Prospects in the retail and consumer goods sector …

1 So much in storeProspects in the retail and consumer goods sector in ten sub-Saharan countriesMarch | So much in storeProject and editorial teamAnton Hugo, PwC africa retail & consumer Industry Leader Charmaine Haskell, Senior Manager Mandy Stroud, Senior Manager Catherine Ensor, Senior Manager Enbers Moodley, Senior Graphic Designer Jaco Maritz, Maritz africa IntelligenceMany other professionals within PwC reviewed the text and contributed local expertise to this publication and we thank them for their report was written in cooperation with Maritz africa Intelligence.

2 Thank you to Dinfin Mulupi, Kate Douglas, Dianna Games and Darias Jonker for their contributions. bulk of this research was conducted in | 1 ContentsForeword 2 The big picture 3 Country profiles 16 1. Angola 16 2. Cameroon 24 3. C te d Ivoire 32 4. Ethiopia 39 5. Ghana 47 6. Kenya 55 7. Nigeria 63 8. South africa 72 9. Tanzania 82 10. Zambia 91 Contacts 99 Key figures 1002 | So much in storeForewordDespite some of the challenges there remains reason for optimism about doing business in africa .

3 There are encouraging economic growth rates predicted for 2016 and beyond in a number of countries in africa and the growth expected in africa s consumer market provides a major attraction to retail and consumer companies looking to the , africa s fortunes are very much tied into those of the global economy. The fall in oil and other commodity prices has seen pressure on government revenues and the ability of governments to increase social expenditure and wages in the public sector . In particular, countries such as Angola, Nigeria and South africa are feeling this impact and this could impact on the growth of the consumer market in these and other African relative weakness of many emerging market currencies has meant a higher risk of tightening monetary policy (with its resultant impact on customer s wallets), exchange controls and of course increased import costs for retailers.

4 Managing the effect on their operations (in particular their cost base) of volatile currencies will continue to be a focus for retailers in significant investment has gone into improving infrastructure in many countries on the continent the quality of infrastructure remains mixed. Retailers need to assess each country individually and ensure they understand how the quality of ports, roads and energy infrastructure will impact their operations. Different strategies have been developed for expansion in africa , including selecting a regional hub to facilitate expansion (such as Kenya into East and Central africa and Nigeria into West africa ).

5 A critical success factor for retailers and consumer goods companies moving into many African countries has been their ability to implement supply chains that deal with the operational challenges that exist. Given the size of africa , companies often need to make significant upfront investments in distribution centres and in many countries upfront lease payments to landlords covering a significant period may also be required. In this report, we focus our analysis on ten African economies that we believe offer some of the most compelling opportunities for retail and consumer businesses looking to expand in africa .

6 Sub-Saharan africa remains one of the fastest growing regions in the world and the successful expansion of a number of global and African retailers and consumer goods companies across the region speaks to the opportunities that exist. Individual country profiles provide an overview of the demographic and economic situation, challenges and opportunities, as well as sharing insights about doing business from executives on the ground. Meanwhile, the big picture section at the beginning of the report outlines a number of the major trends shaping the retail and consumer sector across sub-Saharan hope this report will enhance your understanding of some of the risks but more importantly the opportunities that africa has to offer, and provide the groundwork for deeper Hugo retail & consumer Industry Leader PwC africa PwC | 3 Recent years have seen surging investor interest in sub-Saharan africa s retail & consumer sector .

7 Whereas the focus was traditionally on extractive industries such as oil and mining, a growing consumer class demanding everything from mobile phones to fast food have prompted many retailers and consumer goods companies to look with fresh eyes at opportunities in the region. The purpose of this report is to offer insight into the make-up of sub-Saharan africa s retail and consumer goods industries, and provide an outlook for the coming five years. However, with each country at its own stage of development and stark differences in culture and consumer behaviour, one cannot paint the entire region with one brush.

8 We have therefore focused our research on 10 countries Angola, Cameroon, Ethiopia, Ghana, Ivory Coast, Kenya, Nigeria, South africa , Tanzania and Zambia. In choosing these territories we considered a variety of factors, including the size of their economies and attractiveness from a consumer perspective, while aiming to provide a good geographical spread. To give readers a broad snapshot, we have identified significant trends likely to impact the development of the region s retail and consumer goods industries over the coming years.

9 Macro developmentsSince the turn of the century sub-Saharan africa has undergone a number of changes that have made it a more enticing investment prospect for consumer -focused companies. The region s economic progress and the africa rising narrative have been well-documented, and we will not discuss it in depth. Many sub-Saharan africa countries have emerged among the world s fastest growing economies. For example, between 2000 and 2014, GDP in Angola, Ethiopia and Nigeria grew at average annual rates of , and respectively.

10 While significant work remains there has also been some progress on the governance and political front, with many countries moving towards better administration and deepening democracy. For example, Nigeria s March 2015 election was the first time since 1999 that the country had a democratic transition of political power. The polls also defied predictions of security problems and unrest. These developments, coupled with urbanisation and an increasingly connected and demanding consumer class have given investors a lot to be positive big pictureTrends shaping the retail and consumer sector in sub-Saharan AfricaA growing consumer class demanding everything from mobile phones to fast food have prompted many retailers and consumer goods companies to look with fresh eyes at opportunities in africa .