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Retail development in Africa

Global management consulting firm AT Kearney released its second annual African Retail Development Index (ARDI) report in September, with some surprising results.

Gabon, a developing country with a population of approximately 1.7 million, a per capita income of about USD 21,000 and about 86% of its population living in urban areas, emerged as the top country due to its exceptional economic growth and accompanying retailing opportunities.

Other countries listed in the Index include Botswana (ranked 2nd), South Africa (coming in at 6th), Angola (coming in at 3rd) and Rwanda (ranking 7th, down from 1st in 2014). A country that is surprisingly missing from the Index is Kenya, one of Africa's most developed markets. Its position outside the top 15 in Africa can be attributed to Kenya's low urbanization rate, weak risk profile, slow growth in retail sales and spending figures and a partially saturated retail market that has to compete with largely unsaturated markets in other Sub-Saharan countries, these being some of the factors that are highlighted in a review of Kenya’s leading retailer Nakumatt set out as a sidebar in the report.

The report is based on an evaluation of the growth and retail development potential of 48 countries in Africa (excluding North Africa) chosen on the basis of three criteria: a country risk lower than 137 in the Euromoney country-risk ranking, a population size larger than 1.5 million and a GDP PPP per capita of more than USD 1,000. There are four main indicators used in the ranking: market attractiveness, country and business risk, market saturation and time pressure to enter or expand business in the relevant country (counting 25% each).

Although the report mentions that there are many bars to development, such as lack of lack of shopping culture, infrastructure and supply chain, strict regulations and customs rules, etc., Africa is still very much a fertile ground for growth and expansion and we are well placed to assist our clients with protecting their intellectual property wherever they wish to operate.

For more information, please contact Adré Greeff.

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