Growing population makes Africa a key market

Africa has seen its population grow, making it even more attractive as a market for businesses.

In recent years Africa has seen an explosion in growth in some of its major economies. Although it remains one of the poorest regions in the world, a growing population and economic development mean it is a very promising market for businesses planning to grow internationally.

Data from the Population Research Bureau shows that by 2050, Africa will see its population more than double from 1.1 billion to 2.4 billion people. Nigeria alone will see its population rocket from 174 million to 440 million people. That will mean a large, young and sophisticated audience with a higher demand for a whole range of goods and services, not to mention a large workforce. Improved access to healthcare and medical advances are thought to have been the driving forces.

There may be concern that African economies will struggle to create jobs fast enough to meet the growing population, but improving market conditions and rising consumption will also serve to attract business investment.

Given that nations in Africa are growing from a much lower base than many other world economies, the potential catch-up growth is vast.

Although many countries in Africa have primarily focused on commodities and their natural resources, growth is actually coming from a range of sources. Financial markets across the continent are evolving quickly, and this could mean that more sources of funding become available as capital inflows and outflows increase.

Speaking to McKinsey’s The Quarterly, Maria Ramos, chief executive of Absa, said that underdeveloped financial markets have been an historic problem for firms looking to expand in African countries. Yet as more nations gain credit ratings and access capital markets, stock markets are also emerging and liquidity is increasing.

Markets in countries such as Kenya, Nigeria and South Africa are going to become more sophisticated as their middle classes grow and domestic consumption improves.

In turn, that will have knock-on effects for exporters, who will be able to access huge groups of potential new customers.

But Cheryl Buss, head of global corporates for Barclays Africa, has also pointed out that Ethiopia, Zambia and Mozambique all have strong prospects that make them attractive to overseas firms. As Africa grows, the opportunities are limitless.