Investors...is Africa the new Asia?
Africa is fast becoming an important profit driver for some of the largest multinational consumer companies. The sheer growth of its population and spending habits of its fast-growing middle class means Africa is one of the few areas of growth in a low-growth world. By 2050, Nigeria's population will exceed that of the US and it will be the third-largest populated country by the end of this century.
Investors will soon talk about Africa as they used to talk about Asia and Latin America. Already companies such as Coca-Cola and food company Danone anticipate further penetration of their brands as per capita income rises. For example, Danone's African sales continue to accelerate beyond its 2014 results, which were six times 2008 figures, generating more than ¤1 billion ($1.5 billion) in sales. Global beer companies will experience most of their profitable growth in the coming decades from countries such as Nigeria, Tanzania and Ethiopia.
The best way into any emerging market is through the international consumer giants which are leveraging off their brands to a new group of aspiring consumers. Investors need the safety of companies that follow first-world accounting and governance standards and have the balance sheet, cash flows and global reach to manage the volatility found in individual emerging countries.