LITERATURE REVIEW
An investigation into the luxury fashion industry in West Africa: How can this untapped market impact, integrate and drive global sales?
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LITERATURE REVIEW
CONTENTS
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(Westafrika, 2007)
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AIM
The aim of this project is to highlight and explore the missed opportunity for global luxury brands to break into the West African market, and to determine an efficient way to connect businesses and consumers.
OBJECTIVES
• In order to do this, the main objectives of the research in this literature review will be:
• To investigate the existing luxury industry & market in West Africa
• To explore the potential for the expansion of this market space in West Africa • To study millennial consumer behaviour in West Africa
• To examine the use of e-commerce and social media regarding the industry • To analyse the barriers that are currently preventing luxury market growth in West Africa
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ABIDJAN, COTE D’IVOIRE
(CNN, 2016)
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INTRODUCTION
LITERATURE REVIEW
Used to describe the economic, political, social and technological growth in the sub-Saharan region of the continent, “Africa rising” is a well-known phrase that was coined back in 2000 (Johnson, 2015) that has been an ongoing narrative for almost the past two decades. With the term gracing the covers of publications such as The Economist and TIME over the years, a question emerges as to, when will, or will there ever be sufficient enough developments in global industries leading to Africa being recognised as risen? The luxury fashion industry has always been at the forefront of the fashion market globally, with Kim and Ko (2010) eluding that this is due to the amalgamation of innovations with traditional tactics employed in their business management, combined with the aesthetic value placed on their products. Set to be worth over €490 billion in the next two years (Santamaria, 2018), the industry now operates in a competitive landscape, with growth being placed alongside the “growing importance of non-western markets” (Deloitte, 2018), with this forthcoming research being focused on the African market, in particular West Africa. The capability of this region has been recognised due to first-hand awareness and familiarity, with there being accelerated growing power and shifts in consumer behaviour in recent years. This paper will be both an analytical summary as well as an explanation of the current and past published knowledge regarding the ever-expanding commercial region of West Africa in regards to the growth of the luxury fashion market.
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The research presented will be themed in answering; what is the current state of the existing luxury market and industry in West Africa? And therefore, is there potential for the expansion of this market? To evidence this, what will be explored is how do West African millennial consumers behave? And with regards to the fashion industry, how do West African consumers use e-commerce and social media? Consequently, this literature review will focus on answering why has the development of this market not already happened? Which will be looked at by examining what confines have restricted the advancement and realisation of this topic in the past. This paper will be structured under these main themes with sub-themes derived from subsequent research, investigated through academic exploration as well as analysing a range of contemporary sources; comprising of scholarly and theoretical journals, research papers, industry reports and online published journalistic articles.
LIMITATIONS
In general, there is a lack of research that has been undertaken around the luxury market in Africa, particularly from academic sources. This literature review will be
exclusively looking geographically at West Africa, but will reference the continent on a greater scale for contextualisation where relevant/necessary, due to a lack of scholarly studies found specifically based on the region in question, however will still remain focused on the sub-Saharan region of Africa. For the purpose of this review, the market segmentation of consumer behaviour studies will solely focus on millennials, due to their being more research on this consumer sector and the development of this research is looking to be one of future growth. However, it is worth noting that it is presented with the understanding that the luxury fashion industry has a consumer base that spans a larger group.
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(Victoria Island, Lagos, 2014)
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1.
THE LUXURY INDUSTRY & MARKET IN WEST AFRICA
1.1 What is the problem with the luxury industry in West Africa?
Despite rapid growth economically, West African consumers still face issues when looking to obtain luxury fashion pieces, and have been subjected to mainly shopping abroad for items that they are unable to purchase at home, due to a lack of options with regards to retail stores and the ability to order for delivery to their respective countries. Global business strategist and now CEO of MallForAfrica, Chris Folyan, wrote for How We Made It In Africa that the premise behind his company was that being from Nigeria, he noticed the “strong demand for a service that would enable Africa’s growing middle class to shop from western retail stores” stating that “every time I flew back to Nigeria I would come carrying items that people had asked me to bring”, before going on to explain how he had encountered problems at airports with regards to bringing back too many pieces of luggage and being denied boarding passes due to that (Folyan, 2018). MallForAfrica now connects Sub-Saharan African consumers to Western retailers such as Amazon, eBay and Walmart, however, there is no such service for luxury retailers, of which there is a large consumer base in West Africa.
