Africa has traditionally depended on agriculture to sustain its economy. The continent, as a whole, has maintained consistent high growth rates in the past decade. Metropolitan areas show promise for international investments, and many of Africa’s independent states are developing and implementing strategies that would open up new possibilities for United States companies wishing to export products to Africa. Companies selling and distributing food and beverages, nutritional, and cosmetic and beauty products–with strategic targeted-marketing and product development–will see increased success in the African market.
Africa’s population, at approximately 1.1 billion, makes up 15% of the global population. Africa’s population is made up of predominantly younger generations. Most of Africa’s demographic is under the age of 50, so products geared toward a younger audience will have greater success rates. More than half the population is under 25 years old, so any US products and campaigns could be targeted to the local demographics to optimize sales. Investors should recognize African cultural practices as well as the need for increased health-benefiting products to fit the agrarian preferences of African consumers.
Agriculture is the major contributor to the continent’s GDP, employing the majority of the population. Projections for African market growth are positive, as many of its countries are developing and implementing strategies that promise to increase economic stability through infrastructural changes in transportation, storage, and import/export standards.
Growth rates in Africa vary per country. The highest growth rates range between 5-6% annual increases and is projected to increase by 6.6% in 2017. Consequently, consumer price inflation (CPI) has decreased from 14% in 2011 to 6.9% in 2014. Additionally, poverty has decreased between 5-11%, allowing for expanded market spending and trade.
An increase in trade has led many African nations to alter the standards and process required of goods exported to Africa. Each country has slightly different policies, but most will require a minimum of Certificate of Conformity to get through customs. All African countries follow international best practices in addition to any country-specific requirements set by national organizations.
Many independent states in Africa are focusing on the future to ensure the success of development strategies, especially those aimed at temperature-controlled storage and transportation. Recent and upcoming developments pave the way for a simpler and more profitable export opportunities for United States businesses. African countries that have made such globally-recognized infrastructural improvements in the last five years to enhance the regional, national, and global marketplace include: Kenya, Botswana, and Nigeria.
Infrastructural changes in Africa may also affect the future of exports from the US. The implementation of effective cold chains, for instance—in addition to continued market increase and stabilization—will increase food and beverages, nutritional products, and cosmetics and beauty market opportunities to arid African regions. With all of the alterations being made to the continent’s infrastructure and with each country having its individual distinctions and regulations for trade, international companies seeking to invest in African exports should closely monitor and evaluate the progression of regulations and protocol.
With the increase in urbanization, healthcare access, and wages, the demand for food and beverages, cosmetics, and nutritional products is likely to rise, making it an enticing export option for US companies distributing and selling these goods. Since such widespread improvement takes time, companies should continue monitoring the market trends and changes regularly after investment to ensure that exports and sales meet and exceed their highest expectations.
NUTRITIONAL PRODUCT MARKET
In the past, the African market had very little demand for any imported goods from the United States, due to the consumer’s general lack of disposable income. Recently, many countries have become home to metropolitan areas with a more urbanized and entrepreneurial workforce and economy. These areas have a higher purchasing power than the rural areas in Africa, making exportation to Africa a more appealing investment than ever before!
Countries in Africa with metropolises include Egypt, Nigeria, South Africa, Somalia, Sudan, Tanzania, the Ivory Coast, Morocco, Ghana, Kenya, Algeria, Ethiopia, Angola, Senegal, Libya, Zimbabwe, Niger, Uganda, Mozambique, Madacascar, Tunisia, Sierra Leone, and Liberia. A recent 5-11% decrease in poverty opens up new opportunities and reveals a promising future for US companies to export to African countries. There are currently very few nutritional products present in the African market, which offers US nutritional products companies an opportunity to pioneer in a new and growing market. No venture is without risk. Nutritional products companies in the United States will need to significantly invest in research and development to adapt their products to appeal to and meet the demands of African consumers.
