Global Investing

From cycles to cell phones: tracking Africa’s middle classes

February 5, 2013

Mobile phone bills and beer consumption patterns are used by investors to assess how fast bank accounts are likely to grow in Africa, but what did investors count to gauge trends before there were mobile phones?

The answer? Cattle, bicycles, radios, founder of Zimbabwean telecoms company Econet Wireless Strive Masiyiwa told an Economist conference on Africa this afternoon. Masiyiwa said he researched ownership of these status items to assess the five-year demand for mobile phones in Botswana when he successfully bid for a mobile phone contract from Botswana’s government.

His forecasts, more optimistic than the other bidding operators’, still turned out to undershoot by hundreds of thousands, Masiyiwa said, adding that official data from organisations such as the World Bank also tend to underestimate Africa’s growth potential.

 We need to have the confidence to review some of this (official) data ourselves, particularly when it doesn’t make much sense.

Nick Blazquez, President for Africa for drinks company Diageo, told Reuters that Africans were drinking everything from  cheap keg beer to Johnnie Walker King George V whisky at $400 a bottle.

“We are seeing premiumisation at all price points,” Blazquez said, as consumers move from illicit concoctions to the well-known brands at one end of the market, and are trying the top-brand spirits at the other end.

Blazquez said 10 countries in Africa accounted for 80 percent of the profitable market in both beer and spirits and Diageo has a presence in most of them.

So where is there room for growth? Blazquez said Angola and the Democratic Republic of Congo were countries where “we would like to get more participation”.

 

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