Food Market in Africa

It is estimated that the food market in Africa may be worth more than US$1tn by 2030.


Africa holds almost 50% of the world’s uncultivated land which is suited for growing food crops, comprising as many as 450 million hectares that are not forested, protected or densely populated. This means that not only can Africa support global food demand but also provide for its own inhabitants as according to a study by Deloitte on Africa it is estimated on the current trajectory, the middle class in Africa will rise to 1.1 Billion by 2060.


African farmers and producers face many constraints that keep their production low; such as a lack of access to electricity, capital, improved technology and land irrigation amongst a few, to grow high-value nutritious foods. Storage and supply chain issues, the difficulty of transport on poor public infrastructure as well as a lack of controls are also contributing to the fact that many farmers have a very high post-harvest loss on their products. These problems result that large companies cannot source enough raw materials they need to process goods locally, which means an increase in importation of foodstuffs to be sold to the growing urban populations.


There is a need for African Governments, as well as the private sector to team up with agribusinesses to evaluate the current obstacles they face and formulate plans on how to address and improve or remove the obstacles they face to become major players in the African and Global food industry.


Establishing a Foothold in Africa


Many big Multinational Companies have in the last few years increased their push into Africa, as they have seen the exponential growth in her middles class.


But with entering the African Market comes its own unique challenges not seen elsewhere in the world. As per an article published by The Boston Consulting Group

“Africa comprises of more than 50 markets – each socially, culturally, politically and economically unique – that span a continent the size of the US, Europe, China, India and Japan combined.”
“More than a billion consumers (60% living in rural areas), 2100 languages and 54 countries, these facts only begin to capture Africa’s size and diversity. “


Africa has a combination of Modern and Traditional trade channels as per the article going on to say “Traditional trade consists largely of informal channels, such as open-air markets with scores – even hundreds – of individual vendors (including street vendors), kiosks, cantinas and tabletop merchants. Modern channels include the supermarkets, shopping malls and speciality retailers that MNC’s (Multinational Companies) are more used to, as well as nascent e-commerce. The mix of channels varies by market.”


As mentioned above, infrastructure plays a crucial role in not only the production of goods but also in transporting imported goods to their intended destinations.
“Building quality, transportation and electric power are problematic in many urban and most rural areas. At the very least, limited and basic infrastructure requires substantial expenditures that cannot easily be passed along to less affluent consumers, and in many places under development, combined with long distances, makes it difficult or impossible to serve large rural populations cost-effectively.”


On the other hand, you have local African companies that have invested in Africa and expanding their offerings as per Boston Consulting Group in their article Duelling with lions: Playing the new game of business success in Africa “and in many cases taking away business from multinational incumbents”


“As Africa’s economy has risen in recent years, so have valuations, making it more expensive for MNCs to do business on the continent and to acquire companies based there. Still, the higher cost of entry hasn’t diminished foreign interest.”

Overall, there is great opportunity ahead of Africa. The main difficulty comes in the form of access to resources and information. Hopefully, with state support and assistance, these difficulties will be overcome to ensure that Africa can become a leading global food market!