Africa’s growing economies and urbanisation are increasing the number of Africans with discretionary income. Many Africans we spoke with during our research expressed near-term plans to buy laptops, upgrade their mobile phones, and spend more on entertainment, homes, cars and education. In fact, compared with consumers in other markets, even mature ones, Africans are more likely to trade up on nonfood items, according to Boston Consulting Group’s (BCG’s) 2013 Africa Consumer Sentiment Survey.

African consumers, like consumers everywhere, want to buy products and services that meet their specific needs. They desire brands that connote both quality and value. And they want access to products that are available in the rest of the world. For forward-looking companies, the African market will be worth well over $1tr by 2020 and offer access to millions of new customers.

For their income levels, African consumers are heavy users of the internet and mobile technologies, although this varies by country. In BCG’s survey, nearly half of African internet users said they spend two hours or more each day surfing the web.

The way consumers access the internet varies tremendously. In sub-Saharan Africa, they primarily use their smartphones, while consumers in Algeria, Egypt and Morocco rely more on desktop or laptop computers. Mobile technology, in particular, is enabling the continent to overcome its lack of infrastructure and has enhanced consumers’ access to information and knowledge.

Digital technologies cannot cure all of Africa’s problems. While urbanisation is increasing, most Africans still live in rural areas and in small villages and towns. Distribution to this “last mile” is difficult, given that only 19% of the roads are paved and 70% of the continent’s rural population lacks access to all-season roads. Vehicles tend to be in poor condition, and the destinations that companies must reach are far-flung. Few logistics companies have the comprehensive network required to ensure product delivery across multiple markets. Companies need reliable ways to reach these consumers.

The prevalence of traditional-trade formats in Africa compounds the challenges. Most people buy from traditional stores, street hawkers, kiosks and markets. This makes distribution especially challenging for many multinationals, which are accustomed to working with modern retailers.

Finally, the African business-to-business market is a frequently overlooked segment. As African businesses expand and mature, their need for goods and services will rise. Companies in fields as diverse as advertising, equipment manufacturing, transportation and logistics have an opportunity to jump in on the ground floor.

In order to win in this environment, companies will need to become truly local. This will require that they do the following: create an African offering; build and leverage brands; and control distribution.

Create an African offering

Companies that have succeeded in other emerging markets have done so by tailoring their products. In Africa, however, companies cannot modify their product portfolio to appeal to all their target countries and to specific market segments within those countries. They must balance local preferences against the need to achieve scale and consistency.

Several companies have achieved success in this area. Bajaj Auto’s Boxer motorcycle became the market leader in Nigeria in two years, even though it was priced 30% higher than Chinese models. The product is adapted to local uses and weather conditions and is less expensive than similar Japanese vehicles.