author
Joanna M.
Business
09 / 2020

Market Research in Africa - Challenges and Opportunities

africa

Africa has generated a lot of attention to the subject of investments in the past few years. This is because of the availability of abundant resources which can be turned into lucrative sources of income. Moreover, the consumer market in Africa holds diverse untapped potential. With proper analysis, the needs and demands of the population can be turned into profitable investments. This involves strategic market research to correctly decipher the amount of success a business would encounter in Africa. Pointing out the challenges and opportunities present in the continent will also help investors take the necessary precautions towards their market research.

Challenges to market research in Africa

research challange in africa

Africa is known for its diverse culture, but this could serve as a significant disadvantage of conducting quality market research. Amounting to over 1500 languages or dialects, it is most times impossible to find common ground in many regions. More often than none, the diversity in languages causes lack of unison among the population. Hence, when finding an investment that would meet its target point and match a precise consumer market, more insightful research has to be done. In the same fashion, this will require linguists and enumerators to be able to gather the necessary information.

Poverty and the vast number of rural settlements still pose significant challenges to market research in Africa. Though most economies are overgrowing, there is a considerable disparity that cannot be overlooked. Many still live in abject poverty or below the usual standards of living. More so, there are a significant number of villages and small towns that occupy most African nations, while the number of urban towns still struggles to rise. Equally important, the population in these areas may not be open to new products, services, or outsiders, which stands as a major barrier. Thus, it will be hard to gather the essential information needed to conduct a business properly. In addition to this, these rural settlements are filled with people with a low level of literacy, which means that effectively communicating would be a problem.

Due to the disparity available in Africa, those in rural settlements are mostly not affected by the growth happening in the country. As such, telecommunication penetration is still low in many regions. Without access to mobile telephones and the internet, it would be hard to break into the market base without multiple strategies.

Trying to understand the needs of the consumer market in Africa can be difficult, especially for investors who generalize the African consumer market as one. With multiple regions and disparities, the demand in each region tends to vary. Thus, the right tools or sources are required to break into the market base.

Apart from the language barrier, Africa still faces immense lack of infrastructures such as good roads, electricity, or conductive housing structures to make the process of gathering information efficiently. A lot of unprecedented hindrances could occur, and this may attract unbudgeted costs. Coping with the change in environment is a factor that some may find challenging. Transportation, in general, can be bothersome, depending on the location of the business. Since Africa’s market research procedure is still highly dependent on face to face communication, getting to all the areas you would like to conduct your research can be a major problem. Thus, investors may have to prepare to take on challenges if or when they arise.

In addition, regulatory processes are not entirely convenient too. They tend to involve long procedures before businesses can commence or information is obtained. This can be discouraging to a lot of investors.

In like manner, corruption is still potent in many regions of Africa. This has starved the private sector of African nations of the essential developments it needs. Hence, the ease of doing business is taking a drastic toll rather than expected growth.

A factor that would boost the entire business setup phase is the availability of a skilled labour force. However, this stands as a major obstruction. Though the labour market in Africa is on the rise, finding the right individuals for the job could be quite tasking. Hence, more costs may be incurred during the process.

Opportunities to market research in Africa

The availability of untapped natural resources in Africa serves as a viable opportunity for investments. In general, Africa holds a substantial percentage of the world’s stipulated natural resources. This is one of the major reasons a lot of attention has been on Africa on the subject of investments. Africa, in itself, has not been able to categorically use this as a means of explosive growth; nonetheless, things are taking a positive turn. African governments are making strategic moves towards infrastructural development and providing a conducive environment for investments. With businesses centred on natural resources thriving in a lucrative habitat, economic growth can be achieved. More so, Africa has the potential to use natural resources to secure economic stance. Opportunities to market research on the subject of natural resources would involve narrowing down to a singular commodity and a particular region.

Diversification in Africa has also created enough room for productive investments. Leaving behind the era of single trade economies, most African nations are adapting to the idea of diversification. In light of this, this has caused an increase in the goods being consumed. With productivity increasing, the demands are also increasing, creating an open ground for profitable investments. Diversification in Africa has enhanced skill acquisition and caused significant growth in major sectors such as telecommunications. With the labour market reaping the full benefits of opportunities being created, it is pertinent to note that the market structure in Africa is ripe for harvesting.

Digital transformation in Africa also serves as a welcoming opportunity. Based on the rate at which the continent is embracing the use of technology, many investors are eyeing this sector. Many entrepreneurs are already taking advantage of the scene with the increasing number of tech startups within the continent. According to statistics, Africa has been topping the charts with their growth rate in technology and internet use. The consumer market for technology also shows great promise of increasing due to the willingness of the population to embrace new, innovative products. Considering the rate at which urbanization is taking place in most nations around Africa, we can only expect demands in this sector to increase.

