Rise of The African Opportunity: A Perspective From Boston Analytics

2015
Rise of the African Opportunity

A perspective from Boston Analytics
Content
Introduction to Africa Today
Regional Assessment of Africa
Changing Consumer Market
Challenges of Accessing Consumers in African Markets
Strategies to Overcome Challenges
Concluding Thoughts
Appendix
1
Content
Introduction to Boston Analytics

Concluding Thoughts
Appendix
2
Economic interest in Africa stretches back over 100 years
“On 7th January 1876, King Leopold II of Belgium read in The Times report of a Lieutenant Cameron, who
had just finished an arduous three-year journey across Africa which was widely assumed to be barren and
inhospitable, but Cameron described a ‘magnificent and healthy country of unspeakable richness ripe for
some enterprising capitalist that might take the matter in hand” (1)
Africa in 1914 Key Points
 In the nineteenth century, Europe’s major powers

battled it out for economic dominance of Africa
 In 1880, Europeans controlled ~10% of the
African territory. By1913, Europeans ruled more
than 90% of the African continent
– In 33 years, European nations had added almost
10 million square miles - one-fifth of the land mass
of the globe - to their overseas colonial
possessions via Africa
 The wave of Independence across Africa in
1950s and 1960s brought an end to the colonial
rule by Britain, France, Belgium, Spain, Portugal
and Germany
Sources:
(1) The Scramble for Africa by Thomas Pakenham, Avon Books, 1992
(2) http://www.blackpast.org/gah/partition-africa
3
In more recent decades, its reputation has ranged from hopeless to
hopeful
1984 2012
1992 2011
2000
Perspectives on Africa and its prospects have changed dramatically in the past decade from a
continent with no hope to one which is rapidly emerging on the international stage
Sources:
(1) Time
(2) Economist
4
As a point of comparison, today Africa has roughly the same population as
India, but an economy the size of Brazil spread over a much larger land mass
and set of nations
Compared to the BRIC countries,
Africa as a continent is large, less
densely populated and generally
poor
Region Africa Brazil China India Russia
1,361 1,243
1,053
Population 2013 (M)
200 141
Population Density
(people per sq km of 421.1
land area) 145.5 8.8
35 23.7
8,939
GDP 2013 ($ B)
2,064 2,190 1,758 2,118
14,973
10,958
GDP per capita 2013 ($) 6,569
1,960 1,414
29.4
Area (M Sq. Km) 16.4

8.5 9.3
3.0
Note:
(A) Despite the fact that the African continent has over 1 Billion people, only seven countries in Africa have a population larger than California, i.e., Nigeria, Ethiopia,
Egypt, the DRC, South Africa, Tanzania and Kenya
Source:
(1) IMF World Economic Outlook Database
5
Its economy now appears to be on a growth path however, with real
GDP growth, improved infrastructure and improved health status
Parameter 1980‒1990 1990‒2000 2000‒2010
8 of the world’s 15 fastest Real GDP Growth 1.9% 2.5% 5.1%

growing countries 2000-2013
were in Africa(3) Economic Diversification(A) 66% 66% 61%
Per Capita real GDP Growth -0.8% 0.0% 2.7%
Economic Growth Poverty Ratio(A) 76% 76% 70%
Unemployment Rate (Highest) 16.3% 15.6% 15.3%
FDI Inflows Growth 21.7% 13.0% 16.3%
Exports Growth -1.4% 3.5% 13.2%
Communications Infrastructure Mobile Subscribers (per 100 People)(B) 0.002 1.721 44.713
Prevalence of HIV(B),(C) 2.21% 5.76% 4.84%
Health Status Infant Mortality(B),(D) 106.31 94.07 68.12
Life Expectancy (Years)(B) 50 50 55
Notes:
(A) Includes Kenya, Nigeria and South Africa
(B) For Latest Year
(C) % of Population between 15-49 years age
(D) Per 1,000 live births
Sources:
(1) African Democracy, A glass half-full, Economist, Mar 31st 2012
(2) Freedom in the World, Country Status by Year, Freedom House
(3) Lions go global: Deepening Africa’s ties to the United States, McKinsey Global Institute, August 2014
6
In addition, democracy is gaining a greater foothold in the region
Africa Democracy Ratings (2011)(1) Freedom Development in Africa(A),(2)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1975 1980 1985 1990 1995 2000 2005 2010 2014
Free Partly Free Not Free
Note:
(A) Freedom in the World, Freedom House’s flagship publication, is the standard-setting comparative assessment of global political rights and civil liberties
Sources:
(1) African Democracy, A glass half-full, Economist, Mar 31st 2012
(2) Freedom in the World, Country Status by Year, Freedom House
7
In terms of international partners, while the US contributes the
greatest in terms of humanitarian or development assistance to
Africa, China leads the way in terms of trade…by a long shot
Official Development Assistance (2012, $Bn) Trade with sub-Saharan Africa (2013, $Bn)
United States China 160
France United States
Britain India
Germany Germany
Japan France
Canada Netherlands
China Japan
Sweden Britain
Netherlands Spain
Norway Brazil
0 2 4 6 8 10 0 20 40 60
As current trade figures reflect, other emerging markets such
as China, India and Brazil have become significant trading
partners and represent formidable competitors in many
product categories. Indeed talk of a South-South connection
is emerging
Source:
(1) Economist.com/graphicdetail August 5, 2014
8
Content

Concluding Thoughts
Appendix
9
Africa is best thought of in terms of its parts however, rather than as a
single entity. Conventionally, Africa is divided into five regions with
North and Southern Africa being the most investment friendly to-date
 A mineral-rich region, with Bauxite, Uranium, and Iron ore reserves
West
 Dominates world cocoa production (~65% share)
 Key Challenges: Underdeveloped infrastructure and difficult business environment
 Key Country: Nigeria
 Preferred investment destination in Africa

 Have strong ties with the European market, esp. France
North
 Benefits from historical ties to Arab world
 Key Challenges: Recent political upheavals
 Key Countries : Egypt, Libya
 Agrarian economy, dominated by tea and coffee production

East
 Key Challenges: Civil unrest & political instability, and underdeveloped infrastructure
 Key Country: Kenya
 Heavy dependence on oil

Central
North
 Least integrated region due to wars and poor governance
East  Key Challenges: Weak infrastructure, in terms of transportation, electricity, and water
West  Key Country : DRC
Southern  Most preferred investment destination in Africa

Southern
 Ranks highest on ‘ease of doing business’ in Africa

Central
 Highly developed transportation and communication system. Highest literacy rate.
Relatively greater intra-regional trade
 Key Country : South Africa
Source:
(1) Lions of Africa, McKinsey Global Institute
10
North and Southern Africa are also the regions with the greatest
wealth; That being said, there is a great deal of growing interest in
East and West Africa where firms hope to enter and enjoy a first
mover advantage
Region North East West Southern Central Total
No. of Countries 5 14 16 10 8 53
Area (M Sq. Km) 5.7 6.4 6.1 5.9 5.3 29.4
Population 2010 (M) 163 297 302 140 113 1,014
Density of Population 28 46 50 24 21 35(B)

(Person/sq Km) (2010)
GDP 2010 ($ B) 583 200 319 517 86 1,705
GDP per capita 2010 ($) 3,579 671 1,057 3,699 764 1,681(B)
Algeria, Kenya, Ghana, Angola, Equatorial

Egypt, Ethiopia Nigeria South Guinea,
North Major Markets Libya, Africa Gabon
Morocco,
East Tunisia
West P&G, Unilever, Coca Cola, Coca Cola. Coca Cola,

Unilever, Nestle, Kraft- Danone, Nestle
Southern Kraft- Coca Cola, Cadbury, Kraft-
Cadbury, PZ Nestle, PZ Cadbury,
Central Key MNCs(A) Nestle, Cussons Cussons, Nestle,
Coca Cola, PepsiCo, PepsiCo,
PepsiCo Unilever Unilever,
Notes:
(A) Within the CPG industry Mars-
(B) Average across countries Wrigley
Sources:
(1) Lions of Africa, McKinsey Global Institute
(2) World Bank Database
11
Indeed, some describe a “cross” overlaying the continent and
suggest countries at the endpoints represent some of the most
attractive opportunities for multi-national consumer (A)
Egypt
Ghana Kenya
Nigeria Ethiopia
North
East
West
Southern
Central
South Africa
Note:
(A) Excluding Angola which is very often also listed in the top countries of interest to consumer products manufacturers
Source:
(1) Primary Research
12
Content

Concluding Thoughts
Appendix
13
In terms of consumer spending, while small, Africa has grown faster
than most other regions; of the money spent, over 50% is spent on
food, beverages and other consumer goods
Growth in Global Consumer Spending Consumer Spending Split in Africa (2012)
45,000 CAGR
40,000 2,006 11.7%

1,202 10.9%
12%
35,000
3%
10,801 9.3% 3%
30,000
5% 43%
$ Billion
25,000 830 526 6%

5,318 11,545 4.0%
20,000
11%
15,000 8,403
17%
10,000
15,827 5.5%
5,000 10,294
Food & Beverage Housing
- Non-food Consumer Goods Healthcare
2004 2012
Telecom Banking
America Europe Asia Africa Others Education Others
Source:
14
The African consumer market is partly driven by growth in the
continent’s population which is expected to double by 2050
Growth in the African Consumer Population
Population (billions)
2.1% 0.8% 0.6% 0% 0%

6.0
Population (billions)
5.3
5.0
4.3
4.0
3.0 2.4
2.0
1.1
1.0 0.6 0.8 0.4 0.4
0.7 0.7
0.0
All Africa Latin Asia North Europe
America/ America
Carribean
2013 2050E
 The consumer market in Africa is expected to double in the next 40 years

