Riding on Africa For Expansion

Published 12 years ago
Riding on Africa For Expansion

The African continent’s population has traditionally been polarized into two opposing groups: the impoverished and the well-heeled, with no socio-economic class to bridge the gap.

According to the African Development Bank (AfDB), the number of Africans who make up the middle class segment of the population increased to 313 million (that’s more than 34%) during the past three decades.  Steady economic growth and a move towards stable, salaried jobs—rather than traditional agricultural activities—have been cited as some of the reasons for the growth.

The AfDB has further stated that: “Over the past decade, despite a continued global food and financial crises, Africa has been growing at an unprecedented rate. There is increased optimism about Africa’s potential to win the fight against poverty even though it may take decades to arrive at that point.”


Rens Rademeyer, general manager of Bentley Motors South Africa, echoes this sentiment. “Bentley South Africa has seen a steady growth in our target market over the last 10 years. The most interesting finding is that we are attracting influential business clients who represent the core of emerging economies. These are individuals involved in the supply of infrastructure solutions, energy, mining and minerals, housing and food.

“There is no doubt that with the economic crisis in Europe and signs of an economic slowdown in the Far East, the rest of the world will look to emerging economies such as South Africa and others in Africa to invest. The steady increase in new customers for the luxury car market gives enough reason to believe that Africa is on track to meet and surpass the growth of other more established economies.”

There is clearly still a huge disparity between the haves and the have-nots. Statistics also indicate there is a ‘floating class’ of people whose hold on their stature is far from concrete. Middle class in African terms has been defined as those people whose annual income is greater than $3,900 (purchasing power), and includes factors such as education, lifestyle and aspirations.

Where the middle classes emergence has been the strongest, is in territories that enjoy a burgeoning private sector, replete with many local entrepreneurs. As a result, North Africa boasts the highest middle class contingent. Tunisia’s concentration stands at 90%, while Morocco and Egypt follow with 85% and 80% respectively (albeit a large number in these countries fall within the floating category).


Growth in the middle class population has been highest in Namibia, Kenya, Botswana, Gabon, South Africa and Ghana while Liberia, Mozambique, Rwanda, Madagascar, Burundi and Malawi represent the weakest African economies.

Africa’s growing middle class has led to an upswing in the consumption and purchasing of goods such as household items as well as leisure and transportation. According to the McKinsey Global Institute, consumer spending in Africa is set to tip the scale at $1.4 trillion in 2020.

There is also growing confidence in the continent, demonstrated in South Africa recently by the entrance of retail giant Wal-Mart. China’s motoring industry hasn’t been shy to take advantage of their gargantuan purchasing power, and have identified Africa, with its wealth of natural resources, as the perfect target for their global expansion.

Jaguar Land Rover South Africa’s managing director, Kevin Flynn, feels that South Africa greatly influences the rate of growth throughout the continent. “The global car industry has identified Africa as an emerging market and is taking the growth in the continent very seriously. South Africa plays a pivotal role in the expansion of this market, as a gateway to the continent, as well as from an investment and infrastructure perspective. Africa will play an increasing role in Jaguar Land Rover’s global strategy as new products come on stream catering for a growing and diversifying customer base.


“Owing to the constant challenges of poverty and unemployment in many countries on the continent, Africa is not expected to experience the massive growth seen in other emerging markets such as China, Russia and India. The continent will, however, provide a completely new customer to the global motor industry—those who are intent on displaying their stature and success while at the same time demanding affordable solutions.”

The phenomenal growth in sales of heavy vehicles in South Africa last year seems to indicate that economic conditions in sub-Saharan Africa are improving dramatically. Medium, heavy and extra heavy commercial vehicle sales notched up an increase of nearly 20%. Tony Twine, an economist at Econometrix, believes the demand for such vehicles stems from the need to transport goods into the rapidly expanding interior to the north of South Africa’s borders. As long as China continues with its demands for African raw materials, Twine believes this trend will continue.

Luxury brands such as BMW, Mercedes and Audi have seen a welcome increase in sales throughout sub-Saharan Africa. The BMW Group experienced a growth of 1,603 units in the last year in this territory, bringing their annual total to 32,890 units. Audi recorded an even higher growth figure of 3,887 (20,344 total units) while Mercedes logged an increase of 441 units (31,575 total units). Interestingly, Lexus actually experienced a decline of some 300 units in sub-Saharan Africa (1,500 total units sold). African sales are still far below those experienced locally, but the trends in South Africa are seemingly being mirrored elsewhere in the continent.

The best-selling BMW in South Africa is the 3-Series, with 11,035 units sold in 2011. This self-same derivative was also the most purchased BMW in Egypt (817 units) and 431 of these vehicles were sold throughout Tunisia, Algeria and Morocco. Additionally, there seems to be a growing trend towards the purchasing of large 4×4 vehicles. BMW sold 113 and 112 units respectively of their X5 and X6 range in sub-Saharan Africa. This tendency is echoed by Audi’s sales figures. The most popular derivative locally is the A4, which also happens to be the most desirable Audi in Tunisia. In Egypt, Algeria and Morocco, the preferred option is the Q5, closely followed by the A6.


It therefore seems that African future and desires are inextricably interwoven with those of South Africa. The prospect of a mutually-beneficial and successful future, appear to be well underway.