In a region where nearly 1/3 of food is lost or wasted each year, often before it even reaches consumers, maintaining nutritional value and integrity of products has become a priority to African governments and consumers. As a result of the changes in the standard African diet and increase in healthcare access in urban areas, education on health and nutrition is increased—along with the demand for nonperishable or semi-durable supplements and products with high nutritional value.
A more modern cold chain development also promises to improve the mass quantity of goods that spoil before consumption. The efforts put in place by the GCCA open Africa up to imports from the United States, and it allows US businesses to pioneer the diversification of a predominantly untapped agrarian region.
East Africa has seen drastic growth in recent years. The business strategies of Africa’s more urbanized regions are paving the way for the rest of the continent. Kenya, for instance, is the country with the largest metropolitan area in East Africa and is considered by the United States Government to hold the most potential for economic growth in the East African Community (EAC). Kenya’s innovations include incorporation of mobile-based money, where they currently sustain their global leadership. It also remains competitive in global markets with a growing, diversified private sector.
Infrastructural development plans are increasing Kenya’s potential even further (and Africa’s by default). These plans suggest extensive changes in the way Kenyan communities are run, including their policies on trade. One of these plans, known as Vision 2030, seeks to dramatically improve the nation’s economy by meeting consumer demands, demands that have been expanding from agricultural markets as a result of the nation’s growing middle class and increase in disposable incomes.
Sectors with the most potential for growth in Africa are currently within healthcare products and services, so nutritional products exports to Africa may experience greater success than other US products. Societal changes are transforming the traditional emphasis on rural life to an increasing modern growth of urban areas. As diets change, the need for diversity increases. This increased demand for diversification in a territory that remains virtually unexplored by nutritional products companies offers a rare find for export investments, one that will surely push US companies to invest before the competition does.
Beauty Products Market
With economic stability predicted to increase in Africa through infrastructural changes in transportation, storage, and import/export standards, US exports to Africa may be something to consider.
Urbanization and purchasing power continues to influence the African economy and society. Reports on Africa’s trade unions are limited since classification systems and regulations differ in each country. As more regulations are enforced, US beauty and cosmetics companies wishing to export to Africa will need to monitor and comply with these changes.
Recently, collaboration on temperature-controlled storage by the Global Cold Chain Alliance has focused its efforts on the African markets. With economic stability predicted to increase in Africa through infrastructural changes in transportation, storage, and import/export standards, US exports to Africa may be something to consider. For beauty products requiring temperature-controlled transportation and storage, if African and GCCA plans succeed, United States beauty, cosmetics, and personal care companies will have the opportunity to explore exports to a region that previously had no reliable methods of exporting its goods into Africa.
Most of Africa’s population consists of lower to middle class incomes. However, many African countries are experiencing an increase in entrepreneurs and labor force. This transition reveals increases in the middle class population, which has a greater disposable income than the lower class population. The demographic in Africa is younger, so cosmetic products geared to consumers under 50 years old will see greater sales than products targeted to elderly consumers.
The US chamber of commerce has found Kenya to be the country of most potential in Africa. This potential is measured by its current market size, but Kenya has also actively initiated plans that aim at long-term economic advancement. The changes will better suit consumer demands of the growing middle class that is expanding from agricultural markets as a result national wage increases.
As more US beauty and cosmetics companies export to Africa, they will need to concentrate on value, offering consumers the highest quality while still remaining affordable to the lower-middle class. Products that have more than one feature will achieve greater gains than specialized products that have a high cost with fewer functions.
Previous financial and market limitations have deterred many US companies from exporting to Africa. Now, African nations are doing their part to support an increase in economic and trade opportunities for international investors. Investors who have products with an emphasis on health, organic, and fresh ingredients may have more success, especially in the more urban areas, which contain the majority of African residents with disposable incomes. Africa is a generally untapped market to beauty and cosmetics companies, which could mean unlimited potential for businesses that take careful consideration of consumer needs.