– By 2050, ~20% of the world’s population would live in Africa
 More than two third’s of Africa’s population is below 25 years of age which is growing even faster, at 2.7%
– This indicates a large working age population in Africa which will further drive the future economic growth of the
continent
Sources:
(1) http://www.prb.org/pdf13/2013-population-data-sheet_eng.pdf
(2) http://www.unesco.org/new/en/media-services/single-
view/news/one_third_of_young_people_in_sub_saharan_africa_fail_to_complete_primary_school_and_lack_skills_for_work/#.UpcGOPu3Wj8
(3) http://www.mckinsey.com/insights/consumer_and_retail/winning_in_africas_consumer_market
15
In addition, increasing urbanization in Africa is expected to boost the
consumer market by increasing demand, enabling access and
attracting additional investments
Urbanization of Africa
Urbanization (2010)
100%
21% 18%
27%
80%
60% 55%
70%
60%
40% 79% 82%

73%
20% 40% 45%

30%
0%
India Africa China Europe Latin North
America America
Cities
with > 48 52 109 52 63 48
1M
people
Urban Rural
 Percentage of African population living in cities has increased from 28% in 1980 to 40% in 2010
 The rate of urbanization is similar to China and more than India; reportedly the fastest in the world at 3.6%
 ~50% of African population are estimated to live in cities by 2050
The increase in
 Africa has ~52 cities with more than ~1M population, more than India and North America urbanization will
enable greater and
 Urbanization will boost demand and attract more investments more cost effective
Sources: access to consumers
(1) Winning in Africa, Mckinsey and Company
(2) Lions on the move: The progress and potential of African economies, Mckinsey Global Institute
(3) The 2014 African Retail Development Index: Seizing Africa’s Retail Opportunities, AT Kearney
16
Sub-Saharan Africa has several countries with higher per capita
spend than that of China and India
Private Consumption per Capita, 2012 ($) (A), (B)
12,466
5,000
4,451
4,500
3,887
4,000 3,744 3,800
3,500
2,906
3,000
US$
2,370
2,500
2,016
2,000
1,500 1,195 1,222
1,005
1,000 597 612 670 738
471 495 533 556 577
500
-
Congo,
Seychelles
China
Angola
Equatorial
Botswana
Nigeria
India
Kenya
Comoros
Senegal
Zimbabwe
Cameroon
Lesotho
Swaziland
Gabon
Mauritius
Mauritania
Namibia
South Africa
Rep.
Guinea
 Private consumption in Sub-Saharan Africa ranges from as low as $124 in Burundi to more than $12,000 in Seychelles
 It is higher in many countries, largely because of uneven concentration of wealth within a small percentage of population.
– For example, in Equatorial Guinea, wealth is highly concentrated and 70% of the population still lives under the UN Poverty
Threshold
Note:
(A) Includes Sub – Saharan African countries, with the highest private consumption per capita African Countries
(B) Values at constant 2005 exchange rate
Source:
(1) World Bank Database 17
A rise in the middle class population in Africa has led to an increase in
disposable income and a subsequent growth in discretionary spending
Growing Middle Class Population
African Population Split by Income Levels

100% 5% 5% 5%
6%
80% 28% 30% 32% 35%
60%
%
40%
67% 65% 62% 60%
20%
0%
1980 1990 2000 2010
Poor (< $2 per day) Middle Class ($2-20 per day)

Rich (> $20 per day)
 The percentage of the population that is middle class in Africa has increased from 28% (~110M) to 35% (~300M) in the
last thirty years
– Middle class population as a percentage of total population is estimated to reach ~40% by 2050
 Rise in middle class population has led to increase in disposable income and purchasing power of Africans
Source:
(1) http://afritorial.com/newafrica/
18
40% of CPG spend in Africa is controlled by the tier 1 consumers,
including Progressive Affluents and Trendy Aspirants
African Consumers: Nielsen Segmentation
Type of Sub- Monthly CPG Average Monthly % of Total CPG
Key Characteristics
Consumers Classification Spending ($) Income ($) Spend
Progressive – Older with families

~190 ~1000
Affluents – Well established
Tier 1 40%
– Young and upcoming
Trendy Aspirants ~175 ~850
– Well educated
– Better educated, tend to be in mid-
Balanced Seniors ~125 ~625
thirties, married
Tier 2 28%
Struggling ~125 ~375 – Under educated/ low income
Traditionals
Wannabe ~90 ~400 – Labourers/ entry level employees
Bachelors
Evolving
Tier 3 ~80 ~580 32% – Students/ unskilled labourers
Juniors
Female ~70 ~350 – Housewives/students/ labourers
Conservatives
Key Points
 Tier 1 consumers are wealthier, more urban and relatively well-educated consumers with high income and CPG spend
– They drive growth of modern trade and online retail channels, and are also more open to new and expensive brands
 Tier 2 consumers are Africa's middle aged and middle income populations, with average CPG category spend
– They primarily focus on the needs of their families and focus on affordability
 Tier 3 consumers, the largest segment within Africa, consists of consumers who spend much less on CPG categories
than the average
Source:
(1) The Diverse People of Africa, 2012, Nielsen. The data is from countries including Nigeria, Kenya, DRC, Zambia, Uganda, Tanzania,
Ethiopia, Mozambique, Angola, Namibia, Zimbabwe and Ghana 19
Within Sub-Saharan Africa, the top global 50 CPG firms have focused
their investments primarily in five countries, with over 50% operating
in South Africa and Nigeria
Global 50 CPG firms’ presence in Sub-Saharan African Countries 2012(A)
Mix of US/Non-US
40 firms in sub-Saharan
36 Africa is similar to
35 or 70% overall Global 50
35
Number of Global 50 CPG Firms
29
30
14 15
26 or 52%
25
12 US Firms
20 11 18
15
15 7 Europe/Other
11 Firms
7
10 21 21
3
17
15
5 11
8 8
0
South Africa Nigeria Kenya Ghana Angola Sub-Saharan Sub-Saharan
Africa Africa Excluding
SA and Nigeria
Note:
(A) Presence based on review of office or manufacturing locations or evidence of significant distribution/share in country
Sources:
(1) OC&C Global 50, 2013
(2) Annual Reports
(3) BA Analysis
20
There is evidence that global 50 CPG firms present in Africa are reaping
the benefits - in the form of higher growth rates and strong returns
Growth and Return in Nigeria
Sales 2011 CAGR of Sales Operating Margins 2011 ROCE 2011 (Pre-Tax)1
Selected 2010-11
CPG
Firms
Global Nigeria Global Nigeria Global Nigeria Global Nigeria
$13.4b $670m 13% 14% 4% 12% 11% 92%
$94.8b $630m 6% 20% 14% 22% 16% 41%
$64.8b $350m 10% 15% 14% 15% 22% 85%
Notes:
(A) Presence based on review of office or manufacturing locations or evidence of significant distribution/share in country
(B) Includes all firms listed as present in Nigeria, Kenya, Ghana or Angola, and selected reviewed other Sub-Saharan African countries
Sources:
(1) OC&C Global 50, 2013
(2) Annual Reports
21
Content

Concluding Thoughts
Appendix
22
The African opportunity is poised with multiple challenges however
Challenges of Accessing Consumers in Africa Market
 Environment Challenges
– Differences across countries on multiple parameters
Environment – Lack of infrastructure
– Low level of intra-region trade
– Bureaucracy and corruption
– Uncertain policy environment
 Market Related Challenges

– Significant share of population in low income group –
low purchasing power
– Strong dominance of traditional trade
– Underdeveloped capital markets
Business
 Business Related Challenges
Market – Lack of managerial talent
– Lack of strong manufacturing and distribution local
partners/acquisition targets
– Lack of local information
– Proliferation of counterfeit goods
Source”
(1) BA Analysis
23
Challenge: Differences across Countries E
It is hard to generalize in Africa; the countries are very diverse,

as they are in other emerging regions of the world M
B
Index of Intra-Region Variances among Nations on Key Economic Parameters

6.0
5.0
4.0
3.0
2.0
1.0
0.0
GDP Growth Economic Above BoP Urbanization % Consumer Working Age Literacy Rate Unemployment
Rate Diversification Population % Spending Population % Rate
Africa Americas Asia Middle East Europe Oceania World Average
 African nations show smaller variations across nations on key economic parameters compared to Asia, Middle East and
Overall World
 However, variations on most metrics are higher compared to advanced regions such as Americas and Europe highlighting
the diversity within Africa and need for a country specific strategy and not a single strategy for the continent
Sources:
(3) BA Analysis
24
Indeed, each country within Africa presents a unique story in

terms of its business, economic and demographic features M
B
Consumer Spend
Consumer Spend
Population (%)
Population (%)
Population (%)
Population (%)
Unemployment
Unemployment
Diversification
Diversification
Ease of Doing
Ease of Doing
Literacy Rate
Literacy Rate
Urbanization
Urbanization
Working Age
Working Age
GDP Growth
GDP Growth
Above BoP
Above BoP
Per-capita
Per-capita
Economic
Economic
Rate (%)
Rate (%)
Business
Business
African Market African Market
Algeria B C D D D A D D D Liberia D B A A A D A B B
Angola D A C B B C C A C Libya B D D D D B C D D
Benin C D D D C A C C C Madagascar A D C B A D A D A
Botswana B D D D C A D B B Malawi C B A A A B B A B
Burkina Faso D B D A C C D A A Mali A A A B B D B C C
Burundi C D C D C B D D D Mauritania A D B C D C B C B
Cameroon A D D D D B D A A Mauritius B B B C A D C B A
Cape Verde C C C C C A B B C Morocco D A B B B D A B D
Central African Republic B D D D D A D D D Mozambique C B A A A C A B A
Chad D B A B A C A B D Namibia A B B D A D B B A
Comoros D C C C C D C C D Niger D A A B A D C A C
Congo C B B B C B A C C Nigeria A C B C B B B A B
Côte d'Ivoire D A A A C D A C C Rwanda C C C C B A C B B
Democratic Republic of theACongoC C B B C C C B Senegal A C D C D A A D D
Djibouti B D C B C D C C B Seychelles C A A A B B A C B
Egypt D B A A C C A C C Sierra Leone A D A D C B A D A
Equatorial Guinea D A B A B A B C D South Africa B A A D D B A B C
Eritrea A D D C D A D A B South Sudan B B C B C A B D C
Ethiopia C A A A B C B A A Sudan A A A B B C B A A
Gabon D D D C D B C A B Swaziland B A B A A D C A C
Gambia B C D D D A D C D Tanzania C C D D D B D D D
Ghana B C C B A A C D A Togo B C B C A D D D B
Guinea D A B A B C B B C Tunisia A D A D D D D D D
Guinea-Bissau C B C B A C D A A Uganda B C B A B B D C C
Kenya D A B A A B A A A Zambia A B A C B C C B A
Notes: Lesotho C C D C D A B D D Zimbabwe A B C A C C B B B
(A) Economic Diversification is share of Manufacturing and Services in Total GDP
Sources: d Countries in Highest Quartile c Countries in Second Highest Quartile
(1) IMF, World Bank b Countries in Third Highest Quartile a Countries in Bottom Quartile
(2) BA Analysis 25
With respect to consumer spending, of the 53 countries in Africa,

four represent more than 50% of the total consumer spending M B
Share of Countries in Africa Consumer Spending (2012)
19% South Africa Egypt

