The challenge for fast moving consumer goods companies expanding to Africa

Essay H: What do you believe are the greatest challenges facing the sector or industry you would like to specialize in at IE? What role do you hope to be able to play in this sector or industry in the medium term?

Africa is not one country

Contents 1. Personal background

2. Africa is the centre of growth for the next decade

3. The greatest challenge of capitalising on the opportunity

4. Africa is not one country

5. Dissect the African consumer market

6. Characteristics of the African consumer

7. My role in the medium term

• I am a South African with a strong Africanwork experience

• I have travelled in eight of the 53 countries in Africa and worked in Zambia since 2013. I am currently the financial manager fulfilling the role of CFO for Agrivision Africa

• Since the CEO resigned I have been entrusted with some of the usual CEO tasks until a new CEO is appointed

• Through the acquisition of Mpongwe Milling I have come into extensive contact with the African consumer

• I aim to specialise in fast moving consumer goods witha focus on the African markets

My background

• In January 2013 I was appointed as the financial manager of Agrivision Africa (‘formerly know as Chayton Africa’) and started to work extensively in Zambia

• I want to do a MBA at IE Madrid in order to bridge the gap from being a financial manager or CFO to a more operational role and becoming a CEO and an African business leader

• European investment in Africa will continue to rise but I believe that there is a lack of knowledge and understanding of who the African consumer is

• After successfully completing my MBA at IE Madrid I want to work in the business development division of a major consumer goods company with aspirations to expand into Africa

My career goals

Africa is the centre of growth for the next decade.

The African economy is expected to grow by more than 7 percent between 2014 and 2019.

• Africa is expected to grow twice as fast as developed economiesaround the world

• Africa is a magnet that will attract 50% for new investment from European companies

• Businesses around the world are looking to Africa for growth opportunities

• The single largest business opportunity in Africa will be its rising consumer market, according to McKinsey and Company

World regions’ actualand forecastedGDP compound annual growth.

Source: World Economic Outlook Database, Deloitte analysis

The greatest challenge for consumer goods companies in Africa is understanding us.

• Consumer goods companies entering the Africa market don’t understandthe customer

• They don’t understand that Africa is not one country and that African people and cultures needs to be treated as unique markets

• Companies don’t take the necessary care to adapt their product for the specific marketthat they are trying to serve

Companies don’t understand who the African consumer is and treat them the same as Western consumers.

Africa is notone country.

• Africa is a large and diverse continent with 53 countries and an estimate 1500 to 2000 languages and 3000 ethnic groups

• Countries in Africa grow at very different rates and are at various stages of development

• One size fits all business plans or products will not meet the need of African consumers

• Business needs to understand its target market in order to make the necessary returns on investments

Africa consist of 53 different countries

Source: http://kai.subblue.com/images/True-Size-of-Africa-kk-v3.pdf

The true size of Africa

Dissecting the African market.

Africa can be widely divided into languages that was imported from Europe:

But even this division is only scratching the surface of how diverse consumer markets in Africa are.

Area Language

North Africa Arabaphone Africa

West and Central Africa Francophone Africa

East Africa Swahili

Southern Africa English and Portuguese

By dividing Africa into separate regions it becomes easier to identify with the people and produce product that will meet the consumer needs.

Source: http://2012books.lardbucket.org/books/regional-geography-of-the-world-globalization-people-and-places/section_10/3143975c4dcf5ad0663ca8cbca8dee63.jpg

Africa arranged by language.

Characteristics of the African consumer.

The African consumer is younger than most of the world’s population and technologically savvy.

• The African middle class will grow from 355m in 2010 to 1.1bn consumers in 2060

• Young Africans will be the majority of these citizens. Currently there are 205m Africans between the age of 15 – 24 and this will increase to 302m by 2030

• Mobile penetration rate in Africa will reach 84% by 2015 and increase to 97% by 2030

• Majority of African access the internet exclusively through mobile devices

• Consumer goods companies must engage the young African consumer through technology

https://aviatnetworks.files.wordpress.com/2012/06/africa_mobile_penetration_rates.jpg

My role in themedium term.

There are 53 countries in Africa. The continent cannot be treated as one country.

• In 2014 Chayton Africa bought Mpongwe Milling, a fast moving staple food company in Kitwe, Zambia.

• Upon commencement of my MBA I will have 3 year of experience in the Southern African consumer market and the knowledge to implement new marketing and distribution strategies.

• Upon completing my MBA I aim to work for the new business development division of a European consumer goods company with ambitions to expand into Africa.

• I can add significant experience and knowledge to any consumer goods company that needs to understand the African consumer.

• The single-largest business opportunity in Africa is the rising consumer market.

• Africa is not one country and businesses need to understand the African consumer.

• I can add significant experience and knowledge to any consumer goods company with a need to understand the African consumer.

Conclusion