“Africa’s middle class is a key source for private sector growth in Africa, accounting for much of the effective demand for goods and services supplied by private sector entities”.
– African development bank, 2011 Report.
The current Nigerian $510billion economy which was revealed and evident in the recent rebasing exercise showed the state of the economy in contribution to growth, as against what many believed. Moreso, the exercise showed how growth is being powered by few sectors and how this helps the private sector make informed investment decisions to making the most of these opportunities. As Nigeria advances on her development course, these findings, show that the non-oil sector especially, Agriculture, trade and services – totalling 86%, show the most commercially viable sectors that contribute largely to inclusive growth and shared development in the long-term.
At the face of this structural changes, Nigeria is blessed with a huge and young population, growing at an average of 2.8% yearly, coupled with a high rural-urban migration and high foreign investor focus. All these signify high prospects for these sectors to contribute to its full potential. If well leveraged upon and positioned for inclusivity, will assure brighter days ahead for Nigerians and the Nigerian economy, as against the population situation and projection in other emerging markets.
Though unemployment is still high, but we believe as entrepreneurship initiatives mature to produce more jobs, and as individuals take more responsibility for their lives, we expect income levels to rise, and definitely a rise in the consuming class with effective demand.
Therefore, with the opportunities present, an increase in population, leading to more urbanization, and generally a rise in middle and consuming class, who clamour for more meaningful livelihood( lifestyle related goods), as evidence in the Standard Chartered and Globescan study, where in the next five years, 93% intend to spend in making improvements in housing conditions, that is a rising need for formal housing, 91% want to buy the latest technology goods, 88% intends to make expenses in securing household appliances, 52% hope to increase savings, and 60% aspire to be able to afford quality education for their children.
It is therefore imperative for the private sector especially the Small and Medium Enterprise (SMEs), to understand how to translate these opportunities to actions that yield optimum results.
This happens by taking cognisance of the changes and technicalities involved in meeting the average 21st century consumer.
A clear understanding of this, will help chat a new design for a realistic road map, that ensures cost minimization, value creation and profit maximization.
A few of these important factors include;
- Getting the timing right – This is very crucial, businesses will need to understand the nature of the industry and target audience. This requires, if the targeted consumer can afford them. For instance, before incomes hit a particular level, consumers rarely buy some certain products. However once the income threshold for that product is reached, sales can accelerate rapidly. This also apply, in introducing products per region and locality. For instance a product can successfully be on its take-off stage in southern region, but yet to receive patronage in the Northern regions, probably due to the same income gap, or other important variables that can determine its success or failure. Business will need to understand the intra and interstate dynamics to get her timing right.
- Ride the youth movement and speak the youth language – It is amazing how over 70% of the Nigerian population, is below the age of 35.This simply explains the strength of the consuming class, and as such will continually be on the rise with higher purchasing power. The multinationals have understood this and shifted all strategies to meeting the needs of this population. This is as against the presence of the older and ageing population, in their home countries where they operate. To leverage on the youth market, the private sector will need to consider the following
- Most young Nigerians, are more brand conscious, compare to the general population. Therefore business should aim at building strong and quality brands, with an understanding of the purchase-decision making process.
- Affordability of these goods and services, would be a crucial to reaching this market, owing to the fact that they generally have lower incomes and a mostly caught up in the unemployment bracket.
- Leveraging on social media platforms especially particularly mobile communications, will play a crucial role in business success. This is evident as research shows more than one-third of young population, receive information via sms.
- Also, business model should speak the language of youths, which are entertainment and sports. It will be amazing the kind of results they will get. This is the brain behind the “share a coke” campaign, MTN project fame, Nigerian Idols, Nestle Revelation Rally, Peak ït’s in you” campaign etc.
This is one way to build and sustain brand loyalty among the under 35.
These and many more will need to be taken into consideration, if a private sector led growth, through entrepreneurship will bring any meaningful result that will yield a commensurate result with reducing the number of unemployed. But more importantly ensure for sustainable impact and inclusive growth and development. Cheers!
Image Source: Accenture