> 50% of consumer
26%
spending
Nigeria Algeria
Morocco Angola
3% 18%
3% Sudan Tunisia
3%
3%
Ethiopia Kenya
5%
10%
5% 6%
Other 45 Countries
Total = $1.2 T
 South Africa in the South, Egypt in North and Nigeria in West are the top three countries in terms of consumer spending
 Kenya – which only contributes 3% to Africa’s consumer spending is the largest market by consumer spending in Eastern
Africa
 The smaller 45 countries only contribute about $300 B out of a total of $1,200 B of consumer spending across Africa
Sources:
(1) BA Analysis
26
Furthermore, there are often wide disparities in prices across

African regions with highest variations in Western African M
B
countries
Variation of Retail Price Per Kg for Chocolate and Sugar Confectionery in Different African Countries
250
Central East Africa North Africa Southern Africa West Africa
Price Index (South Africa = 100)
Africa
200 176
198
113 138 138 179
150
110 151 101 113 112 116
107 104 109
101 95 100 97
93 86 90 90
100 121 80 78 84
109 109 105
100 61 98 100 94
91 92
75 73 98 78
50 30
46 46 42
38 35
28
-
Gabon
Uganda
Egypt
Namibia
Zambia
Ghana
Nigeria
Ethiopia
Libya
Mozambique
South Africa
Cameroon
Kenya
Central African Republic
Algeria
Zimbabwe
Morocco
Angola
Niger
Rwanda
Gambia
Cape Verde
Tanzania
Côte d’Ivoire
Chocolate Index Sugar Conf Index
 Prices for same products vary between different African nations highlighting the need for in-depth country specific
intelligence and potentially individual strategies
 The least amount of variations were noticed between Southern African nations which reflects the fact that South Africa
acts more like a region and trade flows more freely
Source:
(1) Eurromonitor
27
The prices can also vary dramatically across players highlighting

different marketing strategies of CPG companies across M
B
countries
Variation of Price Per Kg for Snickers and Dairy Milk in Different African Countries
250
Price Index (South Africa = 100)
200
191
142
150
115 144
100 100
100 84
95 100
70
50
-
Egypt Nigeria South Africa Kenya Cameroon
Mars Snickers Mondelez Dairy Milk
 The above chart compares the prices for Snickers (Mars) and Dairy Milk (Mondelēz) chocolates in the select countries
 While Mars and Mondelez price similarly in some markets (e.g., Egypt and South Africa), they are very different in others
Note:
(A) The above example of prices for chocolate brands has been used as an example to highlight price differences across African countries for same products
Sources:
(1) Data for Kenya, South Africa, Cameroon and US has been derived from store visits
(2) Data for Nigeria and Egypt has been obtained form Euromonitor
(3) Data for Philippines has been obtained from Nielsen
(4) Data for India has been obtained from www.chocohouse.in (accessed on 5 August 2013)
(5) Data for Mondelēz price in Cameroon is for Dairy Milk Fruit and Nut 28
Challenge: Lack of Infrastructure E
With the exception of a few countries, road network is poor in most

African nations M
B
Road Density (Km of Road/100 Sq. Km Land Area) Paved Road (% of Total Road))
- 25 50 75 100 125 150 175 0% 20% 40% 60% 80% 100%

Ghana Egypt
South Africa Algeria
Kenya Tunisia
Côte d’Ivoire Morocco
Zimbabwe Libya
Nigeria Sudan
Togo Senegal
Benin Botswana
Egypt Zambia
Morocco Eritrea
Zambia Togo
Tunisia Mozambique
Cameroon Zimbabwe
Tanzania South Africa
Senegal Nigeria
DRC Tanzania
Namibia Namibia
Congo Ethiopia
Algeria Ghana
Libya Gabon
Botswana Cameroon
Angola Angola
Ethiopia Benin
Mozambique Côte d’Ivoire
Gabon Congo
Eritrea Kenya
Sudan DRC
Brazil China India UK Brazil India China UK
Notes:
(A) Top 27 countries only included
Source:
(1) World Bank Database 29
Almost all African countries with the exception of South Africa

rank low on global logistics Index M
B
International Logistics Performance Index (LPI) 2014(A),(1)

Select LPI Cumulative International Logistics Tracking &
LPI Rank Customs Infrastructure Timeliness
Countries Score Shipments Competence Tracing
1 Germany 4.12 4.1 4.3 3.7 4.1 4.2 4.4
4 UK 4.01 3.9 4.2 3.6 4.0 4.1 4.3
28 China 3.53 3.2 3.7 3.5 3.5 3.5 3.9
34 South Africa 3.43 3.1 3.2 3.5 3.6 3.3 3.9
54 India 3.08 2.7 2.9 3.2 3.0 3.1 3.5
62 Egypt 2.97 2.9 2.9 2.9 3.0 3.2 3.0
65 Brazil 2.94 2.5 2.9 2.8 3.1 3.0 3.4
74 Kenya 2.81 2.0 2.4 3.2 2.7 3.0 3.6
75 Nigeria 2.81 2.4 2.6 2.6 2.7 3.2 3.5
90 Russia 2.69 2.2 2.6 2.6 2.7 2.9 3.1
100 Ghana 2.63 2.2 2.7 2.7 2.4 2.9 2.9
104 Ethiopia 2.59 2.4 2.2 2.5 2.6 2.7 3.2
142 Cameroon 2.30 1.9 1.9 2.2 2.5 2.5 2.8
Notes:
(A) Scores range from 1-5 with 5 being the highest score; African Countries
(B) Top most ranked countries in Africa included
Source:
(1) Logistics Performance Index: 2014, World Bank
30
The time and cost involved in inland transportation of goods are

also very high M
B
Average Transit Time (Mombasa-Nairobi)(A),(1) Share of Logistics Cost (Mombasa-Nairobi)(A),(1)

30
Unloading (2 hrs.)
Goods transiting 430
25 km from Mombasa to Weight Station (3 hrs.) 3%3%
4%
Nairobi take ~ 30 hours 4%
on an average. The
20 same distance in the 13% 41%
US takes ~ 6 hours
Time (Hrs)
15
15%
10 Police Checks (2 hrs.) 17%

Driver Delays (11 hrs.)
5
Weight Station (3 hrs.) Sea Freight Shipping Port Handling
0 Container Freight Station Charges Clearing Agent Fees +Vat
0 100 200 300 400 Inland Routing Costs Indirect Costs of Delays
Distance (Kms)
Direct Costs of Delays Shipping Lines Charges
 It takes ~30 hours and costs ~ $9,844 to transfer a 20 foot container from Mombasa to Nairobi
 Driver delays such as rest and personal errands would normally not be necessary for such a short distance, but the
various regulatory delays force the driver to rest a night during transit
 The shipping line charges include fees such as delivery order fee, bill of lading fee and piracy risk surcharge
Notes:
(A) Logistics Costs and Average Transit Time of a 20 Foot Container, Mombasa - Nairobi
Source:
(1) CPCS Transcom (2010) Analytical Comparative Transport Costs Study Along the Northern Corridor Region
31
Challenge: Low Level of Intra-region Trade E
Africa forms a small share of global international trade; intra-

region trade is very low compared to other regions M
B
Global Merchandizing Trade in Different Parts of the World (2013)

100%
31%
80% 46% 44%
Share in Destination Region
60%
94% 92%
88%
40%
69%
54% 56%
20%
12% 8%
6%
0%
Exporting Region Europe Asia America Middle Africa
Intra-region Other Regions % of Total Global Trade East Oceania
 While rising relatively faster than others, African merchandise trade still
accounts for a very low share of world trade
 Intra-African trade remains a very low percentage of African trade with the  The lack of Intra-Africa trade poses a
challenge for firms hoping to have a
world. Most of the intra-region trade is through land locked countries
launch pad in Africa from which it will
where its on its way to other destinations expand to other markets
Note:
(A) Includes all goods and commodities; excludes services
Source:
(1) Trade Map 32
One reason for low level of intra-region trade is the existence of

multiple economic/custom unions which do not function well M B
and add complexity to trade

