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Africa Becoming Magnet for Foreign Investment, But- Deloitte
Rising consumer demand, aligned with annual growth of around eight per cent, is likely to add around $1.1 trillion to African GDP by 2019, with Ethiopia, Uganda and Mozambique among the fastest expanding markets, and large economies such as Nigeria, South Africa and Egypt continuing to perform strongly, according to statistics contsined in 9th edition of the Deloitte Consumer Review.
In the review, Deloitte said that in recent years a diversifying economy has supported an emerging middle class, driving demand for consumer goods and services, as well as luxury brands.
However, risks remain, including a lack of infrastructure, poor governance, fragile security and unreliable logistics, but conflicts are more localised and democracy is spreading, suggesting the dominant trend is positive.
In Deloitte’s view, the consumer opportunity in Africa rests on five key pillars: the rise of the middle class, exponential population growth, the dominance of youth, rapid urbanisation and fast adoption of digital technologies.
Between 2000 and 2012, Africa’s aggregate household final consumption expenditure grew at an average annual rate of 10.7 per cent, rising by more than $850 billion and reaching nearly $1.3 trillion.
The emerging middle class is more optimistic, brand conscious and connected. In 2013 there were over 375 million middle class people living in Africa, or 34 per cent of the population. By 2030, over half a billion Africans are projected to be middle class.
While the numbers are impressive, it should be noted that 60 per cent of those considered middle class today live on $2 to $4 a day.
More than 200 million Africans, or just over 20 per cent of the total population, are aged between 15 and 24, and that demographic is expected to grow to 321 million by 2030.
Younger Africans form a large share of the rising middle class and will seek to access a wider choice of food, consumer goods and entertainment, and increased connectivity.
Africa’s population is also increasingly clustered in large urban centres, and urbanisation will be a key driver of economic activity.
Many urban areas will cross national boundaries, linking major populations and creating sizable markets and trade opportunities.
The growth of mobile digital technologies meanwhile has also allowed Africans to leapfrog poor landline infrastructure.
Africa is already a world leader in mobile money and mobile is fast becoming the primary channel for accessing the Internet.
The potential for growth is significant, with only 20 per cent of the population online, compared with nearly 75 per cent in Europe and 32 per cent in Asia.
To measure current consumer sentiment, Deloitte surveyed young Africans across four of the fastest growing consumer markets: Egypt, Kenya, Nigeria and South Africa.
The research shows that young consumers in the fastest growing markets of Kenya and Nigeria are most optimistic about their personal financial situation, more than in wealthier South Africa and Egypt.
Despite low income levels, young consumers surveyed attach more importance to the quality of products than price.
Across the four markets researched, quality ranks higher than value for money when it comes to deciding where to shop.
Not only are younger African consumers focused on quality, they are also brand conscious. Deloitte research shows that in some categories, such as food and drinks, local brands are preferred by the younger population.
In other areas, such as fashion and cosmetics, quality is linked to international brands.
The results of the survey suggest that Africa is not suffering from a lack of demand, but sometimes from a lack of supply.
However, where there are challenges, there are also opportunities to innovate and given the potential for growth the continent offers, the business opportunities in Africa could outweigh the risks.
Speaking on the review, Nigel Wixcey, lead partner, Consumer Business, Deloitte LLP said, “At a time when many emerging economies are slowing, Africa is now the second fastest-growing economic region behind Asia and is becoming a magnet for international capital. While Africa’s economy is going through an impressive transformation, it remains fragile, as the recent Ebola outbreak reminds us. Still, in the past decade it has seen strong growth, thanks to high commodity prices, a rise in foreign investment, increased political stability and improved economic governance.
“In this report, Deloitte aims to assess how the African market has developed, how perceptions of Africa have changed and how consumers are responding to period of rapid economic growth. What it took to succeed in the past may not be what it takes to succeed in the future. We discuss the importance of developing a 21st century view of the African consumer market and make the case for seizing the opportunity”.
Commenting on the review, Simon Carpenter, chief customer officer, SAP Africa, said the growth and advances in the African consumer market are some of the reasons why SAP is excited to be invested in building Africa’s information infrastructure.
He said, “Getting the right goods to consumers, profitable, requires insight and execution, supply chain optimisation and coordination, efficient ports and harbours feeding responsive hinterland logistics systems and appropriately stocked wholesale and retail outlets, online and on the ground.
“And SAP is there for all of these sectors, enabling each player to be their best and linking them all in responsive business networks – making sure that Deloitte’s prognosis that the ‘dominant trend is positive’ becomes a reality for Africa,” he said.
Commercial banks in Nigeria closed 2.021 million bank accounts in the first quarter of 2024, Q1’24, to clean their books of questionable accounts and comply with regulatory orders on the linkage of bank accounts to the National Identity Number (NIN).
This is contained in a report by the Nigerian Interbank Settlement System (NIBSS), which also indicated that the number of inactive bank accounts grew month-on-month, MoM, by four million or 2.0 per cent to 19.7 million in March 2024 from 19.3 million in the previous month, February.
