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S African manufacturers primed to exploit Africa’s consumer boom

Manufacturing Circle executive director Coenraad Bezuidenhout
Photo by Duane Daws
Manufacturing Circle executive director Coenraad Bezuidenhout

29th June 2015

By: Natalie Greve
Creamer Media Contributing Editor Online

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With growth rates exceeding those of the developed world – averaging between 4% and 5% from 2002 to 2014 – African States remain key targets for industrial exports from South African manufacturers, who would do well to leverage their proximity to the sub-Saharan African region and understanding of local business conditions and practices to gain a competitive advantage over international competitors, the Manufacturing Indaba heard on Monday.

Manufacturing Circle (MC) executive director Coenraad Bezuidenhout, who lobbied government and other stakeholders in the interests of the country’s manufacturers, said the African frontier markets offered particularly encouraging opportunities in the fast-moving consumer goods markets as the continent’s emerging middle-class continued to swell.

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This could further boost foreign direct investment into South Africa as international investors looked to capitalise on the country’s niche position.

“The degree to which South African manufacturers are able to leverage opportunities in Africa, as well [as the] terms of trade we are able to negotiate with non-African trade partners will be a significant driver of [these companies’] attractiveness to investors all over the world,” he noted.

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His assertions followed the release of a report by consulting group McKinsey in 2010, which forecast total growth in compound gross domestic product (GDP) per capita of 4.5% a year across Africa until 2015.

This was expected to boost consumer demand by 35%, Bezuidenhout added.

“With population growth of 2% and continued urbanisation, we estimate that 221-million basic-needs consumers will enter the African market [by this year]. As a result, the total number of nations with over ten-million consumers and with gross national income exceeding $10-billion a year will increase to 30 from 22,” he asserted.

The report further claimed that GDP per capita was the single most important driver of global growth in the consumption of fast-moving consumer goods, accounting for an average of around 73% of total growth across 60 product categories.

According to Bezuidenhout, it was “critical” for South African companies to move swiftly to maximise “the African opportunity” while markets were still in their early stages of development.

“Some 800-million people are urbanising in Africa this decade – the largest urbanisation movement in the world. This means huge opportunity in terms of fast-moving and durable consumer goods.

“Added to this, there are huge energy developments and easing terms of trade, which means satisfying demand from these markets will become more profitable, going forward, than it ever was before,” he held.

The two-day Manufacturing Indaba, in Johannesburg, drew over 240 delegates and encouraged robust engagement on a host of variables that affected South Africa’s – and the continent’s – manufacturing base.

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