Professor Vijay Mahajan is the author of ‘Africa Rising: How 900 Million Consumers Offer More Than You Think’ (Wharton School Publishing). He is Professor of Marketing at McCombs School of Business at the University of Texas at Austin. And he’s bullish on Africa’s prospects.
By and large, most of the 54 nations that comprise the African continent have weathered the global financial crisis well, with their middle-class consumers and high growth rates acting as a buffer against the largely developed world economic crisis.
In a recent interview with Jeffrey Cavanaugh of the University of Illinois in the US, published on the website AFKI Original, Mahajan said that while Africa’s middle class had been impacted by the slowdown, this hadn’t been enough to dim the continent’s growth prospects. “During the recession,” Mahajan said, “I went to South Africa and they were doing quite OK. Nigeria, Rwanda, Ethiopia – the story is the same. The [middle class is] actually doing quite well.”
Fittingly, it was Africa’s emerging consumer markets which excited Mahajan as far back as 2008 when he published Africa Rising. Back then, his belief in the untapped consumer market across Africa also encouraged big multinational brands that were keen to move into this emerging market. Since his tome was published, firms like Walmart, Yum! Brands, McDonald’s and Burger King, have moved into Africa and, invariably, have plans for further expansion.
Over and above his belief in the African consumer, Mahajan is excited by the rapid urbanization taking place. “One example that really stands out is my most recent visit to Lagos,” AFKI Original quoted Mahajan as saying. “In one slum one could see ladies hawking everything, and people were very keen to show me whether they were using products like toothpaste or not. Even [mainstream] Unilever products like Axe body spray.”
This signaled the strong aspirational nature of the continent’s consumers, said Mahajan. He also pointed to high opportunity sectors like consumer finance, mobile phones and telecoms, hospitality and tourism, healthcare and education, as high-growth industries to watch.
Whatever the sector, the secret to success in Africa, said Mahajan, lay in developing distribution and marketing channels for the continent’s rural population. On a trip to Addis Abba, Ethiopia, Mahajan said he saw rural merchants flocking to one small wholesaler to buy products produced by global multinationals. “Small (rural) retailers come (to the city) about once a month to buy stock,” he said. “They were buying everything for resale. Anything you can imagine. They would spend the equivalent of US$2 000-US$3 000 once a month.” But, to tap this rural market, Mahajan told Cavanaugh, “a strategy is needed”.
Back in 2011, when South Africa has still aglow having hosted a successful Fifa World Cup soccer tournament and having just been invited to join the influential BRICS bloc, Mahajan visited the country and presented at the Brand Africa conference in Johannesburg. During that keynote address, he focused on the importance of branding and marketing in the African context. “Many countries in Africa have among the most brand-conscious people I have seen in the 70-plus countries I’ve visited,” Mahajan said at the time. “Branding is the most important thing that African companies can do.”
Being on the ground was the first point he raised; highlighting that multinationals must realise that they can no longer run their African business from Dubai or Paris and be in touch with local consumer needs on the ground.
His key points around building a brand on the continent included:
- 1. Africa is richer than we think. “Africa is as big a market opportunity as China and India. Africans are not asking for charity they are asking for service solutions.”
- 2. Watch out for the emergence of the ‘Cheetah Generation’. “They are saying ‘we can do it’, ‘we will do it’, ‘we must do it!’”
- 3. Organised markets are emerging in Africa. “For example, the movies from [Nigeria’s] Nollywood. They make a movie for US$5 000 to US$15 000 – I keep on wondering what is wrong with Disney. They go to China and build all those theme parks, they make all those movies in India. Why can’t they organise Nollywood?”
- 4. Don’t forget the active African Diaspora. Africans are the fourth biggest immigrant group in US and they are a massive source of income for Africa, said Mahajan, sending some US$40-billion every year back to the continent.
- 5. Ubuntu is the key to doing business in Africa - “One thing that defines Africa is Ubuntu. Only companies that understand the concept of Ubuntu on the continent will survive.”