Representatives of the world’s biggest brands are in Johannesburg this week at World Retail Congress Africa, trying to figure out how to sell to a fast-growing, but also very challenging market. Among them are many American-based brands like Coca-Cola and Google.
All the calculations that go into where American companies expand basically boil down to one thing: risk versus reward. The continent offers both in ample supply.
“The returns in Africa are potentially huge,” says New York University economist Yaw Nyarko, originally from Ghana. “But it’s also risky. That’s why they call it an emerging market, right? It’s a frontier market.”
Some frontiersmen get rich. Others get eaten by the local wildlife. Succeeding in Africa requires hacking through legal and bureaucratic tangles and dealing with poor infrastructure.
But African countries have made big strides recently, all while conflicts ended and population boomed.
“By 2050, it is likely to have 25 percent of the world’s population,” predicts University of Pennsylvania international business professor Mauro Guillen. “By the end of the century it is likely to have 35 percent of the world’s population.”
Numbers like that are why global brands want to gain a foothold now.