An October 2012 report by McKinsey Quarterly suggests that Africa is the fastest growing consumer market with more upward mobility up the consumer chain than traditionally wealthy markets like Japan.

Now I know some of you will at this point, direct me to the fact that Japan is one country and Africa is a sum of countries. But, let story develop. If you look at it from a market perspective, a market can be without boarders and so the comparisons can work. The findings from the continent wide research also found that not all of Africa is experiencing this upward mobility in fortunes it is in the traditionally strong Africa economies like South Africa, Nigeria, Egypt and Morocco. While this is likely dampen any positive feelings about the potential for other African countries, I feel there is new opportunities littered everywhere in Africa for companies selling consumer goods.

The consumer population is growing with the number of people dependent on every working person falling every year meaning more people are earning an income and while they might not have a lot of disposable income, there will need basics and that’s where good market scouting can produce fantastic business opportunities for companies. Manufacturing will probably create the greatest profit margins but imports will probably out strip locally produced consumer products in terms of supply on the market. There is a need to recognise that Africa must add value to more of its produce because we are exporting crude oil and importing petrol and diesel, exporting cotton and importing clothes, exporting cocoa beans and importing chocolates  all which a more expensive than we got paid for the raw materials we exported.

While investment might be an issue when it comes to developing the capabilities to add value to raw materials, I feel the bigger issue is show term thinking amongst businesses in Africa because they a focussed on making a much money as possible it is impossible to go for cumulative approach in developing capabilities. So rather than thinking of building fully fledged manufacturing operations perhaps companies can consider building capacity gradually until they reach desired production level. This process will put less pressure on required investment and allow companies to develop efficient businesses that grow organically over time which is how all developed economies grew because they also developed through expansion in response to growing demand from their home markets.

So the opportunity is there for African economies to grow on the strength of their own demand but competition from foreign companies exporting cheaper product will also grow in response to the grow consumer market, how we overcome that and grow African enterprises will define the future of our economies. It’s my opinion that a long term strategy to growth, prudent profit margins, capacity building will deliver the potential being described by the report