DAKAR/JOHANNESBURG: For centuries, colonial era merchants tussled for access to Africa’s raw materials, and huge swathes of Africa’s geography became synonymous with the main commodity they exported: Gold Coast, Ivory Coast, the Spice Island of Zanzibar.
But the continent’s booming economic growth and swelling population give it an opportunity to shift away from the traditional raw material export model towards consuming and transforming its own commodities and selling them to its own expanding local markets.
Miners, bankers and trading houses are seeking to position themselves to take advantage of emerging trade routes within Africa at a time when demand growth from China, the world’s biggest commodity consumer, begins to tail off.
Management consultancy McKinsey estimates that African consumer spending will be $1.4 trillion by 2020 and forecasts a more than doubling of the working age population to 1.1 billion people by 2040.
“Any statistics you take are uni-directional so I don’t see why demand should look the other way,” said Venkatramani Srivathsan, head of Africa and the Middle East for Singapore-listed commodities trader Olam.
“For businesses like ours looking into Africa as a market, as a destination, countries like Nigeria and Mozambique are very, very interesting,” he said in a telephone interview during the Reuters summit on African business, held in several African cities.
For Srivathsan, whose employer sources a quarter of its sales revenues from Africa and has invested S$1.66bn ($1.33bn) on the continent, the secret is knowing how to adapt to the tastes and changing consumption patterns of each individual market in Africa.
Olam, which invests in plantations, food processing and the packaged food business, has introduced subtle differences in its West African tomato paste to suit different palates and is adapting to Nigerian demand for more sophisticated biscuits.
“You have to keep innovating. Even if you acquire brands you need to keep adapting to changing tastes and changing levels of income,” he said.
Reuters
