Posted by Temiloluwa Ogundele / On October 31, 2017

Understanding Africa’s consuming class

Africa is often regarded as a continent with tons of untapped potential> however when properly researched this statement is in fact the truth. Africa is a continent housing 54 countries, 1.3 billion people and the world’s second fastest growing economy. This data has made the continent a core target for several brands looking to expand their market share and grow their revenue.

The African development bank sums up the continent middle class to a total of 420 million people. This class of consumers are regarded as individuals who spend between $2 and $20 per day. In sub-Saharan Africa, Nigeria has the largest middle class population (able to spend between $2 and $20) at 42 million people, while Ethiopia/Kenya and South Africa’s middle class populations are almost equal, at 21 million and 24 million, respectively. The rest dispersed amongst other African country. The average yearly earnings of African middle class sums up to $4000 compared its counterpart in China whose yearly earnings sums up to $8000.

Within this broad middle class range, it’s important to drill down further and look at Africa’s globally comparative, rising consuming class, defined as those who spend more than $10 per day. Globally, the consuming class represents a massive rising opportunity in emerging markets and according to McKinsey the consuming class is believed to swell as high as 4.2 billion by 2025, constituting 53% of the global population and accounting for 47% of consumption spending. In Africa, its consuming class comprise 10% of its entire population (versus 35% globally) accounting for 31% of income and closer to 40% of spend. These figures could however double in near term as the income level of the lower middle class stabilises; on the long run the consuming class could rise as high as 40% to include the mass middle class with fluctuating spending ability between $2 and $4 per day. And in the more distant future, the additional 720 million people who live on incomes of less than $2 per day could rise up.

It is quite obvious that Africa’s growing market represent a massive consumer spending potential and as advancement across the political, social and economic sector continues so also would consumer circumstance improve. Businesses need to develop product portfolios, media plans and retail strategies that serve today’s consumer needs and have consumers’ future purchasing potential in mind. Furthermore, businesses can’t simply focus on consumers’ income level and demographic numbers; they need to understand the diverse and evolving consumer spectrums: how consumers live, shop, buy, interact and experience products, as well as what influences their choices, what they watch, and the impact that technology has on their daily lives.

Nielsen created seven consumer categories across 17 countries to identify and understand consumers and how to engage with them. These categories are based on lifestyle, habits, shopping dynamics, purchasing and media drivers (a segmentation model similar to that of the VAL s typology). They are:
– The progressive Affluents
– Trendy Aspirants
– Balanced Seniors
– Struggling Traditionals
– Evolving Juniors
– Wannabe Bachelors
– Female Conservatives
These classifications are described in the diagram above.

In line with these segmentations, there is a need to for brands to understand consumer journey and tap into this journey by pinpointing what stage their brands and businesses would be of critical need in consumers’ lives.

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