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“in my travels to and from my home country of Nigeria, the lists of items that people would ask me to bring back from big international retailers that didn’t ship to Africa were getting longer and longer”
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(Folyan, 2015)
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THE LUXURY INDUSTRY & MARKET IN WEST AFRICA
1.2 The Current West African Luxury Market
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“Africa today houses about 50 directly operated global luxury single-brand stores, including big names such as LVMH and Richemont accounting for more than 50% of those stores. In 2014, the luxury goods retail sales reached $4 billion in Africa.The Global luxury goods sale is expected to reach about $405 billion by 2019, and as per the World Bank estimates, Africa is projected to contribute significantly to this market, growing at a rate of 5.6% per year”
”
(The Times of Africa, 2017)
It has been stated and proven that spending from emerging consumer markets are one of the biggest aspects that drive growth in the luxury market (Deloitte, 2017), and with the ever-growing spending power situated in West Africa, a clear correlation and missing gap between the two can be noted. After the influence of luxury brands such as Hugo Boss and Ermenegildo Zegna moving into retail spaces in Nigeria, management consultancy firm Bain & Co produced a study in 2013 which stated Africa’s luxury market was worth over €2bn, which soon increased to €4.2bn the following year with a 35 percent increase in sales between the years 20092013 (Paton, 2014) and this can only been seen to rapidly increase further over more recent years, as stated in The Times of Africa (2017).
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THE LUXURY INDUSTRY & MARKET IN WEST AFRICA
1.2 Current West African Luxury Consumers
“
“There
is a growing consumer appetite for luxury goods in the underpenetrated African market”
”
(Aiken, Rakic and Baldeira, 2015)
Although Albrecht (2017) argues that people will spend on luxuries regardless of their individual household incomes, it can be seen as palpable to many that an increase in a person’s or a household income can show a correlating increase in the amount of luxury spending, as several psychological studies show (Times of Africa, 2017), with proof of this being seen in Nigeria in particular. Known to have produced a “GDP of $376.284bn in 2017” (Kruger, 2018), Nigeria is the wealthiest and most highly populated country in Africa; and is situated in the heart of West Africa. The southern state of Lagos alone provided well over a third of this amount in 2017 (Pilling, 2018) and this is where a lot of luxury spending occurs, as well as where a lot of new infrastructure is focused in the country as it is also an area of tourism. This amount of spending power growth relays itself in luxury spending as KPMG (2015) reported that over 46% of luxury purchases made by Africans in London were made by citizens of the West African country. This can also be seen as Kebede (2015) states that the “world’s fasted-growing middle class” is in Africa, that this demographic “will continue to surge” (van Blerk, 2018) and that there is a highly-accelerated group emergence of “high-net-worth individuals” that at the time of publication, were growing at a rate of “more than twice” of its relative group in Asia (Kebede, 2015) therefore proving to show that there is sufficient luxury fashion clientele in this area. Initial consumer growth in other emerging markets has been shown to greatly impact luxury markets in places such as Southeast Asia, with luxury brands looking to focus themselves there rather than in already developed markets such as China (Swinteractive, 2018) and this provides good scope for what the future of Africa’s luxury spending could look like in the fashion industry.
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2.
THE POTENTIAL FOR LUXURY MARKET EXPANSION IN WEST AFRICA
Long dismissed by the global luxury market, West Africa’s potential lies solely in their growth in almost every other aspect of themselves. Politically, economically, socially and technologically, the region appears to be developing ten-fold and shows no signs of slowing down in the coming years, with a clear indication of this being the progressive augmentation of urban living.