Regional Economic Communities in Africa
UEMOA CEMAC
AMU
ECCAS
Benin Cameroon
Burkina Faso Central African Republic Djibouti Algeria
Côte d'Ivoire Chad Eritrea Libya
Guinea- Congo Ethiopia Mauritania
Bissau Equatorial Guinea Sudan Morocco
Mali Gabon Tunisia
Niger
Angola
Senegal
DR of Congo
Togo
Burundi
Cape Verde
Rwanda
Liberia EAC
Kenya
Gambia
Uganda
Ghana
Guinea Botswana Comoros Malawi  Poor regional
Nigeria Lesotho Seychelles Zambia trade also stifles
Sierra Leone Namibia Mauritius Zimbabwe overall growth,
South Africa Madagascar Swaziland since for many
Mozambique small countries in
SADC
Africa, regional
ECOWAS COMESA
trade is required
 There are more than 14 trading blocs in Africa with overlapping membership. Of those SADC, to experience
ECOWAS and EAC (where they share a language and moving closer to a shared currency) work economic
best diversification, a
key driver in
 Lot of goods are traded informally and elude the customs
economic growth
Notes:
(A) The above schematic is a direct adaptation from Accenture study on African consumer market to highlight the multiple economic/custom unions existing in Africa
(B) Please refer to appendix for acronyms definitions
Source:
(1) The Dynamic African Consumer Market, Accenture, 2011 33
Within intra-region trade however, South Africa acts as the

trade hub M
B
Share of Major Countries in Intra-region Exports to

Major Exporters to Africa Region (2013)
Africa
100% 1% Middle
East, 7%
90% America,
11%
80% Intra-region,
11% Others, 21%
70%
60%
Asia, 30% Mozambique,
50% 100% 3% South Africa,
Congo, 3% 50%
40% Morocco, 3%
30% Angola, 3%
Europe, Zambia, 4%
20%
40% Algeria, 6%
10% Nigeria, 6%
0%
Total Africa Imports Share of Regions
 A significant share of the intra-region trade in Africa is contributed by South Africa followed by Nigeria and Algeria
 Nigeria’s share of intra-regional trade is smaller than its external trade, reflecting the dominance of hydrocarbons in the
country’s exports
Source:
(1) Trade Map
34
More than half of South Africa’s intra-region trade is with its

neighbouring countries; Indeed, the SADC is one of the M
B
strongest trading hubs in Africa

Share of Countries in Intra-Africa Exports of South
Regions in Africa
Africa
Zambia 17%
Zimbabwe 15%
Mozambique 15%
DRC 9%
Angola 7%
Nigeria 5%
North
Kenya 4%
East
West
Tanzania 4%
Southern
Central Ghana 3%
Others 8% 4% 4% 2% 2%
0% 5% 10% 15% 20% 25%

Source:
(1) Trade Map
35
Much of Africa’s intra-regional trade is unaccounted for since it

takes place via informal markets M
B
Examples of Informal Trade Markets Which Facilitate Intra-regional Trade
Merkato Market Kantamanto Market Mboppi Market

Addis Ababa, Ethiopia Accra, Ghana Accra, Ghana
Destinations: Eritrea, Djibouti Destinations:Burkina Faso, Togo Destinations: Chad, CAR(A), Gabon
 Although there are no reliable statistics available, adding informal cross-border trade to official figures for intra-African
trade would increase the share of intra-African trade in total trade
 In the Southern African Development Community (SADC) area, its estimated that informal cross-border trade could
amount to an additional $17.6 B a year, equal to 30-40% of formal trade
 In 2009 and 2010, Ugandan total informal exports to the Democratic Republic of the Congo, Kenya, Rwanda, the Sudan
and the United Republic of Tanzania were worth $790 M and $520 M, respectively
 Furthermore, estimates of informal cross-border trade in West Africa show that it could represent 20% of GDP in Nigeria
and 75% of GDP in Benin
Notes:
(A) Central African Republic
Source:
(1) UNCTAD
(2) BA Analysis
36
Challenge: High Rate of Bureaucracy and Corruption E
With the exception of five countries, all African nations rank low
on global corruption perceptions index M
B
Global Corruption Perceptions Index (CPI) Scores

0 10 20 30 40 50 60 70 80 90 100
Botswana
Countries
African
Cape Verde
Top 5
Seychelles
Rwanda
Mauritius
Niger
Ethiopia
Median African
Tanzania
Countries
Mauritania
Mozambique
Sierra Leone
Togo
Comoros
Gambia
Chad
Countries
Bottom 5
African
Equatorial Guinea
Guinea-Bissau
South Sudan
Somalia
World Average
India China United States
 CPI ranks countries based on how corrupt their public sector is perceived to be, where a score of 0 means highly corrupt and 100
means very clean public sector
 While over the years, indicators related to human development and sustainable economic development have improved in Africa, there
has been noticeable deterioration with regards to the rule of law and safety
 Only five Sub-Saharan African countries score above average scores in 2013 survey. Issues include stealing, looting government
coffers, rigging elections, etc.
Note:
(A) List represents top five, bottom five and those right in the middle of all African countries
Source:
(1) Corruption Perceptions Index, 2013, Transparency International
37
Challenge: Uncertain policy environment E
“Policy Instability” is also identified as one of major challenges

associated with working in an African country M
B
Challenges of Doing Business in Sub-Saharan Africa
Access to Financing
Corruption
Inadequate Supply of Infrastructure
Inefficient Government Bureaucracy
Tax Rates
Inadequately Educated Workforce
Inflation
Policy Instability
Poor Work Ethic in National Labor Force
Tax Regulations
Restrictive Labor Regulations
Crime and Theft
Foreign Currency Regulations
Insufficient Capacity to Innovate
Government Instability
Poor Public Health
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
% of Responses
 As per the Executive Opinion Survey conducted by the World Economic Forum, policy instability is one of the key challenges of doing
business in Africa. For example:
– In Nigeria, imports of sugar confectionery were suddenly and without defensible rationale banned in 2000 which resulted in the exit of then major
lollypop player – Chupa Chups. However, the ban has now been lifted
– Similarly, import of fruit juice was also banned in 2002, and import duty for juice concentrates was reduced to 5% in the same year to push local
manufacturing
– Zambia, recently suddenly banned the use of American dollars in local transactions—a needless extra hassle for firms operating there
Source:
(1) World Economic Forum Executive Opinion Survey (2010)
38
Challenge: Significant Share in Low Income Group E
A significant portion of the African population lives below

poverty line M
B
Population Living in Poverty in African Countries (LYA)(A),(1)

South Africa
380 Global Average (42%) Nigeria
330
280 Algeria
230
180 Angola
Morocco Oil contributes
130 significantly to Nigeria’s
GDP, the profits from
80 Sudan
58 which do not trickle down
Ghana Ethiopia to the population
48 Tunisia
GDP in US$
Kenya
38
Tanzania
28 Cameroon
Uganda Zambia
18 Gabon
18
Botswana Senegal Mozambique
15
Chad
12 Namibia Burkina Faso Madagascar
Mali
9 Guinea Benin Rwanda
Swaziland
6 Burundi
Niger
Mauritania Sierra Leone
3 Lesotho Malawi
Djibouti Liberia
Togo Comoros Central African Republic
0
Note: 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
(A) LYA = Latest Year Available.
Source:
Population below poverty line (% of total)
(1) World Bank Database Bubble size indicates population in Million
39
Nigeria is particularly noteworthy given its population and very B

large % which live at the bottom of the pyramid(A) M
BoP Percentage of Population(A,B), (1,2)
African Countries with Highest BoP Percentage Total Population (M)

Congo 97% 75
Tanzania 93% 46
Nigeria 90% 177
Ethiopia 88% 87
Kenya 77% 43
Uganda 76% 35
Ghana 64% 26
South Africa 39% 53
Egypt 32% 85
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of total population
Notes:
(A) LYA – Last year available.
(B) Bottom of Pyramid segment is defined as people earning less than $2.5 a day (PPP).
Sources:
(1) World Bank.
(2) 2013 World Gazetter projections
(3) Individual national government statistics
(4) BA Analysis.
40
When trying to assess the wealth of a population, it is important to

note countries which rely upon high-value exports often have M B
lower consumer spend than more diversified economies, making

GDP per capita a misleading indicator in many African countries
Reliance on Oil and Household Spend in Africa
120%
Per Capita Consumption as % of Per-capita GDP(B)
African nations with high reliance on

Swaziland oil and other high-value exports tend
100% Gambia to have high GDP per-capita but
relatively low consumer spend
Madagascar Lesotho
Central African Republic
Togo
Rwanda South Sudan Egypt
80% Sudan Mozambique Zimbabwe Guinea
Kenya Niger
Burundi Côte d'Ivoire
Benin Tunisia Democratic Republic of Mauritania
Ethiopia Senegal the Congo Equatorial
Eritrea Cameroon Mali
60% Namibia Guinea
Cape Verde Uganda Burkina Faso
South Africa Sierra Leone
Morocco
Ghana Botswana Chad Angola
Nigeria Congo
Zambia
Gabon
40% Libya
Djibouti
Algeria
20%
0%
0% 5% 10% 15% 20% 30%
25% 50% 70% 90%
Note:
(A) LYA = Latest Year Available. Share of Mining in GDP (%) Share
(B) Ratio of Consumer Spend to GDP per Capita is taken to show that countries with high oil money tend to have concentration of wealth with few people which results in low overall
consumer spend
Source:
41
Challenge: Strong Dominance of Traditional Trade E
African markets are overwhelmingly characterized by traditional

trade M
B
Modern vs. Traditional Retail Trade (2010) Definition
 Traditional Trade (TT) is defined as all that trade that

Ethiopia 0% 100%
flows through traditional outlets, such as kiosks, corner
Sudan 3% 97% shops, local mom n pop stores, and open markets, or all
Ghana 4% 96% trade except that which flows through retail chains, hyper
Selected African Markets
Cote d Ivoire 7% 93% markets, supermarkets, etc. is modern trade (MT)

Nigeria 8% 92%
Key Points
Algeria 10% 90%
Angola 10% 90%  TT is characterized by a large complex network of
Egypt 14% 86% independently owned retailers and distributors carrying
primarily local or regional brands
Kenya 15% 85%
Morocco
 It can be difficult to penetrate for both national and multi-
25% 75%
national firms given its highly fragmented nature, yet it
South Africa 34% 66%
serves as the conduit for reaching the largest percentage
Tunisia 35% 65% of the consumer population
Libya 45% 55%  Some manufacturers also report, despite its high
Brazil 36% 64% distribution costs, they can reap greater margins from TT
China 20% 80% than MT retailers who negotiate hard on price
India 5% 95%
US 85% 15% Common TT Categories
UK 80% 20% Food and Beverages Home Décor and Furnishing
0% 20% 40% 60% 80% 100% Clothing and Textile Personal Care
Modern Trade Traditional Trade Consumer Durables Footwear
Sources: Jewelry and Watches Books, Music and Gifts

