Are African Companies Ready For The Middle Class Boom?
Globally , the dynamics of the middle class has been changing with emerging regions such as Asia, South America and Africa registering the fastest growth while North America and Europe growth slowed as the financial crisis prevailed in recent years.
A recent report released by Deloitte showed that there has been significant economic growth in Africa due to an emerging middle class and increasing consumer demand, so much so that the continent’s gross domestic product (GDP) could grow by 50 percent to $3.7 trillion by 2019.
According to a report by McKinsey Global Institute Africa’s collective GDP was $1.6 trillion in 2008, with a combined consumer spending of $860 billion that year, and was home to 20 companies with revenues of above $3 billion. This GDP is expected to nearly double by 2020 as the continent experience significant growth in people entering the middle class.
But are companies operating on the continent ready ride this growth?
Even with this good projection many people in Africa still fail to participate in the development of their individual county’s economies due to their financial exclusivity positions. This is quickly being sorted out by the aggressive us of mobile technology to bring financial services to the reach of many.
Huffing Post reported that in Africa today, there are 167 million Internet users or a 16 percent reach, 67 million smartphones, and $18 billion Internet contribution to GDP. By 2025, it is expected that there will be 600 million Internet users or 50 percent reach, 360 million smartphones, and $300 billion Internet contribution to GDP.
This is a great opportunity for African companies.
As more and more people become identifiable on the consumer market and increase their participation in their domestic economy, it will be easier for companies targeting this market to focus their products or services to them and understand their consumption behaviors better.
“consumers from emerging markets do not have access to the world’s financial services mostly due to a lack of a digital information from banks, telcos, utilities and the government about them in the system. A trust relationship cannot be formed with financial institutions because in the US and Europe these companies are used to relying on this type of data to verify a customer’s identity at the onset.; this does not work for people that have no such digital footprint,” Trulioo’s Founder and CEO, Stephen Ufford, told Huffing Post
“Financial inclusion through access to banking services is one part of the equation to eliminating poverty, but we first have to take the next logical step and help those without access today to create a digital footprint that they can use to become full participants in the global marketplace tomorrow,” says Ufford.
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