Businesses Have Unrealistic Expectations Of Africa

The Consumer Class Conditions Index should be used to assess spending power

A regional analyst in sub-Saharan Africa has shown that businesses are seeing sales and profits fall below forecasts because of unrealistic expectations in the region. Anna Rosenberg, director of Sub-Saharan Africa Research at Frontier Strategy Group, said on the Harvard Business Review website that companies failed to understand the drivers of consumer spending. She said that by relying on things such as GDP and demographic growth data, companies could not appreciate the extremities of wealth in the region, where many people have little to no spending power at all. Rosenberg said that “the Consumer Class Conditions Index, which ranks markets according to how easily wealth filters through society”, would be a much better measure of spending power. She also commented that whilst consumers in the region may be becoming more aware of Western brands and products, African tradition played a big part in spending behaviour. 

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