Africa’s gross domestic product (GDP) will grow by 50% to $3.7-trillion over the next five years as the continent’s rapidly expanding middle class helps drive faster rates of urbanisation and increased consumer demand for goods and services, a new report by global consulting and business advisory firm Deloitte has revealed.

The ‘Africa: A 21st Century View’ report predicted that the expansion of Africa’s economy would see mobile subscription penetration grow from its current 72% to 97% by 2017, as the continent added 334-million new smartphone subscribers over the next three years.

Africa’s middle class – which was broadly defined as those earning between $2 and $20 a day – was also expected to increase to more than 500-million people by 2030, the company noted.

“Africa presents many opportunities at present and these are only likely to grow as the groundswell of economic momentum being witnessed on the continent gains further traction in coming years,” said Deloitte East Africa advisory leader Rodger George.

“Much of Africa’s economic potential still remains untapped by international investors, particularly in the emerging consumer sector, but this is set to change in the next decade and a half,” he remarked.

As high-growth economies such as China, India and Brazil showed signs of slowing, the report highlighted that international businesses were increasingly looking to the fast-growing African market for new growth opportunities.

Sub-Saharan Africa’s GDP was expected to expand by 5.1% this year, led by markets such as Chad (9.6%), the Democratic Republic of the Congo (8.6%), Côte d’Ivoire (8.5%), Mozambique (8.3%), Ethiopia (8.2%) and Nigeria (7%), according to the International Monetary Fund’s 2014 World Economic Outlook.

George said Africa’s economic story had, thus far, been focused on natural resource and commodity exports but would, in future, be driven by “the consumer opportunity”, as rising incomes and urbanisation boosted domestic demand.

This transformation was coinciding with the growth of the African middle class, a demographic characterised by optimism, mobile connectivity and brand consciousness.

“Africa is currently at a point where South East Asia was 30 years ago – on the cusp of a consumer boom. Its population is predominantly young, with 680-million, or 60%, of the continent’s total population, below the age of 25.

“These younger Africans will play a critical role in the continent’s economic development, not only because they will want increased connectivity and access to a wider choice of food, consumer goods and entertainment but also as they bring a more innovative and entrepreneurial mind-set,” he outlined.

Africa’s population was also increasingly clustered in large urban centres and urbanisation was likely to be a key driver of economic activity.

Deloitte’s research showed that across the four fastest growing markets in Africa, nearly one-quarter of young consumers noted that buying well-known brands “made them feel good”.

“Notwithstanding the many infrastructural challenges that Africa faces, Africans have shown they are willing to innovate and have leapfrogged poor or no fixed line infrastructure, moving straight to mobile, which has seen the fastest growth in the world over the last five years. 

“In addition, Kenya is already one of the world leaders in mobile money and the continent as a whole has a mobile subscription penetration of 72%, which is set to grow to 97% by 2017,” George pointed out.

Despite significant growth prospects, Africa remained complex and carried risk, Deloitte added.

Each of the 54 countries had different markets and challenges, as well as issues such as a lack of infrastructure, poor governance, fragile security and unreliable logistics, which can make strategic planning difficult.

However, the continent was making progress, with widespread democracy suggesting the dominant trend was positive.

“Our research shows Africa is not suffering from a lack of demand, but a lack of supply. However, there are no quick wins and businesses must be prepared to engage with the various challenges on a long-term basis while carefully weighing the risks and rewards if they want to reap the benefits of Africa’s emerging consumer economy,” George advised.