Understanding Top challenges and risks for consumer goods in Africa
Africa as a region attracts more and more investors every year. Primarily, investors turn to Africa because of (i) the rapid growth of its economies ; (ii) the young and urban population and the growing middle class. Furthermore, As African consumers are largely under-served, the saturation for new products has not been reached yet. There are many opportunities for companies looking to tap into the very dynamic consumer goods sector.
Nevertheless, a few elements still need to be considered when expanding to Africa’s emerging markets.
Lack of infrastructures and distribution costs
With infrastructures on the ground being inexistent or of poor quality, you need to anticipate some extra costs when considering selling goods to Africa For example, You will need to have special insurance in place to cover your goods. Customs problems may also be an issue with potentially heavy administrative processes.
Getting the reliable data you need to build up a marketing strategy and determining the market size for your products or services is one of the most challenging aspects of doing business in Africa. This is especially true for large corporations whose investments require the field data.
Fortunately, more and more companies are entering the data market and information is becoming increasingly accessible. Obtaining data in Africa is relatively expensive for companies compared to other regions such as Europe where information can be available for free and is in the public domain.
To tackle this challenge, many African countries have now developed tools and solutions to spread qualitative and quantitative data. Nevertheless, a lot of progress is still needed and it is highly recommended to use an expert market research firm.
Getting the reliable data you need to build up a marketing strategy and determining the market size for your products or services is one of the most challenging aspects of doing business in Africa
Pricing your product
Even though the middle class in Africa is growing everyday, pricing your product can be a challenge. What is my market positioning strategy? What price do I charge for my product? Those are only a few of the questions you will need to ask yourself. Consider carefully how you want to price your products. Some adjustments will be needed.
Regulations applicable to your product or services may vary on a regular basis. It is important to Always be informed of the latest developments. Before selling your products, check with a local lawyer to make sure that your product complies with local regulations and if necessary seek the relevant authorisations.