(1) Business Monitor International
(2) BA Knowledge Repository
(3) Planet Retail Research (2011)
(4) Feed the Lion, FMCG Opportunities in Africa, A.D. Little Report, 2014 42
Informal trade, a sub-section of traditional trade which consists of

hawkers and table tops, is a very strong channel in Africa M
B
Informal Retail Outlets in African Nations

350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Nigeria South Africa Kenya Cameroon
 Informal retailers act as an important delivery channel of goods to consumers in Africa

 These are mostly small make-shift structures such as table tops, hawkers, spaza shops, etc. which are usually located
around bus stops and crowded public areas
 Serving both cities and smaller towns, they primarily sell items such as snacks, beverages, fruits, bread, cigarettes,
confectionery etc.
 Smokers, students, drivers, passers –bys are the main customer group for table tops and hawkers
Source:
(1) BA Analysis
43
While South Africa has one of the highest rates of modern

trade penetration, Nigeria at least with respect to grocery M
B
stores is expected to witness high growth in this area
Presence (Number of Outlets)

Retail Environment South
Nigeria Kenya
Africa
Modern Trade (MT) % of Grocery Retail 62% 5% 25%
Current Global Retail Chains 9 0

Total No. of Regional Retail Chains 3,000 7 55
Stores
Local Retail Chains 30 150
Total 3,000 46 205
Global Retail Chains 50 1
Projected Regional Retail Chains 3,500 56 100
Total No. of
Stores Local Retail Chains 40-50 250
Total 3500 156 351
Much of the planned

expansion in modern
trade in Nigeria is
coming from South
Africa retailers
Note:
(A) Projected total represents the total number of outlets of each type expected in the next 5-8 years for each country respectively
Source:
(1) BA Analysis
44
Despite ambitious projections, Nigeria is unlikely to see a

dramatic increase in the total % of all trade represented by M
B
modern trade in the near future

Evolution of Modern Retail(1)-(4)
90% 83%
80%
80% 74% 75%
67%
Share of Modern Retail
70% 64%
60% 55%
50% It took 10 years and the

contribution of many
40% different factors for 34%
China to reach 30%
30% 25% modern trade penetration
20%
10%
10% 2%
1% 0% 1% 5%
0% 0% 2%
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
USA India China Nigeria
 Modern retail in Nigeria has been expanding rapidly over the past few years driven by Shoprite, Africa’s biggest retailer,
Spar, Europe’s largest retail network, and Massmart, South Africa’s second-largest retailer
 However, even if modern retail market in Nigeria continues to expand it won’t phase out or replace the informal markets
completely which still and will continue to dominate the retailing .
Sources:
(1) http://www.bain.com/Images/INDUSTRY_BRIEF_Ahead_of_curve_in_emerging_markets.pdf
(2) http://sg.nielsen.com/site/documents/2010RetailandShopperTrends2010.pdf
(3) http://www.kaminibanga.com/professional/articles/brand-equity/27-modern-retail-advantage-consumer-2004.html
(4) http://publications.gc.ca/collections/collection_2013/aac-aafc/A74-1-103-2013-eng.pdf
45
Challenge: Underdeveloped Capital Markets E
Domestic credit from banks to private sector is relatively lower

in African nations compared to other developing markets, M
B
stifling investment and growth opportunities

Access to Capital in Selected African and Other Markets (LYA)(A),(1)
40%
Brazil
35%
30%
Commercial Lending Rates
Uganda
25% Ghana
Kenya
20%
Côte d’Ivoire
Niger Nigeria
Rwanda Angola
15% Gabon Tanzania
Cameroon Egypt
Morocco
Zambia India
10% South Africa
Algeria
Ethiopia Namibia
Libya China
Tunisia
5% United States of America
0%
0% 20% 40% 60% 80% 100% 120% 140%
Domestic credit to private sector by banks (% of GDP)
Note:
(A) LYA = Latest Year Available.
Source:
46
Challenge: Lack of Managerial Talent E
Africa as a region ranks lowest in the Global Talent Index (GTI)

developed by Economist Intelligence Unit M
B
GTI Regional Scores
North America
Western Europe
Asia “I have designed my

strategy and have the
Latin America funding, what I need now
is people. I can’t find the
people I need to run the
Eastern Europe & Central Asia business” – Africa and
Middle East Regional
Middle East Director for Global
FMCG Player
Africa
0 10 20 30 40 50 60 70
 Africa has a significant shortage of management and specialised skills

 Talent shortage is putting a strain on investment in Africa as educational institutions fail to produce the quantity and quality
of skills required to meet growing business needs. 75% of the CEOs operating in African countries surveyed by PWC
outlined a lack of available talent as a threat to their growth
 Even when talent is identified, e.g., through a head hunter to fill senior positions, multinationals note they are only available
at a very high price, comparable to European executives
 Many believe the shortage of available managerial talent has become much worse since the entry of multinational telecom
firms over the past ten years in Africa who offered higher wages and more senior titles in order to recruit professionals
from other industries. Professional services firms, such as accounting firms, similarly followed suit.
Source:
(1) World Bank
47
Challenge: Lack of Managerial Talent E
Indeed, in most Africa countries, educational levels fall behind

developed and developing nations M
B
School Enrollment (% of Gross Population) (LYA)(A),(B),(1)

Primary Secondary Tertiary
Select Key African Countries
Ethiopia 79% Ethiopia 25% Ethiopia 3%
Nigeria 85% Nigeria 44% Nigeria 10%
South Africa 102% South Africa 102% South Africa 15%
Ghana 109% Ghana 61% Ghana 12%
Cameroon 111% Cameroon 50% Cameroon 12%
Kenya 112% Kenya 60% Kenya 4%
Brazil 137% Brazil 106% Brazil 26%
China 113% China 81% China 27%
India 112% India 63% India 18%
Russia 99% Russia 89% Russia 76%
USA 102% USA 96% USA 95%
0% 50% 100% 150% 0% 50% 100% 150% 0% 50% 100%

% of Gross % of Gross % of Gross
Notes:
(A) Gross enrolment ratio. Total enrollment in an education group (primary, secondary, tertiary), regardless of age, expressed as a percentage of the population of official education
group age. GER can exceed 100% due to the inclusion of over-aged and under-aged students because of early or late school entrance and grade repetition
(B) LYA = Latest Year Available
Source:
48
Challenge: Lack of Information E
Identifying and gathering reliable data on Africa is a challenge

due to the lack of credible data, inconsistent research standards,
M
B
and few quality research vendors

 Africa overall suffers from a lack of credible data. Given the relatively small size of the
markets that exist within many countries, few research firms have invested the effort
Credibility &
Data Availability
needed to provide robust analysis of such things as market size, player shares, retail
Reliability
segmentation, etc. Instead, data must be gathered first-hand and triangulated in order to
come up with reasonable and defensible estimates
 Data from secondary sources is scattered and lacks uniformity. National governments
Recentness of serve as the primary source of macro-economic and demographic data in many countries.
Data Not only is their data often considered suspect and self-serving, it is also very often
outdated, particularly in countries with rapidly emerging economies
 Primary research is an evolving industry in most countries in Africa. There are few long
standing firms and most of them are trained only in the most conventional types of
Availability of consumer market research
Fieldwork
Agencies  Finding a reliable, well trained research firm who follows international protocols, while is
also creative and flexible enough to address the unique characteristics of each market is a
Data Collection
great challenge
 While respondents in Africa generally do not expect the same honorarium as those in
other more developed nations, such as the US and Europe do, it can sometimes still be
Ability to difficult to recruit and conduct interviews as well as gather useful insights
Effectively – Given the lack of communications infrastructure, e.g., reliable phone lines in Ethiopia, it can be
very time consuming to simply recruit and schedule interviews
Conduct Primary
– Some respondents unfamiliar with primary research are suspicious regarding how the
Research In-
information might be used and may not appreciate the interviewers need for specific and
Country detailed information
– There are approximately 2,100 languages spoken in Africa with languages spoken per country
ranging from 1 to more than 100 (1)
Source:
(1) The challenges in conducting market research in Africa, SIS International Research, September 2008
49
Challenge: Proliferation of Counterfeit Goods E
Counterfeit goods are seen across product categories and

appear to becoming more prevalent M
B
Adidas shoe in Algeria
Wood glue in Ethiopia

