Only 15% of Africans Earn More Than $5,000 Per Annum
The African continent presents unique challenges and opportunities to entrepreneurs. Among the challenges is the obvious low-income level of its people. Several factors contribute to this.
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The share of adults in Africa earning more than $5,000 per annum on average is 15 per cent, a McKinsey report shows. The report also shows that there are parts of Africa which tend to exhibit economic characteristics of some developed and developing countries beyond the African continent. For example, over 51% of adults in South Africa earn more than $5,000. The country is comparatively advanced in infrastructure, democracy and social and political stability, benefiting from the establishment of many global brands in the country in diverse industries. Egypt also has a matured banking industry and a relatively advanced business environment, despite the socio-political turbulence seen in the 2010-2012 era. Apart from these few countries, the larger part of the African continent exhibit lower levels of economic advancement and independence, including low-income levels. This, however, is not an insurmountable barrier to building a successful business in Africa.
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The low-income levels present opportunities in Africa similar to those in advanced countries, Europe and America especially. However, there is a minor difference: the same products must be produced at far lower costs and priced accordingly if they are to remain within the demand of the largest section of the African consumers.
In banking, the successful models are those deploying effective retail strategies to reach the mass of consumers. The growth of mobile banking in its different forms across the continent is astronomical and a big manifestation of the acceptance of relevant retail banking solutions by Africans. In Ghana, for instance, mobile money transfers continue to grow exponentially, dragging along a strong software development industry, as local developers build and introduce applications each day which provide payment and collection solutions that ride on the fundamental mobile money transfer platforms offered by the telcos.
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Similarly across other industries, entrepreneurs can leverage a large number of low-income consumers to build giant businesses. Offering low and moderately priced products and services which targets a large section of consumers is surely one way to do this.