A bank account is classified inactive when it records zero transactions including deposits, withdrawals, transfers or point-of-sale transactions for six months.
However, details of the “Industry Bank Account Database”, a monthly data reported by banks, and compiled by the Nigerian Interbank Settlement System, NIBSS, also indicated that the number of active bank accounts grew by 6.62 million or 3.0 per cent to 219.64 million from 213.02 million in February.
Recall that in December 2023, the CBN issued a directive to all commercial banks in the country to restrict tier-1 accounts without proper Biometric Verification Number (BVN), and National Identity Number, NIN, that are not linked by Thursday, March 1st, 2024.
According to NIBSS data on BVN enrollment count, 61.6 million Nigerians have BVN as of April 2024.
Credit: Vanguard
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Dubai-Based Citizenship Firm Imperial Citizenship Expands to Lagos, Targets Africa’s Growing Wealth
Imperial Citizenship, a Dubai-based firm specialising in Citizenship and Residency by Investment (CRBI) solutions, has set its sights on Africa’s burgeoning wealth with the launch of a new office in Lagos, Nigeria.
This strategic move positions Imperial Citizenship to capitalise on the continent’s growing population of high net worth individuals (HNWIs) seeking international investment and mobility options.
Imperial Citizenship boasts a proven track record of success, having secured over 2,000 approvals for clients seeking alternative citizenship and residency pathways. Their partnerships with over 15 governments worldwide provide a diverse portfolio of investment opportunities that adhere to strict international regulations.
With its Lagos launch, Imperial Citizenship begins its foray into Africa. The continent boasts a burgeoning HNWI population, according to PwC, presenting a lucrative market for investment firms like Imperial Citizenship.
According to the World Bank, African economies are projected to grow by 3.4 % in 2024 as the African Development Bank Africa has reported that Africa will account for eleven of the world’s 20 fastest-growing economies in 2024. Highlighting the market’s potential, Mr. Zaid Al Hindi, Founder and CEO of Imperial Citizenship, says, “our expansion into Lagos allows us to directly cater to this affluent segment, offering them strategic solutions for global asset diversification, optimised investment opportunities, and enhanced global mobility.”
“At Imperial Citizenship, we do not operate through intermediaries, as we differentiate ourselves through direct government partnerships. This ensures transparency, legality, and efficiency throughout the application process, providing peace of mind for investment-minded clients” Zaid stated during the launch event in Lagos.
Speaking on the company’s approach to CRBI, Zaid mentioned, “At Imperial Citizenship, we prioritise a client-centric approach. We go beyond simply offering programs; we provide dedicated advisors who understand the unique needs and aspirations of each client. This personalised service ensures clients receive tailored investment options that align with their financial goals and risk tolerance”.
The launch of the Lagos office underscores Imperial Citizenship’s commitment to global expansion. With physical offices in Dubai and now Nigeria as well as operational representatives in Mexico, Algeria, and Turkey, Imperial Citizenship demonstrates its ability to cater to a geographically diverse clientele.
Looking ahead, Zaid highlighted that Imperial Citizenship plans to broaden its service offerings and expand its reach into new markets. By strategically targeting Africa’s rising wealth, Imperial Citizenship is well-positioned to solidify its role as a leading player in the CRBI industry, offering investors a gateway to global opportunities.
In a recent gathering, organized by 234Finance, key stakeholders and HNIs came together to discuss the theme “Fueling Progress in the South East.”
The conversation highlighted the rich heritage, entrepreneurial spirit, opportunities for growth and the potential of the South East to be economic powerhouse.
During the discussion, the Managing Partner of 234Finance, Ezinne Nwazulu unveiled plans for an upcoming event of significant impact: the 4-week intensive SME Bootcamp and Mentor Matchup Challenge South East edition designed to empower SMEs. The program aims to empower SMEs with the knowledge, tools, and capital for rapid expansion and global competitiveness.
This initiative is building on the success of previous Mentor Matchup Challenge events, which equipped SMEs with actionable strategies and one-on-one mentorship, resulting in winners of the pitching competition securing grant funding to scale their businesses by 4x-10x.
The SME Bootcamp will feature an array of activities, including physical and virtual training sessions, onsite industrial training, and a pitching competition.
Ezinne Nwazulu emphasized the rigorous selection process, where the top 100 applicants meeting the criteria will undergo intensive training at two training centres in Abia and Anambra. From there, the most promising 15 participants will have the opportunity to pitch their business for grant funding.
Dr Chima Anyaso, Chairman of Caades Group, expressed his commitment to the region’s development and encouraged entrepreneurs with innovative crafts to seize this opportunity.
Criteria for selection are uncompromising, emphasizing technical expertise in core sectors; Agribusiness, Manufacturing, Supply Chain & Logistics, Fashion & Textile, and Retail, with a particular focus on businesses operating within the South-East region for at least three years and significant growth potential of 4x-10x.
The Bootcamp is set to commence from May 14 to June 14 2024 with Southeast-based entrepreneurs encouraged to visit the 234finance bootcamp to apply.
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