Sony music systems in Kenya
Genuine
Imitation
In Algeria, from 2010-2011

the amount of counterfeit
products seized by
customs officials rose by
84.5%
While most counterfeit products were

originally electronic goods and medicines While in some cases,
they now range from food products to counterfeit products are exact
industrial goods replicas of genuine products, in
other case it is just the look and
feel of a dominant brand which
is copied
 It is difficult to estimate the size of the counterfeiting industry since it is based on seizures but in East Africa alone it is
believed nearly $500 million has been lost in revenue due to counterfeit goods. Indeed many firms feel as though their
real competitors in these markets are not those known to them, but those making counterfeit goods
Sources:
(1) BA Analysis
(2) http://www.north-africa.com/naj_economy/industries_markets/1septtwentyfive47.html
50
Content
Concluding Thoughts
Appendix
51
Successfully entering and expanding in Africa often requires a
very different approach
Recommendations to Combat Challenges
Challenges Recommendations
Wide  Each African country requires a unique approach and strategy.
Differences Companies should select markets based on clearly defined criteria which
across go beyond macro-economic parameters and appreciate local market
Countries on dynamics, consumer learning, etc.
Multiple  Invest appropriately in learning about the local environment. Adapt the
Environment Parameters business model and offerings to the markets, if needed
 Invest in own infrastructure if critical to business and economically
feasible (e.g., captive power in Nigeria)
 Optimize cost in non-critical areas to offset investment in infrastructure
and maintain profitability
Lack of
Infrastructure  Appreciate and incorporate in product development any unique
environmental issues which might impact consumption (e.g., inconsistent
electricity for electronics, refrigerators for food)
 Invest in supplier relationships to manage raw material and supply chain
deficiencies
 Identify true regional trade hubs to ensure maximum reach in market
Business Low Level of  Conduct robust analysis of local players to identify strong partners for
Market Intra-Regional entry and expansion
Trade  Follow growth of modern trade via major modern retail chains to expand
across countries if modern trade is key to business
Bureaucracy  Identify a local contact or partner to manage all regulatory and policy
and Corruption affairs
 Engage in scenario planning in order to prepare for sudden changes
Uncertain
 When feasible and warranted develop strategy to work with local policy
Policy
makers
Environment
 Identify means to minimize investment risk rather than avoid it
52
Response: Differences across Countries E
CPG/FMCG companies need to be cognizant of local market

differences when building their African strategy M
B
 Rather than develop an “Africa” or pan-Africa strategy, many firms now recognize they must treat each
country differently, identify and prioritize the top opportunities and then pursue each with a strategy
which reflects the local dynamics
Response
– For example, for the same company, the retail strategy in South Africa may focus more on modern
trade, while in Nigeria, the focus may be on traditional trade. The same company may have lower
distribution costs, but lower margins with modern trade in South Africa, but the opposite in Nigeria
Global Strategy Cluster Strategy Country Level Strategy
 All markets are same  Markets can be clustered in  Each market is different and
different groups based on should be treated in different
similarities way
Low Relevance to Africa Market High
53
Response: Lack of Infrastructure E
In order to address the lack of infrastructure in Africa, some

companies, such as Diageo, invest in their own infrastructure M
B
and partnerships in order to support the sale of their products

 Diageo invested in its own infrastructure to overcome challenges related to power, water
supply, and consistent supply of commodities in Africa
Response  Currently Africa accounts for nearly 13% of Diageo’s total net sales. The continent
contributes 30% of Diageo’s global sales growth and 40% of its global operating profit
increase
Key Points/Examples
 Africa represents Diageo’s largest group of emerging
markets in terms of net sales. The company employs over
5,300 people through the production, distribution and
promotion of its brands
 Diageo invested in Africa to create integrated supply
chains: it built production sites with their own power and
water supplies
 It invested in local suppliers, in developing a sales force
and in working jointly with distributors to enhance their
capabilities
 Diageo sources 70% of grain for its breweries and spirits
production facilities locally. It invests in developing
agriculture locally. Not only does this allow them greater
“You really need to be able to generate at least 80 percent of your control over their inputs, it helps them better manage their
own power requirements by yourself either by embracing solar foreign exchange volatility
energy which some companies are doing or buy powerful generators.
Power is a real challenge to industrialization in Nigeria.”
— Nestle Business Manager, Nigeria
Sources:
(1) http://www.diageo.com/en-row/CSR/Pages/resource.aspx?resourceid=1078
(2) http://blogs.hbr.org/2012/06/how-to-succeed-in-africa/
54
Avon relies on local post offices to distribute their products

and make payments in South Africa where the infrastructure M
B
is otherwise poor in rural areas
 While global sales only grew by 1% in 2011, Avon’s sales in South Africa grew by 29%
Response  Avon has provided local women with a viable employment opportunity by improvising and
utilizing innovative means to manage distribution, credit and payments for their products
South African Post Office
Market Approach
 In hard to reach rural areas with few roads and
even fewer formal street addresses, Avon sends
Avon Sales Reps the products to local post offices where the reps
in South Africa pick them up and redistribute them to locals. Post
offices and/or large local retailers are also used as
pick-up spots for pay checks
 Without a well established formal credit histories,
Avon has also improvised by creating a simple
scoring system related to one’s personal assets,
e.g., ownership of a cell phone, demonstrations of
responsibility and permanence to establish their
credit worthiness
Source:
(1) The Economist, August 18, 2012
55
Multiple companies have adapted to the lack of infrastructure

by changing their product formulations M
B
 Promasidor tailored its product in Africa to overcome challenges related to supply of

freshwater and availability of milk
Response  Unilever has redesigned a wide range of products from food items to household products to
address the lack of refrigeration and water in Africa
 Similarly, P&G has introduced household products which address the lack of clean water
Promasidor’s Cowbell
Brand Key Points/Examples
While Promasidor was the first
powdered milk firm to develop a  Promasidor is an African dairy and beverage company
more shelf stable product in headquartered in South Africa
response to the lack of cold chain, – In 1979 Promasidor launched Cowbell brand of powdered
many firms with other products
milk with an objective to make milk accessible to all Africans
have followed suit, changing either
their packaging or formulation – Promasidor replaced the animal fat with vegetable fat in its
Cowbell milk powder to give it a longer shelf life, thereby
diminishing the dependency on cold supply chain
P&G’s Quick Lather – Promasidor‘s small sachet packs reduce the price point, but
Unilever’s Shelf Stable
Ariel Brand also provide an added benefit of enabling children to pour
Blue Band Brand
the powdered milk directly on their tongues and avoid
concerns about finding fresh water
 Unilever has developed a low-cost climate stable
margarine which doesn’t require refrigeration in order to
combat the lack of cold chain in Africa
 P& G’s Ariel brand of detergent in Africa is designed to
lather quickly thus reducing the water needed to wash
clothes
Sources:
(1) http://www.africanbusinessreview.co.za/reports/promasidor
(2) http://www.promasidor.com/about_products.php
56
The high rate of mobile phone penetration in Africa has

provided many firms with an opportunity to overcome other M
B
infrastructure limitations
 Safaricom introduced the M-Pesa concept in 2007 in Kenya which is a mobile-phone
based money transfer and micro-financing service
Response  MTN Ghana has launched the Mobile Money Bill Payment service to facilitate
payment of electricity and DSTV (satellite TV service) bills for subscribers
Key Points
 Mobile phone penetration in Africa is widely reported to
be higher than 80% and smart phone penetration ~18%
 Mobile phones are being used to transfer money, buy
products online and manage money through such things
as credit, savings, and insurance programs. Mobile
money transfers alone are expected to exceed $200
billion by 2015 according to the World Bank
– Tanzania is reportedly the leader in M-Commerce (Mobile
Money Services) across the Sub-Saharan African markets,
There are currently over 600 Million followed by Kenya, South Africa, Ghana, Nigeria and
mobile phone users in Africa. 1/3 of third
Uganda
of Kenya’s GDP takes place through
mobile transactions – Tanzania also leads in Mobile Payments for airtime top ups,
merchants, bills and salary payments by 60%, followed by
“Before camera phones, I had to travel to remote places to collect the payment South Africa 19% and Ghana by 6%
confirmation receipts from distributors/retailers, or wait for the payment to be
transferred to my account to dispatch goods.. Now, I ask my customers to take – Multiple new innovative M-Commerce products are being
picture of the payment confirmation receipt and send it to me through phone and built now on the M-PESA platform which can be operated on
the goods are dispatched right away” simple no-frills phones
– Area Sales Manager, Dangote group, Nigeria
Sources:
(1) OC&C Global 50, 2013
(2) Africa's mobile boom powers innovation economy, BBC.com, June 30, 2014
(3) Mobile penetration landscape in Africa, SSCG
57
E
Response: Low Level of Intra-Regional Trade, Lack of Local Information
Though few in number, regional distribution houses can offer

a faster expansion route to MNCs M
B
 MNCs such as L’Oreal partner with specialized distribution firms focusing on Africa,
and leverage their experience to enter or expand in Africa
Response
 In some cases, large distribution houses may also offer manufacturing or packaging
support to its principals
L’Oreal Brands For Africa Key Points

 L’Oreal recently signed a protocol agreement with Compagnie
Française de l'Afrique Occidentale (CFAO) covering production and
distribution of cosmetic products in Ivory Coast
 This agreement will provide L’Oreal access to
– CFAO’s distribution network
– Its knowledge of African countries and markets
– CFAO’s production facility for cosmetics and packaging components
Dark and Lovely Garnier  With this agreement, L’Oreal intends to strengthen its presence in
French speaking African countries and speed up its expansion in
Sub- Saharan Africa
The distribution and production partnership with CFAO is part of a strategic plan for the L'Oréal Group in
Ivory Coast and French-speaking West Africa. Ivory Coast is a fast-growing market where beauty products
have a strong appeal among local consumers. It is crucial for L'Oréal to increase its presence in these
expanding markets
- Managing Director, Africa Middle-East Zone, L'Oréal'
"Our strategy in West Africa is to offer major international brands a manufacturing and distribution tool suited
to the markets they wish to tap into. This new partnership is fully in line with CFAO's strategy of encouraging
the consumption of innovative, quality products in West Africa.
- Chairman, CFAO's Management Board
Sources:
(1) http://www.forbes.com/sites/greatspeculations/2014/12/29/loreal-strengthening-africa-presence-can-bolster-target-of-1-billion-new-customers-part-2/3/
58
For the most part, the firms which grow in Africa accept rather than
fight the characteristics which define these markets, in terms of trade,
the consumer population and local financing
Challenges Recommendations
Environment  Design strategy to lower product price and ensure reach
Significant share
 Work with distribution partners who have proven record in
of population in
reaching low-income consumers
low income
group – low  Identify and use innovative means to reach out to lower
purchasing income customers, including possibly partnering with other
power manufacturers who have good reach and complementary
products rather than developing own distribution
Strong  Segment, prioritize and address relevant TT segments
dominance of
traditional trade  Identify right set of distribution partners with ability to reach TT
(TT) outlets
Underdeveloped  Identify, evaluate and possibly employ alternative means of

capital markets access to capital
Business
Market
59
Response: Significant Share of Population in Low Income Group E
Similar to other emerging markets, the most common response

to the large low-income populations in Africa, is offering M
B
smaller SKU sizes

 Consumer product companies launch small SKUs or lower priced (value for money)
offerings in African markets (similar to the strategy adopted in other emerging
Response markets such as India)
 Companies use innovative grass root distribution models to reach out to BoP
customers usually in rural and underdeveloped areas
Key Points/ Examples

