Kenya’s youth market – which accounts for around 32% of the population and 60% of the workforce – is economically highly active and continually driving change in the marketplace. Among these changes is the growing use of social media influencers as key drivers of Kenyan marketing campaigns. Specialist youth and family research agency, Youth Dynamix, says its studies show that 42% of the country’s young people are accessing the Internet daily, mainly to interact on social media platforms such as Facebook and Instagram. Increasingly, youth-related events are now being marketing solely via digital channels and many are sold out. “This online infiltration and reliance demands that brands become active in the youth’s space,” the agency says. “But, it’s not just being active that counts. [Young people] demand customised solutions, to be engaged and to form part of the campaign and the brand.” Therefore, companies that give young Kenyans a strong voice by enabling them to create digital content are more likely to win over this demanding audience. Encouraging the writing of online reviews – particularly of electronic goods – is one such example. Peer reviews of this nature can become a trusted source of product recommendation. Another notable trend is that gimmicky marketing give-aways are becoming less impactful, while well thought-out lifestyle improvement (CSI) initiatives that make a sustainable difference in their community are respected by young people. “It’s becoming ever more evident that the youth’s needs are continuously changing because of their heightened level of exposure. To remain in tune with the youth, brands need to play in their space without being intrusive,” notes Youth Dynamix.
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Customer service, a strong social media presence and increased smartphone penetration are all helping to attract customers to Kigali’s own two-wheeled version of Uber, reports ‘Strategic Marketing Africa’, the magazine of the African Marketing Confederation (AMC), in its latest issue. Kenyan Peter Kariuki and Canadian Nash Barret have created a smartphone app-based business called SafeMotos that is changing the way people travel in the Rwandan capital. They are also improving safety when travelling by ‘moto’ taxi (motorcycle taxi) in a place where 80% of road accidents involve motorcycles. At the same time, they want to offer outstanding customer service and convenience in a taxi industry that has never held these as high priorities, Barret says in an interview published in the Issue 3 2016 edition of the magazine. According to Barret, basing the business model on an Uber-style smartphone app is viable in Kigali because of the extraordinary enthusiasm that people have for smartphones and the fact that prices are plummeting. “In Rwanda, there was a 30% year-on-year increase in smartphone penetration in 2015, and today you can get a good Android handset for US$40 to US$50. Twelve months ago that would have cost US$300. In a year’s time they will cost US$25.” He adds: “Apart from affordability, there is really good infrastructure here. By this October, 95% of the population will be within a 4G/LTE sphere and right now all of Kigali has LTE (high-speed data) coverage.” SafeMotos encourages safe driving by using telematics from drivers’ smartphones to track their road habits and then only connect customers to the safest operators. The worse a driver behaves, the fewer clients they receive. To market itself, the company uses word-of-mouth and has a strong social media presence. Facebook is by far its most powerful promotional platform, says Barret.
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Given the supply chain challenges inherent in reaching consumers in Africa’s far-flung rural areas, increasing urbanisation brings many benefits. But marketers who focus only on the major centres and ignore the growing towns and secondary cities do so at their peril According to Issue 3 2016 of ‘Strategic Marketing Africa’, the magazine of the African Marketing Confederation (AMC), surveys by international consulting firms tend to focus on the capitals of African countries. But they miss the fast-growing towns and secondary cities, as well as the advent of new city nodes and quality urban developments on the outskirts of the biggest metro areas. “The emergence of tailor-made new urban developments is a definite trend, despite the cost of establishing them. They have become necessary because of the difficulties that rampant urbanisation is causing in the traditional big cities,” the magazine says. For example, Kenya has plans to decentralise its urban growth and has six new cities on the drawing board. Already, a private initiative – Konza Tech City – is breaking ground about 60km of Nairobi. Konza draws on the success of Ebene Cyber City in Mauritius, a purpose-built metro near the capital of Port Louis. In Egypt, the government has plans for a new capital adjacent to Cairo. It will have 1,1-million homes housing at least five million residents. In Nigeria’s oil hub of Port Harcourt, a new city is being built around the edges of the old to provide infrastructure for the future. The original city was built to accommodate 5 000 people but now houses around two million residents. “Marketers who can look beyond the biggest cities will often find ample opportunity in the new urban centres – where consumers are frequently more affluent and better urban planning makes for better logistics,” the magazine says
