Report Says Consumer Spending Will Grow In These African Cities And This Is Good For The Tech Industry

Shipments of new tech products to African cities has been largely hampered due to economic challenges across the region. Nigeria which has the biggest market on the continent is currently in a recession that experts think may last through 2018.

A report in July from the International Data Corporation (IDC) says shipments are down globally. It was not all bad news though as the US market has seen a slight improvement in recent months. A strong dollar has contributed largely to this global decline. In Africa though, it’s mainly about inflation in face pf stagnant wages in the middle class.

While this is so, the future is not as bad. A recent report by Euromonitor International (a London-based market research firm) says several African cities are going to drive growth with respect to consumer spending through 2030.

The report primarily focuses on ten cities in four African nations, Cameroon, Kenya, Nigeria and South Africa.

South African cities Pretoria and Johannesburg are expected to lead that era of increased consumer spending even as second tier cities in countries like Kenya show great signs as well.

“Population surge is a predominant driver of the consumer spending boom in the top 10 cities under review. In fact, Sub-Saharan Africa is projected to see the highest increase in the urban population among the developing regions globally from 2015 to 2030 (+74% or 268 million). Another important boost to the Sub-Saharan cities’ consumer markets is that the region’s urban households are growing richer. Indeed, in Kenya’s leading cities of Nairobi and Mombasa, improving purchasing power of households is forecast to be a prevailing factor behind soaring consumer spending in them.”

Lagos is surprisingly omitted from the list and this is due to inadequate infrastructure for its huge population. Lagos is the smallest state in Nigeria and occupies just 1 percent of the entire Nigerian land mass.

This is good news for tech companies (foreign or local) because one the success stories of the American tech market is that there is a ready and robust middle class market ready to buy those services and products. Consumer spending accounts for about two-thirds of the economic activity in the US. While wages have risen modestly over the years in the US and most parts of the western world, it has resulted in increased demand for ICT services.

Wages in Nigeria have been stagnant for some time and like I said it has resulted in poverty increase in light of double digit inflation. But as the country begins to climb out of recession, the story may change.