 In Nigeria, to target the lower income groups, PZ Cussons introduced three different
pack sizes for “Zip” detergent and five pack sizes for “Morning Fresh” cleaners
 Also in Nigeria, Reckitt Benckiser offers a bottle of Harpic for 120 naira (~ $0.75) in
order to combat the otherwise high cost of the product
 Nespray, an instant milk powder from Nestle, contains calcium, zinc and iron - all
essential for children. It is sold in a 250g pouch that costs only a few rand (< $0.50)
 In East Africa, Colgate is sold in small tubes to respond to limited purchasing power
of local consumers; joint toothpaste and toothbrush promotions are also common
across Africa
 In Nigeria, P&G sells Ariel by the ounce, enough for a couple of wash loads. Most
people buy it from the street side vendors of Lagos, where a 1-ounce packet of Ariel
costs $0.10. Diapers are marketed as one-a-day items: "One Pampers equals one dry
night". A pack of 10 sells for $ 2.30
 In South Africa, Danone and local dairy group Clover launched a project selling
individual pots of vitamin-enriched Danimal yoghurt for 1 rand (~ $0.14) for the BoP
segment
Source:
(1) http://upetd.up.ac.za/thesis/available/etd-07292012-144042/unrestricted/dissertation.pdf
(2) http://www.colgate.ph/app/Colgate/PH/Corp/LivingOurValues/Sustainability/RespectForPeople/OperatingResponsiblyInEmergingMarkets.cvsp
(3) Primary Research.
(4) BA Analysis.
60
Response: Strong Dominance of Traditional Trade E
The large presence of traditional trade and smaller sized

retailers typically requires companies to work with multiple M
B
entities to ensure their products reach the final retailer

 Emerging markets of Africa requires a multi-pronged distribution approach
 The first step to identifying the key channel entities involved in the distribution of a
Response
product category and designing an effective route-to-market strategy is to identify
the target retail segments and trace back their means of procurement
International/Local Production Unit
Local Entity Distributor
Sub-distributor Wholesalers
Direct Sales Team
Jobbers
TT Outlets Micro Stores

Retail Chains Forecourts Groceries
(e.g., Dukas) (Kiosks)
Source:
(1) BA Primary Research
61
Since there are very few large distributors in Africa,

companies must work with and rely upon a large network of M
B
distributors to ensure coverage

 Promasidor uses a large network of distributors to penetrate TT trade in Nigeria
Response  Heineken and Nestle deploy multi-level distribution networks in Africa to create
strong presence in traditional trade
 To expand its coverage in Nigeria and penetrate rural areas, Promasidor has
established a large fragmented network of 600 distributors in Nigeria (it is one of
the largest distribution network in Nigeria) which in turn reach out to other sales
channels – wholesalers, retailers, table top stores and others
– Promasidor’s market leadership ensures that its distributors stay loyal to it. The
company provides attractive margins, marketing support and fridges to some of its
distributors
 Heineken uses a 3-tier distribution structure in Nigeria (super key distributors,
wholesalers and bulk breakers), reaching almost 400,000 retail points
– 25% of Super Key Distributors (SKD) have NB–exclusive warehouses enjoying
preferential trade terms
– Large sales force to secure exclusive SKD to retail delivery
– Customer bonding programme including credit facility, bonus rebates, seasonal
promotions, pallets, annual customer award and birthday gifts
 Nestlé delivers directly to spaza shops (informal convenience stores) in South
Africa which make up about 30% of the national retail market. Many of these are in
remote areas and owners often cannot afford delivery vans. Nestlé has set up 18
distribution centres that deliver to spazas. It charges them the same prices as
bigger outlets
Sources:
(1) A continent goes shopping, The Economist, August 2012
(2) Nigeria: Huge country, huge beer market potential, Heineken, Amsterdam, November 2009
62
In order to strengthen the capabilities of traditional trade outlets

and gain greater favor with them, some manufacturers provide M B
complementary business services

 Coca-Cola provides South African retailers with advice on shelving and
merchandizing as well as free drink coolers
 In South Africa, SABMiller has helped illegal taverns convert into licensed outlets by
assisting with the application process and leading information workshops. SABMiller
Response
has also made all license applicants eligible for training in customer care, stock
management, book keeping, credit control, and responsible alcohol use
 P&G provides multiple business services to retailers in exchange for preferential
treatment

 “Golden Store” program to improve channel
partner economics
– P&G employees help improve and remodel independent
stores in rural areas in Nigeria
– P&G overhauls the outside appearance and the inside
design of remote stores, and provides software and other
expertise to help boost and track sales
– In exchange, logos of P&G brands are prominently
displayed outside the stores, products are given preferential
“We have created over 120 new successful shelf space and store owners become ambassadors for
entrepreneurs with sustained training and marketing P&G products
support in rural and semi-urban areas over the past five
years.”
– Manoj Kumar, MD, P&G Nigeria
Source:
(1) OC&C Global 50, 2013
63
CPG/FMCG firms must be proactive in order to address the business
challenges they face in Africa
Challenges Strategies
Environment  Define clear processes and KPI (key performance indicators) for
local teams
Lack of
 Invest in training and development of local team, if need be
managerial talent
 Build in retention plans to ensure you are not training for
competitors
 Build your list based on local market visit and channel feedback
 Segment and understand exact type of partner sought, given
Lack of strong local market definitions (importer, distributor, wholesaler, etc.)
manufacturing
 Identify and sequence criteria to ensure you do not “boil the
and distribution
ocean” and metrics are relevant given local environment
local partners/
acquisition  Think strategically and creatively, e.g., find partners dealing in
targets multiple brands and products to ensure penetration, Piggy back
on other people's network to reduce investments
Business  Invest in local partner for capability and growth
Market  Quickly identify and evaluate local sources of information
 Treat market intelligence as an asset. Invest in market
Lack of local information
information  Have plan for continuous intelligence development
 Identify areas of collective research where you can cooperate
with competitors. Promote industry associations
64
Response: Lack of Managerial Talent E
Some manufacturers are actively engaging in developing the

necessary managerial talent M
B
 Diageo launched a pan-African graduate program to accrue hundred graduates

Response each year to ensure a pipeline of talent going forward
Key Points
 Diageo’s Africa Early Career Programme is a development
programme offering roles and experience from day one. The
company recruits people across African nations and provides
positions in supply chain, finance, HR, sales and marketing
 The three-year programme includes both functional training and
leadership development. Functional training helps trainees gain
skills, knowledge and experience while leadership training
encourages thinking, and drives change
 People spend time with sales force out in the field to increase
their commercial awareness to understand brands, customers,
etc.
Source:
(1) http://www.diageo-careers.com/en-row/graduatesandmba/opportunitiesandprogrammes/Africa-Early-Career-Programme/Pages/default.aspx
65
Response: Lack of Distribution Partners E
To close “the last mile” of distribution, some firms build their

own partners M
B
 Coca-Cola’s MDCs of manual distribution centers are independently owned, low-cost

businesses created to service emerging urban and rural retail markets where classic
distribution models are not effective or efficient
 The MDC model identifies and engages independent entrepreneurs, who receive business
Response
training and in some situations financing
 Started in Ethiopia, Coca-Colas now runs more than 32,000 MDCs in more than 15
countries in Africa, employing over 19,000 people and generating more than $950 M in
revenues for Coca Cola
Micro Distribution Centers – Concept(1–3)
MDCs Transporters
A central point for warehousing of

products, with a manageable coverage
area and defined customer base
(typically about 150 retail outlets)
Retail outlets
MDCs typically serve low-volume outlets located in

more difficult to reach areas, with limited cash flow
Distribution of product is mostly
Source:
and high service frequency requirements
manual (e.g. by pushcarts) to keep
(1) Developing Inclusive Business Models, Harvard Kennedy School and International Finance Corporation. costs to a minimum
(2) http://www.thesupplychainlab.com/blog/photo-library/coca-cola-micro-distribution
(3) Developing Inclusive Business Models, Harvard Kennedy School and International Finance Corporation.
(4) http://www.businesscalltoaction.org/wp-content/files_mf/1286826974CocaColaCaseStudyFORWeb.pdf
66
Response: Lack of Distribution Partners E
Similarly, firms have invested in mobile micro point of sales

to ensure adequate reach M
B
 Both Danone and FanMilk have successfully used mobile carts to close the last mile
Response
and reach end consumers in difficult to access places which have little infrastructure
Key Points
Dani Ladies in South Africa
 Danone set up a separate network of distributors called ‘Dani
Ladies’ to promote its low cost dairy product designed in
partnership with dairy partner Clover
– "Dani Ladies" are trained to sell in open-air markets or door-to-door in
townships
– Danone provides a uniform, a cooler box, a trolley, support and
training, but the saleswomen must pay for the product in advance after
a pilot credit system was deemed unsuccessful
FanMilk Vendor
 FanMilk in Africa directly employs around 1,500 people in
production and administration and creates income opportunities for
more than 20,000 vendors and street hawkers. Employees and
vendors of FanMilk are generally the breadwinners of families
Sources:
(1) Danone Sustainability Report 2006
(2) Dani Ladies on front line of push to sell to poor, Reuters, June 2007
67
Responses: Lack of inter-regional trade, managerial talent and infrastructure E
Companies facing multiple challenges sometimes resort to