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The challenge posed by counterfeit goods sold on the continent is a huge one, making it something that brands cannot tackle half-heartedly. According to Issue 3 2016 of ‘Strategic Marketing Africa’, the journal of the African Marketing Confederation (AMC), experts agree that while counterfeiting is a global scourge, it is at its worst in Africa. “The list of counterfeit goods is almost endless,” Steven Yates, a Partner at law firm Adams & Adams, tells the magazine. “Items you would expect to find – such as mobile phones, DVDs, food, beverages and clothing – are there. But we have also come across the likes of counterfeit razor blades, super-glues, batteries, golf balls, diapers (nappies) and hair extensions.” Ailsa Wingfield, Executive Director for Marketing and Communication in Africa at research company Nielsen, concurs. “In a country such as Nigeria you will find genuine brands of literally any product side-by-side with their imitations. Many counterfeit products are very hard to tell apart from the real thing and, in certain instances, can only be identified by a laboratory test conducted by the brand owner.” Counterfeit goods are also a concern in North Africa, says Mohamed Eldib a Senior Associate at one of Egypt’s oldest law firms, Eldib & Co. Fast-moving consumer goods (FMCGs) are the key target of counterfeiters in Egypt, but also on the list are clothing, electronic goods, mobile phones, TVs and refrigerators. At times, counterfeiting can be dangerous. Eldib provides an Egyptian example in which counterfeiters collected empty Nestlé water bottles from refuse dumps in Cairo, refilled them with water not fit for human consumption and sealed them again with replicas of Nestlé caps. Arguably the most insidious form of counterfeiting involves pharmaceuticals, which are available in abundance in fake form. According to an estimate by the World Health Organisation (WHO) fakes account for up to 50% of pharmaceutical sales in sub-Saharan Africa, compared to only around 10% worldwide. But some progress is being made in protecting legitimate brands. Paul Ramaru, an attorney at law firm Spoor & Fisher, says Kenya is among those making big strides, spearheaded by the Anti-Counterfeit Agency established under the 2008 Anti-Counterfeit Act. According to a study by the International Chamber of Commerce and Anti-Counterfeit Agency, counterfeit goods worth US$835-million were sold in Kenya in 2013. Edlib believes South Africa is by far the most advanced in combatting counterfeiting in Africa, followed by Egypt and Morocco. Other topics covered in the latest issue of the magazine include the growing potential of consumer markets in Africa’s secondary towns and cities, Uber’s disruption strategy on the continent, and the importance of advertising ethics in emerging markets. ‘Strategic Marketing Africa’ is published four times a year and distributed through AMC member organisations in Ghana, Kenya, Morocco, Nigeria, South Africa, Zambia, Zimbabwe and Indian Ocean Islands. It is also available in selected airline lounges and is mailed to a selected list of marketing industry professionals.
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Despite a relative slowdown, Africa remains one of the fastest growing regions in the world. This is according to a study released this week by business consultancy EY (formerly Ernst & Young). The ‘Africa Attractiveness Programme 2016, Staying the Course’ study says there was a 7% rise in foreign direct investment (FDI) projects in the region over the past year. This made Africa one of the only two areas of the world achieving growth in FDI projects. Ajen Sita, Africa Chief Executive Officer at EY, says that economic growth across the region is likely to be slower in coming years than it has been over the past 10 to 15 years, although the main reasons for a relative slowdown are not unique to Africa. East Africa recorded the highest share of FDI across Africa last year, achieving 26,3% of total projects. While Southern Africa remained the largest investment region on the continent, its projects were significantly down from 2014 levels. West Africa saw a rebound in FDI projects, which increased by 16,2%. North Africa experienced 8,5% year-on-year growth in FDI projects, and the study says it is notable that the region’s projects are increasing at a faster rate than in sub-Saharan Africa. Michael Lalor, EY’s Africa Business Centre Leader, believe the continent’s ability to attract FDI is still relatively good. “In a context of heightened concerns about economic and political risk across the continent, FDI flows remain robust and in line with levels we have seen over the past five years,” he observes. Mining and metals, coal, oil and natural gas – which were previously the key sectors attracting major FDI flows – have now given way to consumer products and retail, financial services and technology, as well as media and telecommunications.
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Rwanda is continuing to promote itself an African technology hub with the recent announcement that a low-cost laptop computer, the Positivo BGH, is being produced in the country. The laptop costs around US$265 and is being marketed as ‘proudly made in Africa’. It will be sold in Rwanda, other parts of Africa and possibly even further afield. Although the units are being manufactured in the capital city, Kigali, the business behind the project is South American technology company Positivo BGH (the same name as the computer). The website ‘Rwanda Eye’ quotes the company’s President for Africa, Juan Ignacio Ponelli, as saying: “It’s a strategic decision … to go global. We are a top company in technology but we are known really just in South America. So right now we decided to go global and chose here [Rwanda] to start the international arm for this group.” According to Ponelli, Rwanda does present some obstacles. “It has the challenges of being an emerging market, but we’re coming from emerging markets. We’re coming from Argentina and Brazil so we know to do it, and we’ve been doing it for 100 years,” he says. The company employs around 50 staff in Kigali and sees opportunity in the Rwandan education sector, with the government reportedly agreeing to purchase 150 000 units a year for education. The nation’s many co-operatives – there are around 7 500 countrywide – are also being targeted as customers. Rwanda’s ‘Vision 2020’ national strategy aims to “transform "transform the country into a knowledge-based middle-income [economy]” by the year 2020.