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”
“The relationship between urbanization and development is...vital... especially in Africa”
2.1 Urbanisation
(Turok and McGranahan, 2013)
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“The future of the world’s urbanisation will be in Africa”
(Van Noorloos and Kloosterboer, 2017)
Although previously argued by Aniah (2006) that the correlation between urbanisation and economic development wasn’t apparent in Africa, studies and literature published in more recent years written by Hatch, Becker and Van Zyl (2011) and Onjala and K’Akumu (2016) suggest otherwise.
Historically associated to economic development (Onjala and K’Akumu, 2016), advancements in urbanisation has also long proven to hold synonymy with growth in respective luxury markets, with the movement of population to towns and cities showing expectancy to “support growth in the luxury goods market over the medium to long-term” (KPMG, 2015). With a couple years ago an average of 41% of West Africa’s vast population living in towns and cities (Moriconi-Ebrard, Harre and Heinrigs, 2016), the effects of urbanisation are obvious, as shown in Figure 1, showing the increase in urbanised areas over the last 60 years. It had previously been argued that in recent years urbanisation growth in sub-Saharan Africa was on a decline, or coming to a plateau at a low rate of 1.4% in 2016 (International Monetary Fund, 2017) but it has more recently been seen that developments in urban areas is on the rise and in 2018 grew from 2.7% to 3.1% (International Monetary Fund, 2018).
Figure 1 (Moriconi-Ebrard, Harre and Heinrigs, 2016)
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“Urbanisation…will lead African consumers to purchase more goods and services”
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(Hatch, Becker and Van Zyl, 2011)
Countries in West Africa such as Ghana, Nigeria, Togo, Cameroon and Liberia have all seen growth in urbanisation over the last ten years, with the highest percentage of people living in urban areas seen in Cameroon at 55.49%, as opposed to the lowest in Togo at 40.97%, shown in Figures 2 to 6, recorded from statistics obtained at the beginning of 2018. This is relevant as Africa’s consumer class that is looking to be the ones to spend the most, are known to be the youngest as well as the one with fastest growth, is focused in these urban areas (McKinsey & Company, 2012). Figure 2
Figure 4
Figure 3
Figure 5
Figure 6
Figures 2-6 (Statista, 2018)
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THE POTENTIAL FOR LUXURY MARKET EXPANSION IN WEST AFRICA
2.2 Economic Growth Particularly in sub-Saharan Africa, urbanisation is closely linked to great advancements in economic growth (Onjala and K’Akumu, 2016). Saying this, Africa’s economy has been on the rise for a number of years, with predictions made in previous publications proven true and even surpassed. Deloitte (2014) stated that in the years 2014 to 2019, the economy of the continent would see an increase that was at a rate that was doubling that of advanced economies, looking to be of around 7.7% annually. Earlier this year that prediction was affirmed by Bloomberg who published an article entitled “Ghana’s economic growth rate more than doubles in 2017 to 8.5%” (Dontoh and Van Vuuren, 2018). It is interesting to note that Bloom and Sachs (1998) previously argued that Africa’s economic stance was in a position of difficulty and hindrance at the time of publishing, caused by high levels of of the population living and working in agriculture and urban areas being regions used for politics. Now, as written in several studies, it can be seen that movements of general population towards urbanisation has clearly had positive impacts on the continent’s economy, and the growth of which has seemed to draw attention from a wide scope of foreign investment.
2.3 External Market Investment 7
Investing in emerging markets is a high priority for a lot of international businesses, with Figures 7 and 8 showing that Deloitte (2014) published that Africa was looking to be ranked highest with 23% on the list for location market expansion by European businesses after the European Union, a growth on the years previous. The continent also, in more recent years, receives a high level of interest from the BRIC countries - Brazil, Russia, India and China - as well as the US (PwC, 2018) and the UK (Allegretti and Goodall, 2018).
