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Africa's consumers demand modern retail formats

Oct 16th 2013, 08:13

Africa's consumers demand modern retail formats

Compiled by Galetti Knight Frank

Africa’s vast, young and increasingly wealthy population gives the continent a demographic advantage that few other parts of the world will be able to match over the coming decades, according to Knight Frank’s Africa Report 2013.

The growth of Africa’s dynamic consumer markets is creating great demand for modern retail formats and western-style shopping centres. But, are the opportunities sufficiently compelling for International investors and developers, given the continent’s diverse challenges?

Having averaged GDP growth of more than 5% per annum over the last decade, Africa’s economic expansion is creating wealthier populations, particularly in the largest and most rapidly growing urban centres. Africa’s major cities, such as Lagos, Nairobi, Accra, Lusaka and Dar es Salaam are increasingly becoming the drivers of the continent’s economic growth.

The urban middle class is growing across much of the continent and city dwellers generally earn more and spend more than their rural counterparts. In fact as a clear indication of Africa’s growing wealth, the World Bank now classifies 27 of Africa’s 54 nations as either mid- or high-income countries, 12 more than was the case in the year 2000.

Countries such as Zambia, Ghana, Kenya and Nigeria have seen a wave of retail construction activity in recent years, which has delivered the first generation of modern shopping malls to many major cities.

Elsewhere, there are a number of countries where modern shopping malls are a relatively new phenomenon; The Palms in Lekki, Lagos, regarded as Nigeria’s first modern shopping centre was opened in 2006, while Accra Mall, the first of its type in Ghana, opened in 2008.

Several very large modern shopping malls have been opened in North African countries in recent years, such as the Mall of Arabia in Cairo (180,000 square metres GLA) and Morocco Mall in Casablanca (70,000 square metres GLA).

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