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African trends supporting agricultural investment

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Absa bank het al die afgelope 100 jaar in landbou belê en sien uit na die volgende 100 jaar saam met ons boere. Bekende name in die landboubedryf gaan verskillende vooruitsigte soos die ekonomie, die weer, gewasse, groente, vee ens vir 2017 bespreek. 

Agricultural exports into Africa increased significantly over the past decade following investment by retail chains, especially in Angola, Cameroon, Ethiopia, Ghana, the Ivory Coast, Kenya, Nigeria, Tanzania and Zambia. PWC (March 2016) identified significant trends likely to have an impact on the development of the region’s retail and consumer goods industries in the coming years. Agricultural development is needed to supply these industries with the necessary food and fibre.

  1. Macro developments

Many countries in the region have emerged to be among the world’s fastest-growing economies. Administration has improved and democracy has deepened. These developments, together with urbanisation and an increasingly connected and demanding consumer class, have led to a growing interest in investment.

  1. Economic factors

The softer demand from the EU and China for commodities such as oil, from Angola and Nigeria, has impacted negatively on GDP growth. Security threats in Nigeria and Kenya are also unfortunate. The strong US dollar has inflated the costs of imports, putting added pressure on local economies. Despite these challenges Africa’s prospects remain significantly better than the global average.

  1. Demographic changes

Africa’s young population is expected to drive consumption and economic growth. Africa will be the continent having the youngest population, with 25% of the global population in Africa by 2050. When the labour force grows more rapidly than the population that is dependent on it, resources become available for investment in economic development and personal consumption. This offers an opportunity for rapid economic growth.

  1. Urbanisation

Sub-Saharan Africa is undergoing the largest wave of urban growth in its history. It is the most rapidly urbanising region in the world. Urbanisation will bring about huge social, economic and environmental transformation. The urban population in Africa is due to increase from 35% in 2010 to 56% in 2050. Supply chains will be pressured to meet the changing demand patterns and consumer tastes.

  1. Income growth

Although uncertainty prevails about the true size of the middle class, most analysts seem to agree that incomes are rising. The current optimism about the region hinges on the assumption that a consumer class is emerging. Some analysts believe that the current 15 million middle-class households in 11 sub-Saharan countries are contributing 50% of the GDP in sub-Saharan Africa. These households are expected to grow to 40 million by 2030, assuming that the overall growth trend remains robust.

  1. Busier, healthier and more informed consumers

Consumer lifestyles are evolving and ambitions are influencing consumer behaviour. As a result of the growth in internet penetration and travel, Africans are more connected to global trends than ever before.

  1. Home-grown champions making their mark

African champions are boosting their presence in the rest of the continent after becoming dominant players in their home markets. Pioneers such as Shoprite first entered Zambia in 1995 and are currently active in 14 countries with over 300 stores. Few JSE-listed retailers or consumer goods manufacturers do not have a footprint north of the Limpopo.

  1. Shift to modernisation but informal trade continues to lead

Informal retail will continue to dominate sales in sub-Saharan Africa with the exception of South Africa and Angola. Although modern trade is expected to continue growing, companies should not underestimate the strength of the informal sector as products in the malls are priced at a premium. The lack of appropriate formal retail space is restricting the growth of modern retailers. Building shopping malls is a tough and expensive business due to challenges surrounding the securing of land, skills and the cost of building.

  1. Online retail showing promising potential

The digital age is increasingly disrupting the retail industry globally and redefining the role of the traditional store. Although online retailing is still in its infancy, the industry is certainly showing promising potential. Sorghum producers in Pandamatenga, Botswana are using the technology successfully for importing second-hand harvester combines from the US and exporting commodities.

  1. A more sophisticated retail sector

Formal retailers exploit growth and market-enhancing initiatives such as private labels, loyalty programmes and retail credit. The entry of regional and foreign players is expected to boost these kind of initiatives as they are already applied in their home markets.

  1. Moving into secondary towns

The expansion of modern retailers focused on the major cities and capitals, but second-tier cities and emerging towns are now increasingly attracting interest.

  1. Import substitution

Thousands of consumer goods still arrive at Africa’s ports every month. However, there is a growing trend towards domestic production. Growing democracy and stability gives companies the confidence to invest in assets on the ground. Second, companies invest to circumvent import duties, port delays, and high transport costs. Third, governments are granting incentives for local manufacturing and production to create jobs and to diversify their economies. Most importantly for farmers, Africa’s enormous agricultural potential provides ample opportunities for local agroprocessing.

  1. Supply chain optimisation

Surging competition means supply chain optimisation will be a priority for most retailer and consumer goods companies. Supply chains are complex, challenging and expensive. Poor transport infrastructure, inadequate local supply capacity and the dominance of informal retail trade make distribution a strenuous exercise. The stable supply of agricultural produce remains a challenge.

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skaap

Vee en wild

jaguar

Jaguar F-Pace: Net die kat vir wanneer jy met jou kerkklere in die bos wil kattemaai