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Figures 7 & 8 (Deloitte, 2014) 14
Although Chen, Geiger and Fu (2015) argued that South Africa is the location of choice for many foreign investors, BusinessTech (2018) state that interest in South Africa has been dwindling in recent years and one of two countries that was named as regularly enquired about instead for foreign investment is Nigeria. The British Prime Minister earlier this year also has been undertaking trips to new markets in which the UK will do business with post-Brexit. Africa was high on her list and within the continent aims to create ties to three countries in particular; South Africa, Kenya and Nigeria (Allegretti and Goodall, 2018). Within Africa, there are a number of destinations that were ranked following surveys carried out by PwC for the top destinations for investment outside of the corresponding home countries. The results of these global surveys conducted also resulted in Ghana and Nigeria taking the first and second spots respectively, further backing up this point. The survey also highlighted that 82% of respondents also stated that growth was the primary factor that motivated interest in investing in these African markets (PwC, 2018). This highlights the interest in West Africa in particular, even when compared to the rest of the continent as a whole.
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3.
WEST AFRICAN MILLENNIAL CONSUMER BEHAVIOUR
Over the past few years, research has been undertaken looking into African millennials and the way they shop due to businesses becoming progressively conscious of the future powers of the African consumer, who will make up a fifth of the global population by the year 2025 (Agyenim-Boateng, Benson-Armer and Russo, 2015). Studies have shown that Africa’s growth is largely due to the consumers which inhabit the continent (McKinsey & Company, 2012), and millennials have had a specific impact in Africa as they have overtaken the previous generation as being the largest demographic on the continent (HR Pulse, 2018). When looking at consumer behaviour, millennials are therefore the focus of research in regards to Africa, as they are also described as “one of Africa’s most critical assets” due to their size and the impact they have driving the trends that increase GDP growth (Business Ghana, 2018).
“are maturing “Millennials
into their prime earning years and becoming the focal luxury consumer”
”
– Keith Niedermeier
(Knowledge @ Wharton, 2018)
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3.1 Consumer Attitudes and Trends
Figures 9 & 10 (KASI Insight, 2018)
Year on year, it can be seen that the median millennial West African consumer steadily, as income increases, spends more and more (Hatch, Becker and Van Zyl, 2011), with the five aspects that are shaping Africa’s consumer market being “exponential population growth, the rise of the middle class, Africa’s youth, the rapid urbanisation of the population and fast adoption of digital technologies” (Deloitte, 2014). Schiffman (2015) argues that a big aspect that affects the way people buy is consumer confidence levels of a demographic. According to KASI Insight (2018) consumer confidence in Africa had strong start to the year, with Ghana and Nigeria being the two leading countries with the highest rate of consumer confidence as of April 2018. However, this later dropped across all of the continent in July, and consumer confidence was low throughout the summer, as seen in Figures 9 and 10, but the most recent reports state that this picked back up in August and September (KASI Insight, 2018).
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Following a consumer attitudes survey taken in 2014 by Deloitte, it can be seen in Figure 11 that although Kenya comes out with the highest percentages, Nigeria is not far behind when reviewing positive thoughts surrounding their personal and national financial situations. More than a third of young Nigerians think their country is economically better off now than it was previously, as well as sharing a similar sentiment with regards to their own personal finances (Deloitte, 2014). This shows a reflection on how the economic growth in their country reflects in the young consumers’ disposable incomes as well as their optimism about their economical situations that may have been absent in the past. 11
Figures 11 (Deloitte, 2014)
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WEST AFRICAN MILLENNIAL CONSUMER BEHAVIOUR
3.2 Brand Loyalty
African millennials are known to contrast with other types of consumers due to their high association with loyalty when it comes to brands (HR Pulse, 2018). Having loyal customers that continually buy into a brand is what the luxury fashion industry almost solely relies and thrives on. When looking at West Africans being consumers for this industry, industry reports further back up the affiliation, with KPMG (2015) stating that the average African consumer is brand loyal, and that luxury brands on a global scale can “benefit from the evolution of the African consumer”. According to Schiffman (2015) the most desirable result of client-business relationships for marketers is retention of consumers seen through brand loyalty. Repeat purchases and continual relationships with brands increase a brand’s equity and that is the precise notion that maintains luxury brand success and subsequent growth year on year. Drawing on these sources, the arguments imply African millennials are the ideal consumer for luxury brands.
