Africa Open for Business: The Basic Needs Market
Lauri Edwina Elliott
April 11, 2009
Africa offers vast business and investment opportunities. One often overlooked opportunity is the consumer market in Africa. The population of Africa will exceed the 1 billion mark by 2015 – a large market by any standard. However, prevailing views of the continent as a place for resource-focused business, as well as a place of conflicts and poverty, have blinded many to the potential in this little tapped treasure.
One strategic focus for doing business in Africa is provisioning basic needs for Africans, where demand far outstrips supply. The first question to ask is "which survival needs are not being met currently?" Survival needs include food, water and personal shelter. Other needs include infrastructure that supports everyday living and livelihoods, such as transport, communication and energy. In almost any African country, you hear of the challenges faced by people just to get power.
The next question to ask is "why are these needs not being met?" Many assume poverty is the answer. Poverty may contribute, but Africa is actually a very resource-rich continent. In fact, several of the world´s major oil and mineral producers are in Africa. What´s missing is adequate development and infrastructure. There is an upsurge in development and infrastructure projects to improve the quality of life and increase economic opportunity in Africa. However, it will take decades before Africans broadly experience the level of development in the same way Americans and Europeans did in the 20th century.
So, how can this be turned into a business opportunity? Ask yourself, "how can we help the African market meet basic needs to improve their quality of life amidst the obstacles? How do we make a profit?" It´s not impossible and has huge pay-offs. Companies like Coca-Cola and SABMiller reach rural areas with little infrastructure to sell their products. Why can´t others learn from their examples and provide other products and services?
The next consideration is how to we fit what we can offer to the people and their lifestyle? Let´s take clean water as an example. Municipal water systems will be a long time coming for many Africans, so why not look at how to provide clean water so that families or communities can maintain their own clean water? In a place like the Democratic Republic of Congo (DRC), there is an abundance of water but less than 20% of it is clean. With a population of close to 70 million, what a market opportunity!
To deliver clean water in the DRC, which has very little infrastructure, the water cleaning systems need to be light, portable and inexpensive to fit the widest market. There also should be a means of producing the product locally as the market grows to keep costs down and provide support to the growing customer base. Whether you are a small or large business person or investor, you will need a means of managing and distributing locally.
So, what´s the answer to tapping into this market? Creating a value network that works. Next week, we´ll explore this, using the water cleaning industry as an example.
One strategic focus for doing business in Africa is provisioning basic needs for Africans, where demand far outstrips supply. The first question to ask is "which survival needs are not being met currently?" Survival needs include food, water and personal shelter. Other needs include infrastructure that supports everyday living and livelihoods, such as transport, communication and energy. In almost any African country, you hear of the challenges faced by people just to get power.
The next question to ask is "why are these needs not being met?" Many assume poverty is the answer. Poverty may contribute, but Africa is actually a very resource-rich continent. In fact, several of the world´s major oil and mineral producers are in Africa. What´s missing is adequate development and infrastructure. There is an upsurge in development and infrastructure projects to improve the quality of life and increase economic opportunity in Africa. However, it will take decades before Africans broadly experience the level of development in the same way Americans and Europeans did in the 20th century.
So, how can this be turned into a business opportunity? Ask yourself, "how can we help the African market meet basic needs to improve their quality of life amidst the obstacles? How do we make a profit?" It´s not impossible and has huge pay-offs. Companies like Coca-Cola and SABMiller reach rural areas with little infrastructure to sell their products. Why can´t others learn from their examples and provide other products and services?
The next consideration is how to we fit what we can offer to the people and their lifestyle? Let´s take clean water as an example. Municipal water systems will be a long time coming for many Africans, so why not look at how to provide clean water so that families or communities can maintain their own clean water? In a place like the Democratic Republic of Congo (DRC), there is an abundance of water but less than 20% of it is clean. With a population of close to 70 million, what a market opportunity!
To deliver clean water in the DRC, which has very little infrastructure, the water cleaning systems need to be light, portable and inexpensive to fit the widest market. There also should be a means of producing the product locally as the market grows to keep costs down and provide support to the growing customer base. Whether you are a small or large business person or investor, you will need a means of managing and distributing locally.
So, what´s the answer to tapping into this market? Creating a value network that works. Next week, we´ll explore this, using the water cleaning industry as an example.
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