African Innovation: The world’s fastest growing continent

                                                            7th March 2013
                                                        
                                                              |   
                                                                            3 minute read

This week the Economist has a special report on Africa which suggests that “Celebrations are in order on the poorest continent… Its economy is flourishing. Most countries are at peace…record numbers [of children] go to school. Life expectancy rose by a tenth in the past decade and foreign direct investment has tripled. Consumer spending will almost double in the next ten years; the number of countries with average incomes above $1,000 per person a year will grow from less than half of Africa’s 55 states to three-quarters.”

Marketers should prick up their ears; in a world with ever fewer growth opportunities for brands Africa still feels like a relatively new market for many. But whilst Africa offers great opportunity with an emerging middle class hungry for Western brands and products, a growing population and growing wealth, it is still a difficult place to do business – a place where it pays to know ones way around and have connections.

It can also be a dangerous place – both personally, but also in business terms. Whilst there is a hunger for aspirational brands from overseas as in other emerging markets it pays to understand local nuances rather than just rolling out what has worked elsewhere. Innovation can pay huge dividends – but it inevitably requires real insight into consumers, their needs and the market context.

Not least because Africa is incredibly complex, there are over 50 countries and a vast number of ethnic groups that means there are multiple cultural differences – even within the same country – that are vital to take note of. In Muslim parts of Africa for example, red is often seen as a colour with negative connotations – to the extent that a well known toothpaste brand has had to change packaging to accommodate this view.

Equally, when Diageo created Snapp, an innovative alcoholic drink aimed at younger women, it avoided putting it in more classic brown beer bottles as many West Africans associate those with prostitutes – so instead Snapp comes in clear bottles and has a clean apple taste.

Local brands are also growing in confidence and are able to respond quickly to emerging needs and opportunities. When Brand Genetics visited Nigeria recently the local Fuman juice brand was growing fast with its healthy, natural offer; no sugar is a strong claim in a country alive to the dangers of diabetes. Equally, local favourites like Palm Wine continue to hold a place in the hearts of African consumers.

But there are opportunities for brands to leverage some of their learning across other markets – for example in the use of mobile marketing. Mobile phones are everywhere – even in the shanty towns and slums. In Kenya a third of GDP flows through a mobile banking systems. By using approaches already developed in other markets such as India, global brands can get ahead of the competition and target African consumers directly.

In such a sizable market it also pays to think far bigger than one might closer to home. For example, Diageo worked with the Kenyan government to create a low price beer that would help wean locals off cheap (and often dangerous) hooch. Thinking entrepreneurially the company found ways to significantly cut costs and in return the government excused the company excise duty: today Senator Keg is Diageo’s most successful African product, and the company expects East African drinkers to splash out more than £100m on Senator this year and there are plans to role this out in other markets.

Africa is changing as fast as it is growing: where most FMCG innovation in the Western world is focused on stretching existing products and brands, in Africa there is also opportunity to create entirely new ones that benefit the consumer and the company. It represents virgin territory: a chance to genuinely think creatively when it comes to innovation and to grab share of the rising incomes in fast-growing parts markets. But whatever your ambition, you would be wise to ensure you start from a deep understanding of the local consumer, their habits and the market context or risk becoming a mzungu brand: wandering aimlessly through Africa.