“
“Luxury
”
brands are built on loyalty”
(Frankenberry, 2017)
3.3 Technological Impact on Consumer Behaviour Approaching consumerism with a tech-savvy approach, African millennials are wellversed in all things online and are able to navigate e-systems with ease, due to the increased ease of access to the internet and higher penetration via mobile handsets (HR Pulse, 2018). The advances in technology have had a huge influence in consumer behaviour, notably in West Africa. In surveys obtained by CNBC Africa (2016), with figures that have most likely to have increased since, Nigeria had the highest amount of consumers that utilise online shopping as they find it advantageous, at 64%. E-marketers have therefore had a lot of developments to make as with the rise of the internet in current years, they have had to evolve their marketing strategies to retain consumers and attract new potential ones (Inegbedion, Obadiaru and Bello, 2016). This increased use of smartphones combined with a lessening of internet pricing has surged the way in which West African consumers shop and will be affecting their consumer behaviour greatly for the foreseeable future (Pedro, 2017).
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4.
E-COMMERCE AND SOCIAL MEDIA IN WEST AFRICA
With the largest growth rate of internet operation in the world over the past year, Africa has been greatly impacted by the advancement of digitisation, having online usage increase “by more than 20%” in 2018 in comparison to 2017 already (Mumbere, 2018). This has lead to Africa’s e-commerce rate growing at a rate of 9% higher than the rest of the world (Afolabi, Boyinbode and Ibam, 2018). In particular, the West African countries of Benin, Sierra Leone and Niger all had their number of internet users more than double in the past 12 months alone (Mumbere, 2018). Culturally, Mkono (2018) states that the growth of social media has aided the ability for Africans to combat long-standing stereotypes of what life is like on the continent, represent themselves to the world and connect Africa to others on a global scale. This combined with developments in e-commerce has affected the way Africans, in particular African millennials, shop. In recent years, the luxury industry has been seen to adopt the use of online services such as e-marketing and e-commerce, particularly on multi-brand websites, in order to reach further markets and consumers that aren’t able to make in-store purchases (Berg et al., 2015), and this applies well to the case of West Africa, and so it is relevant to look into how internet penetration has transformed the region and the economies.
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E-COMMERCE AND SOCIAL MEDIA IN WEST AFRICA
4.1 Development of Digitisation & iGDP
“
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“Digitization is transforming African economies in four major ways: retail payments systems, financial inclusion, sustainable business models, and revenue administration”
(Ndung’u, 2018)
Proven to result in large discrepancies amongst size of economies, the lack of infrastructural digitisation of countries in Africa has had big implications going forward for the overall development of the continent (Afolabi, Boyinbode and Ibam, 2018). According to an article written by the former governor of the Central Bank of Kenya, in an industry report regarding developments in Africa, the West African country of Senegal has consistently outperformed the majority of countries on the continent when it comes to innovation within digitisation for five out of the last six years (Ndung’u, 2018), another key indicator of the strides West Africa in particular are making when it comes to global growth.
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“technology can help countries overcome many barriers to growth”
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(Chan, 2018)
Although there is a clear divide between the digital penetration levels of developed markets such as Europe and developing markets such as sub-Saharan Africa, the growth in recent years shows that this divide will lessen in coming decades (Banga and te Velde, 2018). In 2015, Internet GDP - iGDP - figures were produced by global management firm McKinsey & Company with regards to the continents across the world, with broad predictions placed on Africa. When looking at the growth of the continent’s internet usage, McKinsey & Co state that they expect their iGDP “to rise from 1.1 percent to at least 5 to 6 percent” before the year 2025 (Ba, 2015). This estimation would put Africa parallel with UK as places leading high internet GDP figures, further proving Africa’s ability to be a front-runner in developed economies.
