Traditionally, Africa accounts for just 5% of the world’s beef, sheep, chicken, pork and goat meat production, equivalent to some 14 million tonnes. The largest producer in Africa is, by some margin, South Africa at 20% of the total, or some 2.6 million tonnes, followed by Egypt at around 10%.
While for many other agri-food products, such as fruit and vegetables, Africa is seen as a major international source of supply, the relatively low level of domestic meat production means that African exports are minimal at just c.125,000 tonnes per annum. In contrast, the growth of Africa’s meat imports has been significant – increasing by some 300% over the last 10 years, rising to around 1.8 million tonnes. This now makes Africa the fastest growing regional import market in the world.
What is driving these developments? We see what we call "four pillars of growth" fundamentally under pinning this.
Although Africa may not yet be a byword for political stability, the region has seen significant improvements over the last decade, resulting in fewer wars and greater political certainty for many countries.
This stability has often been accompanied by economic reform, which has allowed the emergence of a wealthy elite (various reports suggest there are about 100,000 very wealthy Africans) as well as a ‘consumer class’ – people with incomes of around US$14 – 20 a day that, for example, have regular jobs, own mobile phones, fridges and buy packaged food products.
In 2013, the World Bank issued a report suggesting that there were about 150 million ‘firm middle class’ consumers across Africa, a further 180 million formed an ‘emerging’ or ‘floating middle’ class. To put these good news headlines in perspective however, the report also suggested that 60% of the population of Africa still lives below the $2-a-day poverty line.
Many people still associate high levels of population growth with China, when in fact it is Africa that will have the highest growth rate of any region to 2040 and beyond. UN data projections suggest that Africa already has more than 500 million people of working age (16–64) and that by 2030, the number will have grown to 1,100 million (1.1 billion) – more than India or China.
In terms of urbanisation, it is estimated that around 40% of Africans live in cities. By 2030, that figure is likely to be closer to 50%. Africa already has more than 50 cities with more than one million people. This is more than North America (48) and Europe (52).
African countries have been famous for commodities, such as Nigerian oil and Angolan diamonds, for many years, but the rise in commodity prices over the last decade has boosted company and government revenues considerably.
Strong international prices have increased the volume and value of exports for a wide range of African commodities from cocoa to palm oil. Although there are debates about how much of these higher prices have actually ‘trickled down’ to the average citizen, there is certainly more wealth in Africa as a result.
With projected demand for food to increase as the world’s population becomes richer and more focused on Western diets, access to farm land and increasing productivity of existing farm land is very much on the agenda. Organisations such as the World Bank now suggest that Africa may hold the key to balancing future global food demand with actual production.
Africa is estimated to contain around 60% of the world’s unused arable land and production yields are typically well below global averages. Many African countries are ripe for the type of agricultural productivity revolution that occurred in Asia during the 1970s and Brazil during the 1990s.
One of the other most common indicators we use to assess the level of country and particularly food market development is the number and type of food retailers present. Across Africa modern food retailing is just emerging – as an example, the top six retailers in Nigeria account for barely 2% of sales. In the 2013 review of international retail market opportunities, produced by the consultancy AT Kearney, only two African countries made it into the top 30 list – Botswana and Namibia. However this is changing rapidly.
South African retailers Shoprite, Pick and Pay and Choppies already have stores in multiple countries across the region, Shoprite has probably seen the most expansion with stores in 13 countries. Other regional retailers are also actively looking for growth opportunities - as an example Brazilian retailer Odebrecht has taken over a number of supermarkets in Angola.
Large international food retailers are starting to take an interest in Africa. Spar already has more than 100 stores across six countries (excluding South Africa). Mass Mart (based in South Africa and part of the Walmart Chain) has plans for food stores in Nigeria and Angola. In 2013, the French retailer Carrefour announced that it planned to open stores in eight African countries, starting with the Ivory Coast in 2015.
As well as international chains, a number of local or sub-regional chains are emerging. The Kenyan Nakumatt chain has 40 stores across four countries in East Africa. Uchumi has 33 stores across three countries (mainly Kenya), while Tuskys has stores in Kenya and Uganda.
Such is the pace of development on the Continent of Africa, we believe that all organisations will begin to feel the impact of what is happening there – particularly as a potential source of supply, as a market and as an investment opportunity. And even if you do not directly operate in Africa, the knock-on impacts of what is happening there will begin to be felt around the world and right across the global supply chain.
Lizzie Bonsall is a consultant with Promar International, a leading agri food supply chain consulting firm and a subsidiary of Genus plc. firstname.lastname@example.org