While on my way to Singapore this weekend, I had the opportunity to finish Vijay Mahajan’s book, Africa Rising: How 900 Million African Consumers Offer More Than You Think. Those familiar with James McGregor’s book One Billion Customers may recognize similarities in structure and tone, but with Mahajan’s emphasis on Africa instead of China. Within Africa Rising, there is certainly much to value; however, I also wonder if in speaking of Africa as a whole in order to capture the continent’s potential, Mahajan too easily glosses over the wide disparities that would make necessary a more discrete and country-specific analysis. Regardless, I recommend the book for two reasons: first, no other book I have encountered as systematically works through the best-case examples of multinationals marketing and selling to Africa’s emerging consumers and second, Mahajan’s advocacy for Africa’s potential is everything that is good and constructive about how nation’s grow and become stable.
Mahajan puts forward several ideas that I found helpful. The first comes in his chapter titled “Africa is Richer Than You Think.” Here he puts forward the point that “the average gross national income per capita (GNIC) across all 53 nations in 2006 was about $1,066, more than $200 above India’s.” In addition, the GNIC shows that “12 African nations (with more than 100 million people among them) had GNICs that were greater than China’s, and 20 nations (with a combined population of 269 million) had GNICs that were greater than India’s.” (pg. 29) This is a very helpful way of framing what many westerners, myself included, tend to think of when we discuss Africa’s economic potential. It is also one of the strongest rebuttals to my previous concern that Mahajan’s analysis too easily aggregates the whole of Africa when a more country-specific evaluation would be appropriate. As Mahajan shows, even when we look at the individual countries within Africa, we can see many have more vibrant economies than are widely understood and appreciated.
Second, his discussion on what has been called the “Black Diamond”, as he puts it “an emerging middle-class segment that is driving economic growth.” Initially coined to describe South Africa’s growing consumers, Mahajan writes “the roughly 400 million people in the middle segments of the entire African market … are a growing opportunity everywhere in Africa.” (pg. 9) These so-called “Black Diamonds” hold a similar potential to propel FMCG companies into new growth markets in Africa as has been recently experienced during China’s exploding middle class. Potential versus inevitability are worth exploring as some pundits would likely argue that both Africa and China have long held the “potential” to become vibrant consumption economies, but that only one has recently been able to do so.
The third concept that I found very helpful from Africa Rising was in Chapter 4, titled “Harnessing the Hanouti: Opportunities in Organizing the Market.” One of the services we provide companies early into their process of developing a strategy for an emerging economy is distribution mapping. Here, we want to identify channels to market, both the formal and informal relationships that drive these channels, and the reasons why one company is preferred over another (if, as is not always the case, a market for the good actually exists in the first place). Mahajan’s attention to the role of doing what he calls a “consumer safari” is spot-on, and very critical regardless of whether we are talking about Africa or any other emerging economy. He takes the idea of distribution mapping a step further, and illustrates how companies selling into Africa need to actually “organize the market” on their own. He describes this as “finding opportunities by moving informal retailing into more formal and organized stores, transforming informal and illegal markets into formal markets, and organizing secondhand markets.”
My only misgiving about Mahajan’s analysis is the tension that must always exist between the zeal for what Africa could become versus the many challenges that could well prevent it from ever fulfilling its promise. After all, few parts of the world have for so long bedeviled conventional logic about what could happen and what should be hoped for. Regardless, Mahajan’s book is a super introduction into the potential Africa holds, and one that is worth reading.