Even better, the willingness of African governments to expand this sector has created profitable business environments for startups, which means conducting market research in this field would seem profitable. More so, this has opened up avenues for people to increase their knowledge and grasp technological expertise. Thus, the labour market is exceedingly expanding. Opportunities in the digital sector hold several keys to economic growth and an avenue for more jobs to be provided. This means it’s an opportunity waiting to be seized.

Apart from technology, Africa is utilizing the power of manufacturing and industrialization. This will help develop the continent’s economy and further enhance productivity. The industrialization has the capacity to alleviate poverty which is why many African governments are using diverse strategies to promote this sector. According to statistics, manufacturing in Africa has the capacity to generate billions of dollars in revenue by 2030, which is an explosive growth from previous years. The power of manufacturing in Africa has also allowed nations to make good use of their available natural resources. The growth in the manufacturing sector shows the need Africa has for manufactured products and the efforts they willing to put into reaching their goals. More so, with this much enthusiasm towards growth, Africa could be the next manufacturing hub for the world. Qualitative market research would expose the behaviours of the consumer market, bringing light to how profitable investments would be.

Taking into consideration the aforementioned developments occurring in Africa, it’s also exciting to point out the substantial increase in urban consumers over the past decade. Unlike never before, the drastic rise in urbanization has birthed an attractive African consumer market. Urbanization in Africa has surpassed nations like India and is ranking fairly close to developed nations like Russia. According to statistics, there has been a 20 per cent increase in urbanization in comparison to the late 90s. This is considerably high given Africa has experienced vast population growth. It has been projected that in a few years, Africa would have reached 50 per cent urbanization. The increase in urban consumers creates more demands for improved commodities, which means investments are bound to be profitable. With the spending power increasing in Africa, opportunities for investors are growing.

Despite Africa lacking essential infrastructure for economic advancements, it is pertinent to point out that its demand has caused plausible opportunities for investments. The rise in urban consumers caused an increase in demand for commodities as well as infrastructural developments. In general, people want to improve their general condition of living. Nevertheless, with the government not being able to fully cater to the infrastructure needs, avenues for investors to make positive changes were created. According to statistics, investments in infrastructure has amounted to billions of dollars, which is an excellent market for investors worldwide. As urbanization rapidly expands, we can expect more growth in the nearest future.

Ranking as the second-largest continent in the world, Africa’s increasing population has been complemented by its young demographics. This has created many outstanding benefits, including coming with a rich consumer market. Opportunities exist in more ways than one because the youth are more susceptible to new commodities than the elderly. Even better, statistics show that the population of Africa is expected to quadruple decades from now. This means there’s bound to a bigger consumer market that investors to make their mark.

Brand loyalty serves as another qualitative measure for market research in Africa because this exposes how the consumer market relates to products and services. Statistics show that over 50 per cent of Africa’s population would remain loyal to a brand. This serves as an advantage to investors if they are able to break into the market base productively. More so, multiple surveys explain that Africans are more inclined to choose quality products over others, which means there is a raising need for modern commodities like never before. With intuitive strategies, investors can make great use of the opportunities available on this continent.

In general, African governments have been taking diverse measures to promote foreign direct investments and to mobilize their private sector. Much of this involves improving the ease of doing businesses in their countries. As such, many rigorous regulatory processes are being reduced to ensure companies are set up easily, and essential information is obtained when desired. According to statistics, most African countries have attracted multiple foreign investments for the sole reason of being ranked well in their ease of doing business.

Despite all the challenges that Africa faces in conducting market research, major opportunities still revolve around its room for sustainable developments. Some areas of sustainable developments include quality education and the alleviation of poverty. With the disparity occurring majorly in the rural villages, and the lack of infrastructure, the room for sustainable developments are viable enough to leave long-lasting and impactful developments. Having little to no hope for positive changes, investments in these regions would cause explosive growth, and further change Africa for the better.

Multiple organizations are taking extreme measures to impact the lives of these people, which means Africa is set for a revolutionary transformation in the long run. The government is also contributing immensely to the implementation of sustainable developments in multiple regions; and as positive steps are being made, most of the challenges to market research are being flushed out.

Insightfully, the growth in Africa is expected to be one of the highest in the world in just a few years to come. Statistics also indicate that a substantial percentage of the fastest growing countries around the globe are indeed African counties. With major sectors like the finance and banking sector exhibiting explosive growth, unlike never before and spreading to rural areas, people are more empowered to make profitable choices towards investments. This means that businesses are expected to thrive with the information gotten from a market analysis.

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