East Africa becomes the focus for retail growth with Kenya the leader
A new report says east Africa’s most prominent economy is at the centre of a growth prospects shift from the west to east of the continent.
Kenya is named as ‘the leading Africa Prospect Indicator for Micro Business, Consumer, and Retail markets’, according to the respected Nielsen’s 4th Africa Prospects Indicator report.
It attributes Kenya’s performance to strong agricultural output, a resurgent tourism sector as well as increased FDI resulting in infrastructure projects that have spurred the diversified economy.
Nielsen Head Emerging Markets Thought Leadership Ailsa Wingfield comments; “To stay abreast of the rapidly evolving trends in 2017, businesses will need to adapt short-term and long-term country strategies to maintain relevance in fluctuating market cycles. In this 4thedition of the Africa Prospects report, the longer-term, trended movements highlight the more significant shifts being experienced.”
Kenya has been in the upper regions of the API ranking since inception topping Cote d’Ivoire, Tanzania, South Africa and Ghana in the top five.
But, while Kenya offers a strong gauge of the changing nature of economic growth in the country, the report says its retail sector is facing a mixed fortunes.
It says: “Truly informal small and medium-sized enterprises, as well as new start-ups, have been negatively impacted which has hindered growth and employment opportunities. However, elevated consumer purchasing power due to growth in per capita GDP, has resulted in a bigger base of more affluent consumers who can maintain retail resilience, creating an upbeat outlook for Kenya’s retail sector.”
Prospects for South Africa, relative to other sub-Saharan countries, have been reconsidered, as investors refocus on more established markets where it is usually easier to execute in known consumer and retail environments. South African businesses have not expressed a confident view of the country’s future, however as conditions in many SSA countries have deteriorated at varying rates, South Africa started to outshine many faster growing or more politically stable African counterparts. “Unfortunately, this may be short-lived in the face of recent political and financial turmoil and uncertainty within the country,” says the report.
Comments Wingfield: “The South African opportunity must be evaluated in comparison to the fates of the other SSA countries. SSA’s most industrialised economy still has the potential to be viewed favourably during increasingly tough economic times but this must be in a cautionary light, given recent events.”
Nigeria, in eighth position has been particularly hard hit by lower oil prices compounded by low oil production resulting in a forex shortage