fattening Room, follows young women going through traditional pre-marriage rites, learning from the matriarchs what it means to be a traditional wife.

Tradition mixed with modernity is Africa today, Abudu argues. In the reality series the older women try in vain to fatten up the young women, who all want to retain their Hollywood-inspired shape. “People need to know that this kind of Africa exists; we have moved into the modern age. People don’t think that people live in Africa like this. They don’t think that we have high-profile events where people look glamorous and they’re all dressed up.”

Admittedly there are still pockets of despotic rule, of famine and strife, but as the slogan for EbonyLife goes, “Everything you think you know about Africa is about to change”.

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