Africa consumer

President Obama’s US-Africa Business Summit in August drew a top-notch group of African heads of state, business leaders, financiers, and ministry officials.

But did the event bring in new potential investors? Some, but not enough. Rooms were full of familiar faces during our three days in Washington DC, but many US companies and investors still say “it is too early for Africa: the continent is too dangerous, and markets are too small”.

We think this approach — often based on anecdotes or media articles instead of fact-based research — actually elevates risk rather than mitigating it. 

In the 1980s Yvonne Chaka Chaka released a hit single called Umqombothi, the Xhosa word for homebrew beer. The song described the virtues of the traditional maize or sorghum-based brew that is often sold in cardboard cartons.

What the “Princess of Africa” did not mention was the pungent pong the fermenting beer gives off and – if it is left for more than a week in its carton – its propensity to explode.

The secret, therefore, to tapping the vast but informal African homebrew market is to play on the drink’s inherent charms while damping its explosive potential. SAB Miller, the world’s second largest brewer, reckons it has found the formula – a product it calls “Chibuku Super”. 

By Andrew Brown of Emerging Capital Partners

Last week the International Monetary Fund (IMF) predicted a further drop in China’s growth to 7.3 per cent in 2014, the lowest figure that the country has experienced in the last 23 years.

China’s continued economic slowdown as it shifts from export-led to consumer-driven growth has prompted speculation as to the knock-on effect on economies that have benefited from China’s rise. Debate has centred on whether many frontier economies, including those of sub-Saharan Africa, are reliant on continued rapid growth in China’s demand for commodities to drive their own economic development. 

Ethiopia’s government is famously protective of its economy, especially telecoms, banking and retail. So when the late prime minister, Marxist-influenced Meles Zenawi, met senior Walmart executives face to face last year, it might have seemed an incongruous pairing.

But rising food inflation, combined with traders hoarding goods to avoid government-imposed price caps, made the prospect of big stores arriving to deliver cut-price goods appealing.

Negotiations are continuing with the American giant under Meles’s successor Hailemariam Desalegn (pictured). But progress is slow. 

French retail giant Carrefour has its sights set on sub-Saharan Africa’s booming consumer markets, and will begin setting up shop on the west coast of the continent within the next two years.

A joint venture between the supermarket retailer and the Africa-focused trading and distribution company CFAO – a subsidiary of Toyota Tsusho, the Toyota Group’s trading arm – announced on Thursday will open outlets across eight central and west African countries. 

Africa is on the verge of a supermarket boom thanks to the (comparatively) freewheeling spending habits of its citizens and spending on food.

But any retailer or producer thinking about Africa may be too late – the investment and deals are already underway, according to Mohit Arora, director of agricultural banking at Standard Bank. 

Africa’s fast-growing personal care and beauty markets are prompting ambitious innovation plans from two of the sector’s giants, Unilever and L’Oreal, both looking to capture the expanding middle classes.

But you can’t just take all your western or Asian products and sell them in Africa – new, tailored ranges are needed.