In the new consumer reality, where the focus is firmly on affordability, value and cost of living, sub-Saharan Africa is emerging as a region full of opportunity. To take full advantage of these opportunities, businesses need to prepare for the evolution of the youth cohort, offer and take advantage of domestic offerings based on local demands, and embrace technological innovation as an enabler for financial inclusion.
Africa’s youth: Demand for affordable goods
Limited income levels across sub-Saharan Africa remained alarming in 2023, severely affecting people in the lowest income deciles. This impact is particularly felt among consumers aged 15-29, who represent 28% of the population. This team is just starting their professional journey. As such, their incomes are low and particularly sensitive to macroeconomic shocks such as high inflation. Consequently, spending on youth in 2023 was focused on essential goods and services, leaving little room for discretionary spending.
While the gap between core and non-core spending in Nigeria is a fascinating snapshot of the region, one company has successfully catered to the country’s fast-growing youth segment. Airtel’s cost-effective mobile services essentially target 15-25 year olds with affordable connectivity solutions, helping the brand build a strong presence in the region.
As the region continues to experience a surge in its youth demographics and a persistent cost of living crisis, businesses must be proactive in anticipating consumers’ search for affordable goods and services. This will meet current consumer demands, build loyalty and establish your brand as a trusted partner.
Winning with value by going local
While affordability remains a focus for sub-Saharan African consumers, attributes such as “local origin” are generally perceived to be more reliable and accessible than imported products.
In South Africa and Nigeria, one in three consumers expressed a preference for local products and locally owned shops, while a third of consumers prioritized quality goods and services
Source: Euromonitor Voice of the Consumer: Lifestyles Survey, January to February 2023
Using technological innovation to enhance financial inclusion
Digital solutions are boosted by rising smartphone ownership rates across the region.
By 2040, 90% of households in the top five consumer spending markets in sub-Saharan Africa will own smartphones, up from 73% in 2023. Consumers in Ethiopia will be the most active users, as ownership rates will increase from 66 % in 2023 to 89% by 2030.
Africa’s youth sector is tech savvy and eager to use technology solutions that promote accessibility and affordability. By targeting this group and enabling greater technological innovations, financial inclusion is promoted and can be an effective tool that supports increased purchasing power and enables greater consumer spending among consumers in sub-Saharan Africa.
Sub-Saharan Africa: How to win
- Prepare for the evolution of the youth cohort: A growth spurt is expected in Africa’s youth segment. Their demands can be adequately met by providing affordable, need-based solutions and expanding product offerings to serve underserved communities.
- Drive growth with domestic offers: To reap the powerful benefits, businesses and brands must champion local products and adapt production processes and supply chains, closely aligning with the local consumer market.
- Promoting technological innovation as a means for digital inclusion: Providing and enabling consumers to leverage technological innovations such as digital payments enables flexible and convenient payment solutions. As consumer demand is met, digital inclusion should be promoted as it enables greater purchasing power and supports consumer spending.
Learn more about consumers in sub-Saharan Africa in our report, Affordability, Value and Cost of Living: Spotlight on Sub-Saharan Africa, to get an in-depth analysis of potential market strategies for companies operating or planning to enter sub-Saharan Africa – Africa Sahara market.