$1.4 Trillion in Consumer Spending by 2020
Africa is the world’s second-fastest-growing region, topped only by emerging Asia. But it may come as a surprise that Africa’s growth is fueled not by resources but rather by a rising consumer market. The McKinsey Global Institute estimates that by 2020 consumer spending in Africa will reach $1.4 trillion and consumer-facing industries will grow by $400 billion. Trying to size Africa’s middle class is a frustrating deep-dive into data assumptions and definitional haze but, as the African Development Bank reports, it may be as high as 350 million people.
The World’s Fastest-Growing Consumer Class
Africa is surging based on four demographic markers: It is the second-largest and second most populous continent on earth with an estimated population of 1.2 billion (2016); the largest youth population (250 million between the ages of 15 and 24); the most rapidly urbanizing population (5 percent rural-to-urban annually over the last two decades); and the globe's fastest-growing consumer class.
A Young and Urbanizing Population
Sub-Saharan Africa's population is young, growing rapidly, and urbanizing. There are approximately 350 million Sub-Saharan Africans living in cities and the number is growing between 4 and 5 percent per year. More than half of Africans will soon reside in cities. The UN predicts that by 2020 Sub-Saharan Africa will have 57 cities with a population of more than a million—the same as Europe. The UN calculates that the population of Sub-Saharan Africa will be 2.4 billion by 2050.
A Market for 21st-Century Technology
Africa has an abundance of people who want to buy things, sell things, and move them around. What Africa lacks is a 21st-century operating system to make it all work. Moja is that system.
A Culture of Networking and Deal Making
Many of Africa's most successful entrepreneurs are exemplars of a long-standing tradition of deal making, networking, and negotiating skills. Buying and selling products and services of every variety is the heartbeat of Africa.
A Hunger for Services and Solutions
The next round of African tech headlines will center around solutions for the continent's rapidly formalizing economies. This is the "frictions and lubricants" hypothesis: The daily friction related to scaling businesses and getting basic things done is significant; delivering 'lubricants' in the form of technology services and solutions is essential.
A Rapidly Growing E-Commerce Market
McKinsey sees the potential for $75 billion in e-commerce sales across Sub-Saharan Africa by 2025. What is needed is a digital platform to get SMEs trading. African e-commerce will depend on millions of companies trading domestically and across borders.