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The 2015 African Retail Development Index (ARDI) was released earlier this month, and revealed the most attractive developing markets across Africa for expansion.
The index also explored the growth in Africa’s increased consumerism, the spread of malls, land being taken up for development for retail purposes and Sub-Sahara’s young and connected middle class that is growing fast and still deciding on its favourite brands.
The 2015 ARDI ranks the top 15 Africa countries according to market attractiveness for retail expansion, and is a useful framework for retailers because it identifies Africa’s most attractive markets for retail expansion today, as well as those that offer the most potential.
Below, we’ve summarized the 2015 ARDI top 10 rankings. See the full index and more analysis here – The 2015 African Retail Development Index
Senegal is in many ways ‘the average’ African market – limited in attractiveness for retailers (high poverty and low incomes), a little risky to do business, yet highly unsaturated with strong economic growth and a burgeoning retail sector.
Ghana features a fairly balanced profile—about 27 million people (half in urban areas), with a relatively stable economy and a retail market that, while still small, is growing. Interestingly, Ghana is unique among Sub-Saharan African markets in that it has a relatively large middle class yet is highly unsaturated. Many international retailers are eyeing expansion into Ghana, including Sunglass Hut, Debenhams, Pick n Pay, and Spanish fashion retailer Mango.
Namibia has a small population (about 2.3 million people) covering a huge stretch of desert on Southern Africa’s west coast. About 40 percent of the population lives in urban areas, which consists of a few urban centers and surroundings where most trade is modernized. As in other regional markets, South African players such as SPAR and Shoprite dominate the market; local chain Woermann Brock also has a large presence.
The surprise leader of the first ARDI a year ago, Rwanda slips six spots to seventh but remains an attractive yet small market (read 10 Interesting Facts About Rwanda).
6. South Africa
South Africa remains the most developed economy and retail sector in Sub-Saharan Africa. Although retail sales per capita have declined a bit, the country’s position and profile as the most developed and saturated market have not changed.
Tanzania has a lot going for it as an attractive retail market. It is the largest and most stable economy in the East African Community (EAC), a regional intergovernmental organization that includes a common market for goods. Tanzania is also home to a relatively stable political climate, 50 million people, and more than seven per cent annual GDP growth.
Nigeria is huge—its population of about 178 million people is largest in Africa, almost double the size of second-place Ethiopia. And it is growing, it is urbanizing, and it has a rising middle and upper class. Its economy is growing fast, and the country is rich in minerals, particularly oil. It has massive room for growth in formal retail—modern supermarkets make up only one per cent of all trade, which is still dominated by informal shops and convenience stores—and 25 new shopping centers are in development.
At seven per cent annual GDP growth, Angola has one of Africa’s fastest-growing economies. That and a growing retail sector, with 14 new shopping malls being built, help propel Angola into the top 10 of the ARDI.
Botswana is often cited as a good example of what an economy can achieve in Africa. Although it is small (about two million people), the landlocked, diamond-rich country has a strong GDP per capita and a stable, well-developed economy, with growth driven not just by minerals but also agriculture and tourism. Unlike Gabon, Botswana’s modern retail sector is well developed, led by a number of active local and South African players.
In the first ARDI in 2014, Rwanda was the surprising ‘small gem’ at the top of the ARDI rankings; this year it’s Gabon (population about 1.7 million), thanks to tremendous economic growth and great opportunities. Gabon has one of the highest per-capita income levels in Sub-Saharan Africa (about $21,000), and 86 percent of its population is urbanized, primarily in the capital Libreville. The real investment opportunity in Gabon is its true middle class in a stable environment.
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