By Tunde Osho
Manufacturers and retailers seeking to stay one step ahead in Africa’s complex markets need to move beyond ‘business as usual’ – they simply cannot keep doing the same things and expecting a different result.
This is the latest insight stemming from the 5th Nielsen Africa Prospects Indicator (APi) report, which includes a comparative ranking of eight African countries, drawn from multiple datasets, collected across the Macro Economic, Business, Consumer and Retail dimensions.
Nielsen Executive Director Thought Leadership Emerging Markets Ailsa Wingfield comments; “No one size fits all and no total continent, country, city, consumer or channel approach is enough to ensure sustained success in Sub-Saharan Africa. Similarly, successful brands, advertising and activation in other developing markets do not provide the passport to growth in Africa’s complex markets and challenging climates.”
The latest APi report reveals that Sub-Saharan Africa has uplifted itself from the two-decade economic low reached in 2016, bringing a slight easing of pressure but certainly not a return to the robust growth rates previously experienced. However, despite the turmoil and heavy constraints; Wingfield stresses that Africa’s ‘heavyweights’ namely Nigeria, Kenya and South Africa, cannot be ignored and remain a long-term priority for any business focused on Sub-Saharan Africa.
Considering this, it’s clear that the sub-continent’s two most significant economies, Nigeria and South Africa, are slowly turning around from recent declines to low levels of growth, however, the consolidated prospects for these two powerhouse economies continue to be subdued. Of the countries measured in Nielsen’s 5th Africa Prospects report, South Africa slips two positions to sixth place and Nigeria remains in eighth place.
South African consumers have expressed declining sentiment regarding their job prospects, personal finances and time to buy. With higher average GDP per capita – double that of Nigerians and Angolans and triple that of Kenyans – bigger in-store spend and an openness to new, innovative products, South Africa presents the strongest consumer prospects in SSA.
However, the reality is that a cautionary consumer mindset has led to more risk averse spending behaviour and a heightened focus on saving, especially in the areas of out of home eating, entertainment and fashion, followed by an acute awareness of price for consumer-packaged goods. To counter this, businesses have been drawn into more promotional activities, eroding brand equity and margins.
Kenya relinquishes top position due to fading macro-economic indicators and a declining business outlook amidst an unsettling election period. Economic growth slowed to 4.7% in the first quarter of 2017 brought about by drought and the credit slowdown. Rapidly rising inflation has driven food prices to five-year highs, which has plagued consumers and retail trading conditions. Consumers are less confident about their personal finances; their spare cash is limited, and their mindset remains cautionary with them opting to save rather than spend.