Breaking into Africa: Global industry-wide cooperation essential for export entry

By Natasha Spencer

- Last updated on GMT

How can manufacturers compete and excel in a marketplace as diverse as the African continent? We take a look at the opportunities and obstacles.

Africa is a “very diverse continent”​, Louis Hinzen from European food and drink industry confederation, FoodDrinkEurope, explained. Socio-economic development levels, purchasing power and consumer preferences vary considerably by region and country.

Food and drink manufacturers planning on expanding into the African marketplace, therefore, need to consider and understand the particular profile of the area they intend to enter.

Production and imports

“From a demographic point of view though, we should expect to see a continued increase in the demand for food which will need to be met by a combination of domestic production and imports,”​ commented Louis Hinzen, Senior Manager of Economic Affairs, FoodDrinkEurope.

“This also means opportunities for European companies, in terms of exports and potential investments in African countries,”​ Hinzen added.

Focusing on the characteristics of the most interesting countries to watch in Africa, Hinzen confirms that these are “certainly the ones with a strong and growing urban middle class”​.

Premiumisation spurs popularity

This growing consumption is particularly strong where there is a noticeable shift towards high quality value-added products, including premium products from abroad. Embracing this trend encourages an engaging and proactive consumer base.

Countries to watch in this context include the Maghreb countries such as Morocco and Egypt, Nigeria, Ghana, Cameroon, Ivory Coast, Kenya and South Africa.

However, FoodDrinkEurope highlights that this list is by no means exhaustive and it is not ruling out any particular countries in Africa to watch.

Pockets of innovation

In East Africa, a Bloomberg survey reveals that 36% of Kenyan consumers go grocery shopping in formal retail outlets. Global interest and direct investment from international players such as Carrefour and Walmart have led to increased confidence and consumer spending.

Expenditure on food and beverages in Africa is expected to rise 53% of global expenditure in 2017 to 60% by 2030 with the growth in population and urbanisation anticipated to drive purchasing, Foodstuff Africa explains​.

Online grocery retailing is also expected to increase, in South Africa in particular, Euromonitor International states​, as brands launch online stores to support a multi-channel strategy,

Growth pains

There are significant barriers to trade and challenges to growth that food and drink manufacturers looking to enter the African economic landscape must consider.

Business, legal and regulatory obstacles need to be addressed to encourage confidence and exploration in Africa’s commercial environment.

Currently, Africa is an “unpredictable business environment”​, Hinzen relayed. Commenting on the competitiveness within this region, World Economic Forum’s Richard Samans, Managing Director Centre for the Global Agenda, outlined: “Removing the hurdles that prevent Africa from fulfilling its competitiveness potential is the first step required to achieve more sustained economic progress and shared prosperity.”

With equally unpredictable policies, there is also a “lack of stable regulatory frameworks” and “burdensome requirements including customs and administrative procedures”​, Hinzen stated.

“To meet the aspirations of their growing youth populations, African governments are well advised to enact policies that improve levels of productivity and the business environment for trade and investment,”​ noted Klaus Tilmes, Director of the Trade and Competitiveness Global Practice, World Bank Group.

European companies looking to enter Africa currently experience logistical and operational restrictions. Namely, “infrastructural constraints such as ports and roads”​, along with “relatively high transaction costs and risks” ​are contemporary issues, the FoodDrinkEurope confederation noted.

Easing routes to entry

International cooperation is also vital to improve the entry path for European brands seeking access to the African food and beverage industry.

An integrated approach that provides both “technical assistance”​ with “capacity building with the support of the EU, development organisations and banks” ​are also positive steps to improving this access, Hinzen noted.

This collaboration should also extend to public-private sector cooperation, where the exchange of best practices and expertise between private sector stakeholders and institutional actors should further these efforts and remove barriers.

In November 2017, the EU – Africa Business Forum in Abidjan, which preceded the 5th Africa-EU Summit, emphasised the strategic importance of the agri-food sector for Africa. It also stressed its intention to increase participation between African and EU agri-food business through a structured dialogue involving private and public sectors.

Collaborative efforts

The World Bank Group has launched a new business delivery model that outlines how its newly-launched unit will dedicate its efforts to concentrate on cities and urban infrastructure.

After surveying hundreds of executives at multinational companies, the World Bank Group indicates that a “business friendly, legal and regulatory environment, along with political stability, security and macroeconomic conditions are key factors for investment decisions in developing countries”​.

Related topics Business

Related news

Show more

Follow us


View more