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E-COMMERCE AND SOCIAL MEDIA IN WEST AFRICA
4.2 E-Commerce in West Africa
“
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“E-commerce provides a viable platform for bridging the gap in African economies”
(Afolabi, Boyinbode and Ibam, 2018)
Currently the African country with most online sites for shopping, Nigeria simultaneously holds the headquarters of over 40% of all African e-commerce businesses within their land (Kaplan, 2018). Odunmorayo (2015) argues that this rapid growth in e-commerce could diversify and sustain and non-oil-based economy in the medium-long term future for West Africa, and this is affirmed by previous figures and models published in literature by Adewoye, Ayo and Oni (2011) that witnessed the 90% growth rate of internet usage between 2000 to 2008, and are further backed up by statistics from the Africa B2C E-Commerce Market Report by yStats (2018).
4.2.1 Privacy & Trust With the extensive growth that has been seen across sub-Saharan Africa let alone West Africa, there are questions raised as to why the digital economy has not quite gained as much worldwide recognition, and this can be seen to the issues a lot of African users have with privacy and trust. Afolabi, Boyinbode and Ibam (2018) state that Nigerians in particular, generally approach e-payments with a degree of scepticism as there is a lack of trust with regards to the security of financial information. Proving this, a recent academic paper that studies through primary methodology the impact on usability of technology driven mobile commerce, the idea of distrust in use of financial data is shown to be the primary reason that puts of African consumers from purchasing online, supported by ideas of company reputation, website ease of use and previous user experience (Joseph, Oyelere and Sanusi, 2018).
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4.2.2 Mobile Usage
Figure 12 (yStats, 2018)
As seen in Figure 12, mobile penetration is large in Africa, with a majority percentage of 61.8% of users accessing the internet through their handsets (yStats, 2018). Afolabi, Boyinbode and Ibam (2018) argue that this is due to the lack of permanent internet subscriptions in African countries, with desktop internet connections making up a minute percentage of connections. There are many published industry reports that look into the growth of mobile penetration in sub-Saharan Africa, showing that statistics show the contribution mobile usage is having on continental GDP. In 2017, “a contribution that amounted to $110 billion of economic value” was added by mobile, and when looking at future projections; “the mobile economy in the region will generate more than $150 billion” by 2022, as well as the predictions for smartphone adoption being 690 million by the year 2025 (GSMA Intelligence, 2018).
(GSMA Intelligence, 2018) YASMIN MICHELE ISHOLA - S00902077 - FSM601 - LITERATURE REVIEW
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4.2.3 Social Media With this increased mobile penetration rate has come the increased use of social media. The use of social networking applications such as Facebook and Twitter have encouraged African users to engage in topical discourse with others outside of their usual circles, allowing them to alter internal and external perceptions of themselves and one another (Bellasio et al., 2018). Despite this, research shows that the most popular social media application in use in Africa, and particularly in West Africa, is WhatsApp, shown in Figure 13. This has been integrated into consumers’ shopping habits as “some retailers are using apps like WhatsApp to improve customer service” (Ba, 2015)
Figure 13 (Mumbere, 2018)
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4.3 Digital Luxury Although often not associated with global trends, the world of luxury cannot escape the growth of digitalisation. Despite only accounting for a lesser amount of purchases than in-store ones, the online world has grown to have a big impact on the luxury world with Berg et al. (2015) arguing that a large portion of buying decisions made around the purchase of luxury goods have an online influence in 2015, before McKinsey & Company affirmed that statement earlier this year and stated that “80% of luxury sales are influenced by online� (Wedgbury, 2018) as seen in Figure 14. Future projections of this are seen as Woodworth (2018) claims that luxury sales made online by the year 2025 will triple in their proportion. Good examples of international multi-brand e-tailers are Net-a-Porter and FarFetch who are about to reach a $5billion IPO (Knowledge @ Wharton, 2018) - , who give the perfect combination relationship to provide a service that aids luxury brands by providing them with e-data on their products and giving them an online presence, whilst simultaneously gaining their own web traffic from selling these exclusive luxury brands. Figure 14 (Wedgbury, 2018)
FarFetch have had a particular connection to the African market, after their launch of the Dream Academy; an accelerator programme that helps fashion startup companies get off the ground. Most recently, one of their top 12 chosen companies was Fashpa, a Nigerian-based vertically-integrated fashion company that are now making waves across the fashion industry in the continent (Nsehe, 2017), proving that once receiving global recognition, the abilities of the West African market are great.
