Sub-Saharan Africa has 60% of the uncultivated arable land in the world and only 5% of the cultivated land is irrigated with modern techniques. While yields in all crops are at least 50% below global averages, the sector has considerable potential to lead globally in many sub-sectors. The region’s agribusiness potential is real and the sector’s future growth is critical considering that in most African countries agribusiness represents 30-70% of all direct and indirect employment; however, climate change, competitiveness, and access to finance remain the sector's Achilles heel.
Fast Moving Consumer Goods (FMCG)
Africa’s consumer landscape is undergoing a re-adjustment. The middle income growth expected by many a few years ago has yet to materialize, driving multinationals (“MNCs”) and local companies to right-size and re-strategize. Both Asian and Latin American companies faced similar growth patterns over the last two decades, but contrary to their African peers, they successfully focused on the lower segments of the population, i.e. the bulk of the population. In fact, one can say these companies democratize the FMCG industry in Asia and Latin America by catering to the bulk of the population with better, safer, affordable products.
Modern retailing is also bound to transform the agribusiness and FMCG supply chains by pushing for standardization, scale and cost efficiency, all likely to benefit consumers. Interestingly, in Asia and Latin America, local retailers, not MNCs, dominate their markets. Indonesia, for example, has seen the percentage of food purchased through modern channels tripled over the last two decades, driven by rapid urbanization and growth in per capital income. Rapid movement to hybrid e-commerce and physical presence will be required to succeed over the next decade.
Access to healthcare remains a key challenge in Africa. According to KPMG’s report the “State of Healthcare in Africa,” the region still lags behind the rest of the world in key health indicators. However, there has been considerable progress over the last decade. Primary care is more accessible in rural areas, and better quality hospitals and clinics are appearing in most major cities. The opportunity lies in "second cities" or cities in target countries with a population of 1 million or more that have not seen a major increased in private investments despite growing demand and incomes.
There is growing interest in technology companies in the Region, particularly, in Kenya, which is now referred to as the “Savanah Valley”. Fintech is attracting considerable investment in new companies in payments and remittances, insurance, business solutions etc., areas which are all taking advantage of the strong US$35 billion p.a. e-wallet facilitated by Mpesa in Kenya. New technology companies in the agribusiness, logistics, education and healthcare are also popping up across the Region creating new investment opportunities and leapfrogging sectoral challenges.