Companies intending to export to Africa should be willing to place heavy investments on research and development before carrying out any export strategies. Above any of the other goods exported to Africa, beauty and cosmetics companies will have to take skin tone and environment into consideration. The climate is very arid and sunny, making many of the top cosmetic concerns focused on moisture and correction of dark spots in the complexion. Skin tones in Africa also include darker tones than what is usually offered to European and North American markets. The key to success in African markets for beauty and personal care products will be to adapt existing products to cater to the consumer demographic, develop exclusive brands or products to meet distinct consumer needs, and design specific branding and packaging to appeal to the fresh market.
Food & Beverage Market
Africa is a nation that has relied on agriculture as the backbone of its economy. Currently, the majority of the population uses its purchasing power on fresh goods. African countries are placing more emphasis now than ever on public health education, so health is a growing concern for its consumers. Products with a more natural, organic, and fresh ingredient list are most likely to succeed in this market. Any product with nutritional benefits may also appeal more to this group of consumers.
Unique distinctions in the African population should be noticed when exporting, especially if you are unfamiliar with exporting to developing nations. More than half of the population is under 25 years old, so any US products and campaigns could be targeted to these demographics to optimize sales. An increase in public health awareness stimulates demand for immune-building food and beverages that would help improve the population’s ability to fight off infections.
As societies change from an emphasis on rural life to an increasing growth of urban areas, diets are changing and healthcare access is increasing. Urbanization and purchasing power continues to influence the African economy and society. Cultural standards are beginning to shift. In a region where nearly 40% of food perishes before reaching consumers, maintaining nutritional value and integrity of food and beverage products is an important public health issue.
In an effort to decrease the quantity of wasted food and increase the health and safety of consumers in Africa, a collaboration on temperature-controlled storage by the Global Cold Chain Alliance (GCCA) has focused its efforts on the African food and agriculture markets. Cold chain is the temperature management of perishables, maintaining quality and safety from the point of slaughter or harvest to the final consumer. According to the GCCA assessment, the alliance represents the warehousing, construction, and transport industries engaged in temperature-controlled logistics. It serves over 75 countries (1,300+ companies). Currently 40% of the nations served by the GCCA are outside of North America. The partners in this alliance include industrial and nonprofit representation, including: the International Association of Refrigerated Warehouses (IARW), the International Association for Cold Storage (IACS), the International Refrigerated Transport Association (IRTA), and the World Food Logistics Organization (WFLO). This effort encourages engagement between the International Trade Administration and African Governments, including the continent’s economic leader, Kenya.
In February of 2015, the U.S. Department of Commerce agreed to launch the cold chain assessment in East Africa to evaluate market potential and value of implementing and improving African cold chains, creating a number of suggestions for African governments to successfully implement plans. Some of these recommendations include increasing public awareness, implementations of technology, and a stricter adherence to import/export regulations compliance. The assessment determined Kenya to be a high-potential investment for trade, based on current market size. Currently, Kenya’s economy has a stronger connection to continental and global economies than the rest of Africa when it comes to flow and trade. Further increasing Kenya’s potential—and Africa’s by default—is an infrastructural development plan that seeks to dramatically improve the nation’s economy by meeting consumer demands, which have been expanding from agricultural markets as a result of the nation’s growing middle class and increase in disposable incomes.
East Africa, especially, has seen drastic growth in recent years. Kenya’s business strategies serve as a trail blazer for the rest of the continent. Its innovations include incorporation of mobile-based money, where they currently sustain their global leadership. It also remains competitive in global markets with a growing, diversified private sector. Kenya’s growth can be seen by international markets as a marker to predict the following of other African countries into similar economic growth. Exporting to African markets for many Food and Beverage companies might appear to be a risk, but investments of this nature stand to be an opportunity to introduce current products, or even goods that are not marketable in the US, to a virtually untapped foreign market.