Travels with the cheetah generation
By Vijay Mahajan | Published: 01 December, 2008
By Vijay Mahajan
For my latest book, Africa Rising, I traveled extensively across Africa over the span of three years. This was no ordinary trip. Africa is known as a place of great beauty and intrigue, but I was on a different type of safari – a ‘consumer safari’ – a term I learned from Unilever executives in Zimbabwe.
I discovered the market landscape in Africa is every bit as marvelous and surprising as its geographic landscape. I met with business leaders, advertising agency executives, entrepreneurs and hundreds of consumers to better understand the opportunities in Africa. I didn’t meet with any politicians or government officials. I wanted to immerse myself in the markets and see the way people were buying and selling.
There were many lessons learned and many friendships made, and the book discusses at length the people who shared with me their insights and optimism about the future of Africa. For me, the first step in beginning to understand the immense opportunities in Africa is to look at the numbers.
It would come as a surprise to many – it did to me – that Africa’s economic strength is greater than India’s, which has a comparable population. If Africa were a single country, according to World Bank data, it would have had $978bn in total gross nation income in 2006. This places it ahead of all the BRIC countries (Brazil, Russia, India and China) except China. Africa has greater wealth than most think.
One segment of the population that is particularly striking in its demographics is what I refer to as ‘Africa Two’ in the book. Simply put, this is the middle-class wage earners. They may not be rich but, collectively, they have immense buying power. At roughly 35-50 percent of the population, this means there are an astounding 350-500 million consumers in Africa Two. These are the teachers, restaurant workers, nannies, drivers and maids. Many work for Africa One, the small minority (around 5-15 percent) who make up the top earners. Africa Three makes up the rest of the market – a large group which is aspiring to become Africa Two.
Companies across Africa are recognising that Africa Two is their future. My meeting with Ferid Ben Tanfous of Arab Tunisian Bank was typical. He explained the competition for Africa One is very tough, so he is focusing on African Two. Whereas Africa One customers may jump from bank to bank, Africa Two customers are much more loyal. The bank is building a reputation as a youth bank, offering products appropriate to this market. The future of Tunisia is in this market, he told me.
There are other numbers to consider about Africa that point to a very optimistic future. Africa is one of the most youthful continents in the world, with 41 percent of its population under the age of 15, according to the Population Reference Bureau’s 2007 data. In contrast, Europe has just 16 percent of its population under 15, and North America has 20 percent. These young Africans are different from their parents, and from their peers in the West. Ghanaian economist George Ayittey has called them the “cheetah generation,” because they move faster and are far more optimistic than the “hippo generation,” the group that is still in power but very much mired in the colonial past. The cheetah generation is changing politics, driving economics and redefining the future of the African consumer market.
Another statistic about Africa relates to the diaspora. With perhaps 100 million members around the globe, the diaspora is investing billions of dollars annually on the continent. And unlike the recent past, Africans living abroad are more likely to return home to lead and create new businesses. They are helping to propel Africa’s rise.
Of course, there are many problems in Africa – from diseases such as AIDS and malaria to corruption, to all-out war – but the fact remains that Africa has more than 900 million consumers who want to give the best to their children, better than what they had. Serving this market means overcoming a lot of challenges, but I met entrepreneurs across Africa that have already proven it is possible, feeding a fast-growing demand for every conceivable type of consumer good, from cell phones and banking, to televisions and travel. Even as the world faces an economic downturn, Africa is a market that, in the long run, can’t be ignored.
Vijay Mahajan is Professor of Marketing at the McCombs School of Business at the University of Texas at Austin, and author of Africa Rising: How 900 Million African Consumers Offer More Than You Think (Wharton School Publishing 2008).