A lack of reliable data in most African countries means companies looking to enter the continent need to get creative in order to understand their target market.[hidepost=9][/hidepost]
So says consulting firm Accenture in its recently published The Dynamic African Consumer Market: Exploring Opportunities in Sub-Saharan Africa report.
“Due to a large informal economy and the prevalence of cash transactions, accurate and representative data on consumer spending is sparse,” notes Accenture. Companies must tap into local networks to gather insights; partner with academia and others that have usable customer data (possibly banks and telecommunications firms); and design pilot “experiments” to test the market.
“Managers need to be prepared to walk the markets and gain insights from talking to street vendors, watching consumers and building a qualitative model of how the market operates,” says the report.
The report uses Kenya’s CfC Stanbic bank, a division of the Standard Bank Group, as an example of a company that has overcome some of these hurdles.
CfC Stanbic faced a challenge in lending to self-employed vendors – Nairobi has about 100,000 such businesses – because many of them have no credit history. To deal with this challenge, CfC Stanbic used a tool that enabled portable psychometric testing of potential loan recipients. This enabled the bank to rapidly assess their risk tolerance, ethics and honesty, intelligence and business skills, thereby reducing the risk of loan default.
“The new African consumer is a force to contend with and represents an opportunity no company can afford to ignore,” says Accenture.
The report highlights nine Sub-Saharan African countries with especially attractive consumer markets. These are Senegal, Ghana and Nigeria in west Africa; Kenya, Ethiopia and Uganda in east Africa; and Angola, Zambia and South Africa in the southern part of the continent.