Whether its Starbucks opening its first coffee store in sub-Saharan Africa next year, or fast-fashion retailer, H&M, opening its first African store in Cape Town, multinationals are lining up to cash in on the opportunities abound in Africa’s growing consumer goods market.
While many multinationals (MNCs) may be growing their revenue share in Africa—off the back of a growing middle class and a demand for a variety of consumer goods—a new report from the global consultancy firm, Boston Consulting Group (BCG), argues that multinationals are gradually losing market share and being outclassed by local African companies.
“It’s true—European and North American companies in a variety of industries are earning a higher percentage of their global revenue on the continent than they ever have. But the numbers are still small. And by another, perhaps more telling, measure—African market share—many of those companies are going backward,” says the report (pdf, pg. 4)
Dangote Cement was able to grab market share from “an experience multinational”, according to BCG, by simply building more cement plants—adding 18.5 million tons in cement production a year—compared to the multinational that could only add 5 million tons of cement production annually.
“MNCs often can’t justify the cost of developing new products for African markets and so may try to compete with offerings made for Westerners. What’s more, MNCs frequently reallocate their investment capital, weighing one geographic region against another,” says BCG in the report.