Economic statistics and research from institutions like the World Bank or the International Monetary Fund (IMF) may be misleading for those who want to gain a realistic picture of the African market. While essential to capturing the overall trends of an economy, statistics and economic indicators such as gross domestic product (GDP) and consumer price index (CPI) tell us very little about the potential of a local market. In other words, there may be a significant discrepancy between the data and Africa’s economic realities. 

Examining African Economic Growth at the Ground Level

Like many emerging markets, Africa has long been overlooked, yet many entrepreneurs find that if offers explosive opportunities for growth once they look beyond traditional economic indicators. For example, in the book Africa Rising: How 900 Million African Consumers Offer More Than You Think, Vijay Mahajan and Robert E. Gunther tell the story of a Kenyan family consisting of two parents and four children with two residences. This family belongs to the lower middle class and lives on the equivalent of US$400 dollars per month. At first glance, this family seems too poor to help the market grow. However, the parents are paying for their children’s education – their three daughters attend school in Nairobi and have living expenses of $225 per month. The father, who makes his living as a taxi driver, obtained a loan from a local cooperative to buy a solar panel that provides power to their main residence. The mother earns income by teaching at a primary school and farming on their three acres of land. Two of the daughters have cell phones and the family regularly buys groceries. 
This case illustrates how the low-income segment of the population falls into a diversified category of regular consumers. This type of family creates a market for the personal care products, food, technology, and education industries. In addition, the family’s small farm likely requires them to buy tools and sometimes fertilizers and pesticides. Finally, the family is a customer to the green energy sector and small financial institutions. 

Beware of Misleading Macroeconomic Data

Economists love numbers, but macroeconomic data gives a disconnected picture of the economy and is of little use to those who are interested in doing business in Africa. A discerning businessperson knows that generic, vague information about an economy can conceal an effervescence that can only be seen at the local level. In emerging countries, the real potential is impossible to grasp from data from the World Bank or the International Monetary Fund. It is on the ground and in the lives of people where you resolve problems and find markets to develop. The economic activity generated by the household mentioned earlier is easily lost in the limbo of macroeconomic data. 
The mission of HartNamtemah boils down to this: to highlight business opportunities in Africa that abstract data doesn’t reveal. Entrepreneurs in Africa need to gain insight into people’s practical problems, aspirations, morals, and daily lives. There is no question regarding the importance of traditional economic indicators that have been vetted by generations of economists. However, it is necessary to link macroeconomic measures with field experience and microeconomic data to gain a more vivid understanding of the African market. 
GDP figures and other indicators are broad brushstrokes that tell us very little about the complex nature of Africa’s dynamic economy. These simple numbers ignore a huge realm of Africa’s multifaceted market. HartNamtemah strives to provide innovators and entrepreneurs with valuable information and insight into every level of the African economy. Contact us for more information about our Africa consulting work and speak with our business consultants.  

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