B
completely different models M
 Jumia, an e-commerce site in Africa has responded to challenges with inter-regional trade,
managerial talent and infrastructure by:
 Creating an extensive network of transportation vehicles to fulfill orders and make
delivery to end consumers across Nigeria, using regional warehouse for order
Response fulfillment outside Nigeria
 Sourcing talent from among the pool of non-resident Nigerians who have received
education form renowned institutions globally, and are looking to come back
 Implementation of cash on delivery model to address lack of payment infrastructures
Key Points/Examples
 Jumia started with Nigeria, and, within a short span of time, opened warehouses in other
“We’ve done two things. One is we’ve important African countries such as Egypt, Morocco, Kenya and Cote d'Ivoire
raised money from very smart investors
– Jumia also expanded to other African countries such as Uganda, Tanzania, Cameroon, Ghana;
who can get us access to top-notch
talents. And the second thing we’ve done – Jumia supplied goods to some of the above countries from warehouses established in larger
is we’ve gone around the world to find countries such as Kenya and Nigeria
Nigerians who want to come home. We’ve  Jumia ensures timely delivery of goods in all 36 states of Nigeria, building trust among the
gone to recruit at Harvard Business consumers; this is possible only through significant investment in supply chain
School, at MIT, at Oxford, at London
infrastructure
Business School” -Company Founders
 To address the challenge of finding right managerial talent, Jumia recruits young and
“For all of its consumer potential, the passionate Nigerians from all over the world, who wish to return to their home country
evolution of Nigeria’s online retail industry
 In addition, Jumia is also funded by seasoned investors that helps them gain access to
has been hampered by an absence of
payment infrastructure and a relatively low
right people in the industry to work for them
penetration of credit cards. Jumia, “Africa’s  One of the main reasons why e-commerce didn’t grow rapidly in Africa until now is the
Amazon”, solved this by sending out its absence of reliable payment infrastructures and low usage of credit cards. Jumia solved
products on bikes and collecting cash this implementing cash on delivery service for its products wherein its employees collect
payments” - How we made it in Africa cash at the time of delivery from the consumer directly
Sources:
(1) Company websites and annual reports
(2) http://www.howwemadeitinafrica.com/
68
Content
Concluding Thoughts
Appendix
69
Concluding thoughts
 Africa represents one of the last frontiers in terms of underpenetrated emerging markets. Compared to
other emerging markets, we are in early days of understanding, prioritizing and exploiting the opportunity.
It is alluring because, for some, it represents a chance to enjoy a first mover advantage, an opportunity
that is not available in most product categories in other emerging markets any more. For others, it
represents an opportunity to continue to grow as other international opportunities become more
saturated.
 In any case, Africa’s story is a forward looking story of “promise”, as the factors needed to create and
sustain a market for international products are just beginning to come together and coalesce. In order to
truly emerge as a viable market, it still needs active investment from manufacturers in ways that are
unfamiliar and sometimes unheard of in other more developed nations. These investments can range
from investments in the supply chain to investments in distributors and in some cases, retailers, as well
as in new product developments.
 Furthermore, while there are a few commonalities across countries in Africa, the size and attractiveness
of the opportunity differs greatly by country. Africa needs to be seen as a set of individual countries from
which manufacturers and retailers must cherry pick opportunities, and not as an entire continent ripe for
entry. In order to succeed, manufacturers and retailers, must do their homework, tailor their strategies to
the unique characteristics of each market, accept and work with the realities of underdeveloped markets,
provide sufficient support and make a commitment for the long hall. As early research shows, rewards
are available for those who do the above.
70
Content
Concluding Thoughts
Appendix
71
Definition of LPI index
 The Logistics Performance Index is an interactive benchmarking tool created to help countries identify the challenges
and opportunities they face in their performance on trade logistics and what they can do to improve their performance.
The LPI is based on a worldwide survey of operators on the ground (global freight forwarders and express carriers),
providing feedback on the logistics “friendliness” of the countries in which they operate and those with which they trade.
They combine in-depth knowledge of the countries in which they operate with informed qualitative assessments of other
countries where they trade and experience of global logistics environment. Feedback from operators is supplemented
with quantitative data on the performance of key components of the logistics chain in the country of work.
Appendix
Source:
(1) World Bank
72
By 2020, Africa will comprise 17% of the world’s population and 3% of
the global GDP
Share of World Population Share of World GDP
100% 100%
5% 5%
11% 10% 3% 3%
90% 90%
14% 13%
80% 80%
28%
33%
70% 70%
15% 17%
60% 60%
50% 50% 30%

27%
40% 40%
30% 60% 59% 30%
20% 20%
34% 32%
10% 10%
0% 0%
2010 2020 2010 2020
Asia Africa America Europe Others America Europe Asia Africa Others
Appendix
73
By 2050, three African countries will make the list for the top 12 most
populated countries in the world, when none made the cut in 1950
Most Populous Countries (in billion)
0 1 2 0 1 2 0 1 2
China China India
India India China
United States United States Nigeria
Russia* Indonesia United States
Japan Brazil Indonesia
Indonesia Pakistan Pakistan
Germany Nigeria Brazil
Brazil Bangladesh Bangladesh
Britain Russia Ethiopia
Italy Japan Philippines
France Mexico Mexico

Bangl
adesh Philippines Congo
*
1950 2013 2050
Note: forecast
(A) Bangladesh didn’t exist as a country in 1950, Historical estimates made using modern borders
Appendix
Source:
(1) UN: The Economist
74
The largest cities exist along the coast and are predominantly in West
Africa
Large population cities in Africa (2012)
Algiers
Rabat Tripoli
Casablanca Alexandria
Cairo
Giza
Khartoum
Kano Omdurman
Dakar
Ibadan
West Africa, led by Conakry Kaduna
Addis Ababa
Nigeria, has the Free Town
Yaoundé
maximum number of Abidjan Accra Douala Mogadishu
cities with population Lagos
Port
exceeding 1 million
Harcourt Nairobi
Brazzaville
Kinshasa
Dar Es Salam
Luanda Lubumbashi
Population of African Cities Lusaka
More than 3Million Harare
More than 2 Million but less Johannesburg Pretoria

than 3 Million
Soweto Maputo
More than 1 Million but less Durban
than 2 Million
Appendix
Cape Town
Source:
(1) 50 Largest Cities in Africa, The African Economist, December 2012 data
75
Most of the major markets in Africa have nearly 30% or more
population in the age bracket of 25-54 years
Age Structure
100% 3% 3% 3%
5% 5% 6%
4% 4% 4%
90% 6% 7% 7%
80% 29% 33% 31%

70% 38%
43% 38%
60%
21% 19%
50% 19%
40% 18%
17% 20%
30%
20% 43% 42% 43%

28% 32% 28%
10%
0%
Algeria Angola Egypt Kenya Nigeria South Africa
0-14 years 15-24 years 25-54 years 55-64 years 65 years and over
Appendix
Source:
(1) CIA World Factbook
129
Africa looks more like India than other emerging markets in terms of
the below additional demographic points of comparison
Region Africa Brazil China India Russia
Share of Urban
40% 85% 51% 31% 74%
Population (2011)
Share of Working Age

55% 68% 74% 65% 72%
Population
100
Above BoP Population 37% 89% 73% 31%
%
Appendix
Source:
77
Definitions of acronyms used in the presentation
 UEMOA: West African Economic and Monetary Union
 CEMAC: Central African Economic and Monetary Community
 ECCAS: Economic Community of Central African States
 COMESA: Common Market for Eastern and Southern Africa
 EAC: East African Community
 ECOWAS: Economic Community Of West African States
 SADC: Southern African Development Community
 AMU: Arab Maghreb Union

Appendix
78
For more information contact:
Kimberlee Luce
Senior Vice President
kluce@bostonanalytics.com

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2015

Rise of the African Opportunity

Introduction to Africa Today

Regional Assessment of Africa

Changing Consumer Market

Challenges of Accessing Consumers in African Markets

Strategies to Overcome Challenges

Introduction to Africa Today

Regional Assessment of Africa

Changing Consumer Market

Challenges of Accessing Consumers in African Markets

Strategies to Overcome Challenges

Introduction to Boston Analytics

Africa in 1914 Key Points

 In the nineteenth century, Europe’s major powers

Region Africa Brazil China India Russia

Area (M Sq. Km) 16.4

8 of the world’s 15 fastest Real GDP Growth 1.9% 2.5% 5.1%

Per Capita real GDP Growth -0.8% 0.0% 2.7%

Economic Growth Poverty Ratio(A) 76% 76% 70%

Unemployment Rate (Highest) 16.3% 15.6% 15.3%

FDI Inflows Growth 21.7% 13.0% 16.3%

Exports Growth -1.4% 3.5% 13.2%

Prevalence of HIV(B),(C) 2.21% 5.76% 4.84%

Health Status Infant Mortality(B),(D) 106.31 94.07 68.12

Life Expectancy (Years)(B) 50 50 55

Africa Democracy Ratings (2011)(1) Freedom Development in Africa(A),(2)

United States China 160

France United States

Introduction to Africa Today

Regional Assessment of Africa

Changing Consumer Market

Challenges of Accessing Consumers in African Markets

Strategies to Overcome Challenges

Introduction to Boston Analytics

 Preferred investment destination in Africa

 Agrarian economy, dominated by tea and coffee production

 Heavy dependence on oil

Southern  Most preferred investment destination in Africa

 Ranks highest on ‘ease of doing business’ in Africa

Area (M Sq. Km) 5.7 6.4 6.1 5.9 5.3 29.4

Population 2010 (M) 163 297 302 140 113 1,014

Density of Population 28 46 50 24 21 35(B)

GDP 2010 ($ B) 583 200 319 517 86 1,705

Algeria, Kenya, Ghana, Angola, Equatorial

West P&G, Unilever, Coca Cola, Coca Cola. Coca Cola,

Introduction to Africa Today

Regional Assessment of Africa

Changing Consumer Market

Challenges of Accessing Consumers in African Markets

Strategies to Overcome Challenges

Introduction to Boston Analytics

40,000 2,006 11.7%

25,000 830 526 6%

2.1% 0.8% 0.6% 0% 0%

 The consumer market in Africa is expected to double in the next 40 years

40% 79% 82%

20% 40% 45%

Private Consumption per Capita, 2012 ($) (A), (B)

Growing Middle Class Population

African Population Split by Income Levels

80% 28% 30% 32% 35%