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As it gears up for its 17th annual conference, being held this year at Victoria Falls in Zimbabwe during August, the Pan African Media Research Organisation (Pamro) has issued a call for individuals or institutions interested in presenting papers at the event. Pamro is seeking findings from media audience research activities, or relevant case studies drawn from Africa and internationally. “Media research provides critical insight into local consumers and how best to reach them,” says Pamro board member Oresti Patricios. “It reveals which market segments are watching TV, listening to radio, or accessing information through print or digital means. It enables a company to tailor their marketing strategies to reach target audiences in the most effective way, and is therefore important to the success of many business enterprises.” According to Patricios, Pamro is working to achieve harmonised media research. “For example, we have methods that create an establishment survey that is consistent across all the regions, while allowing for a certain degree of local adaptation.” The annual conference is an important part of this effort because it provides a platform for those concerned with media research to share ideas and find ways to make Africa a place where brands can feel confident about doing business and marketing themselves. The theme of this year’s conference is ‘Media research in a globally connected world’. “It is something of a cliché that Africa is leapfrogging the rest of the world in the use of mobile phones,” says Patricios. In South Africa, for example, things are changing rapidly as more consumers choose to access information digitally. Similarly, in the rest of Africa, while radio is still big, digital sites and various social media platforms accessed via mobile phones have become the first port of call.”
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Nigerian consumers continue to be more confident than their sub-Saharan African peers, while confidence also improved in Kenya. Ghana’s consumer confidence score remains unchanged from the previous quarter, but South Africans are notably less confident than before. This is according to the latest Nielsen Consumer Confidence Index (CCI) results for the first quarter of 2016, which were released this week. The company conducted its research during March. Nigeria, Kenya, Ghana and SA are the only four countries measured in the region. In Nigeria, all three confidence indicators declined from the previous quarter amidst the current macro-economic slowdown and resultant uncertainty. “Despite this, Nigerians continue to be some of the most optimistic consumers on the continent,” notes Nielsen West African MD, Lampe Omoyele. “It’s a much-needed optimism, as business success in Nigeria is about successfully adapting product and retail strategies for good and bad times. There are brands which are winning – and they are not necessarily the cheapest brands.” Most consumers in Ghana and Nigeria said they did not have spare cash (64% in Ghana and 58% in Nigeria). Among those who claimed discretionary funds, saving continued to be a priority for the majority (81% in Ghana and 84% in Nigeria), who plan to put money into savings accounts. In Kenya, consumer sentiment is again on the upswing and the jobs outlook also rose. “Sentiment about personal finances and immediate spending intentions is also on the increase, with 65% saying they’ll be ‘excellent’ or ‘good’ within the next 12 months,” the study says. In South Africa, however, consumer confidence declined to a level not seen since the 2008/09 recession. The biggest worry over the next six months is the economy, with 40% of people saying it as their biggest or second biggest concern.
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DStv, the dominant pay TV operator in sub-Saharan Africa, has confirmed that it is losing subscribers and as has frozen prices as consumers in various countries feel the impact of slowing economies. Subscriber numbers have fallen by 288 000 in 2016, the South African-based ‘Mail & Guardian’ newspaper reported in late June. “We have … lost a lot of subscribers in the last year in sub-Saharan Africa; people have just not been able to afford it,” the newspaper quotes Naspers CEO Bob Van Dijk as saying. “We bill in local currencies, but our costs are in dollars. It is quite painful when the currencies are running in the wrong direction.” Naspers, which operates as a multi-media business in various parts of Africa and other emerging markets, is the owner of the DStv satellite broadcaster. ‘Mail & Guardian’ added that DStv had frozen prices and “expects a difficult few years in sub-Saharan Africa”. In an article published in March, the Botswana-based ‘Sunday Standard’ newspaper said that “the rate hike moratorium was … in recognition of the fact that most African markets have suffered as a result of commodity and oil price weakness and because of the significant devaluation of local currencies”. Despite the economic slowdown in the region, Naspers recently launched its Internet-based video-streaming service, ShowMax, in 36 African countries. This is in a bid to counter the arrival of US-based service Netflix.
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Ethiopia is on track to become an African industrial powerhouse and, except for Rwanda, is the only country on the continent whose economic growth has been consistently high for more than a decade without relying on a natural resource boom. This is according to a report produced for the United Nations Economic Commission for Africa. “Between 2004 and 2014, per capita growth in Ethiopia was 8% per year. This was the highest on the continent during this period and is impressive by any standard,” say the study’s authors, Ha-Joon Chang, Jostein Løhr Hauge and Muhammad Irfan. In an article for ‘The Conversation Africa’ website, they note that growth has been attributed mainly to a construction boom and increased agricultural productivity. But manufacturing has also been vital. It has grown 11% annually and manufacturing exports increased more than 11-fold. This was largely due to the increasing export earnings of the footwear and apparel industries. The growth represents more than a doubling of manufactured exports’ share in total merchandise exports, which itself more than quintupled during the period. Nevertheless, manufacturing as a share of GDP in Ethiopia remains 5%, which is well below the African average of 10%. The country also scores below average on diversification, export competitiveness, productivity and technological upgrading. Despite this, the authors are upbeat. “It’s not a long-shot to predict that Ethiopia will catch up with countries like China and Vietnam in some low-tech manufacturing industries in the near future,” they write. “These are industries for which labour costs are very important. And right now you’d be hard pressed to find a country in the world that has cheaper labour than Ethiopia. Even beyond these obvious industries, there are reasons to believe that Ethiopia might be on the right track to catch up with more advanced economies.”
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