A growing middle class has fuelled Africa's fast-growing consumer market driving the regional economy, according to a new report by research firm McKinsey.
Africa's top 10 consumer markets now include Libya, Ethiopia, Nigeria, South Africa and Kenya.
Egypt, Angola, Morocco, Senegal and Ghana are also in the list that was released in Nairobi Monday in McKinsey’s ‘The changing face of the African Consumer’ report.
The consumer market study that was jointly carried out with TBWA shows that consumers have become key drivers of Africa’s economy, which is expected to grow at an average of five per cent in the next 10 years.
McKinsey says steady growth of Africa’s population, expansion of the middle class and rising optimism about the continent’s future will play a crucial role in determining the continent’s fate.
"Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies,” said Damian Hattingh, an associate at McKinsey & Company.
He said that although natural resources remain important to the continent’s economy, an emerging middle class is crossing the threshold of pursuing basic needs to having discretionary spend.
"The consumer opportunities are real and have been reaffirmed.”
The report shows that early entry into African economies provides an opportunity for global businesses to create markets, influence customer preferences, and establish brand loyalty.
"Profit margins in Africa are some of the highest in the world and as more players come into the market the gap will narrow down,” said Mr Hattingh.
The Mckinsey study indicates that opportunities in for consumer goods companies are opening up fast in many African economies and is expected to fuel long-term growth.
As Africa realises economic growth, the continent’s household spends are expected to expand and drive higher consumption in consumer-oriented sectors.
Economic growth in Sub-Saharan Africa remains strong and is expected to rise above the 4.9 per cent recorded in 2011, according to the World Bank.
The continent’s growth, excluding South Africa, which accounts for a third of Africa’s GDP, is projected to be 5.9 per cent.
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