Private Consumption and Consumer

Spending: Part I
El Amine Alaoui Soulimani
DBIA
March 2017

Summary Notes

Africa is the worlds fastest urbanizing region. Over the next decade, an additional
187 million Africans will live in citiesequivalent to ten cities the size of Cairo,
Africas largest metropolitan area.
As a result, consumption is expected to grow at 3.8 percent a year to 2025 to
reach $2.1 trillion. Business spending is expected to grow from $2.6 trillion in
2015 to $3.5 trillion by 2025.
The actual spending by consumers and businesses today totals $4 trillion. There
is a $4 trillion opportunity for businesses to tap in the form of rising consumer
and business spending. Of this, household consumption accounts for $1.4 trillion,
and business spending $2.6 trillion.
Half of additional private consumption in the period to 2025 is set to come from
East Africa, Egypt, and Nigeria.
Nigeria will remain the largest consumer market in 2025
In Africa as a whole, around 60 percent of new household spending over the past
decade has been due to population growth, with the rest driven by higher
incomes.
Food and beverages still constitutes the single largest consumption item,
accounting for as much as one-third of Africas household spending in 2015.
In higher-income countries such as South Africa and the North African nations,
spending on housing, health care, and education equals spending on food and
beverages, and spending on consumer goods, transportation, and
telecommunications is higher than in the rest of Africa.
By contrast, in lower-income countries including Ghana, Kenya, and Nigeria, close
to 40 percent of household spending in 2015 was devoted to food and beverages.
Food will constitute the largest share of consumption growth in the period to
2025, but the fastest-growing categories include financial services, hospitality,
housing, and health care
Demand for typically discretionary consumer goods is another huge opportunity,
with expected growth of $20 billion in Egypt, $10 billion in Nigeria, and $5 billion
or more in several of the continents other large economies
 Nigeria. Africas largest economy will remain the largest single consumer market,
accounting for 15 percent of the continents growth in consumer spending to
2025. New spending will be fairly evenly split among affluent households that
will spend an additional $30 billion a year by 2025, global consumers with
$44 billion, and emerging consumers with $28 billion. Their biggest spending
categories are expected to be food and beverages, housing, consumer goods,
education, and transportation services

Questions

What can African governments do to increase consumer spending and private

consumption?
How can African governments avoid monopolies and high prices?
Do you think governments should get involved in setting prices to encourage
consumer spending?
What methods could be used to define the best prices and WTP in order to have
the best outcome for the economy?
How can African governments avoid black markets?
Do you think is good idea for governments of vulnerable growing African
countries to increase taxes?
What factors can affect the consumer spending?
Do you think surveys are very effective when gathering data about average
spending on food In Nigeria?
What is the most effective method to gather relevant data on consumer spending
on food in Nigeria?
What are some examples of unbiased questions to ask while surveying for most
consumed product in a country?
How can we forecast the consumption of food and beverages in lower-income
countries?