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5.
IMPEDIMENTS PREVENTING MARKET GROWTH
Despite extensive research of literature published favouring the potential of the growth of the luxury market in West Africa, there are a number of impediments that are unable to be overlooked, that answer the question of why hasn’t it already happened?
5.1 African Market Context & History 5.1.1 Legality & Trade
The African market has long been avoided by external businesses as it is widely perceived as complicated. This is due to the fact that despite being made up of several different countries and nationalities alike to continents like Europe, Africa does not operate as a single market like Europe is able to under the European Union. The EU therefore provides some wide-ranging and across-the-board laws with regards to elements of consideration such as trade which make conducting business within the continent a lot less difficult. Africa as a continent however, employ over 50 differing laws with regards to external trade, ten overlapping provincial coalitions, in excess of 2000 official spoken languages, as well as multiple dialects, spanning over 12 diverse climate zones (Young, 2015). Previously, there were even more issues to be seen as global tariffs were replaced by “domestic technical regulations that permit countries to bar products from entering their markets if the products do not meet certain standards” (Mutume, 2006) but this has since improved with the growth of urbanisation and globalisation.
5.1.2 Infrastructure & Logistics An aspect of the problem Africa has with its’ global connections that can sometimes be overlooked is the hindrance of logistics that are key when working with external businesses and markets. The sheer size of Africa as a continent is vast, and all throughout it runs poor infrastructure, unable to connect towns, and rural areas that don’t have any efficient systems in place in order to physically be able to access some consumer destinations (Ba, 2015). Rowden (2015) argues that the reasoning behind the poor industrialisation and infrastructure of Africa lies way back in the 1980s and 90s when IMF and World Bank loan conditions were set in a way that were not able to help Africa, and therefore left the continent to rely on its agricultural backbone. These longer-term problems that have lasted longer than anticipated have caused a struggle for some aspects of growth. Combined with the concerns regarding corruption in Africa, the complexities for global businesses has in the past seemed extensive.
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5.2 Corruption
5.2.1 Balance Between Wealth & Poverty in West Africa
Particularly seen in West Africa as it is one of the most advancing economies in the continent, the balance between wealth and poverty has been of ongoing discourse for a number of years. In 2015, almost a third of the continent’s entire wealth was held by 165,000 African millionaires, whilst synchronously a third of the continental population were sustaining themselves on under the equivalent of $2 a day (Young, 2015). Wadongo (2014) argues that just because West African countries are reporting economic growth year on year, this does not mean that the life of the median West African is necessarily improving. If anything, he goes on to say, that this only increases wealth disparity, in an article he entitled ‘Africa Rising? Let’s be Afro-realistic’, who is further backed up by Franks (2015) who feels there is a missing gap in the narratives of impoverished Africa to that of it ‘rising’. Contrary to their statements however, there has been evidence to suggest that this middle-class of Africans has been making real strides towards growth, with the African Development Bank stating that these middle-class Africans are “driving growth in...consumer markets like fashion” (Young, 2015) and more recently this has been backed up by the fact that African millennials are said to be growing “irrespective of commodity driven economies - because of the growing young population, urbanisation and the entrepreneurial spirit” (van Blerk, 2018).
“
“the digital divide separating economies that can adapt to new technologies to those who cannot can exasperate global inequalities, create poverty traps, and exacerbate vicious cycles of poverty”
”
(Chan, 2018)
Speaking from a personal perspective using his ‘middle-class’ parents as an example of the differences between African middle-class and the middle-class of a family living in the US, Wadongo (2014) goes on to state that improvements for the average African can definitely improve in the future, and that Africans should remain with high levels of optimism, but only if citizens of the continent place more accountability on their leaders. Despite this, a 2018 Ipsos report entitled the ‘African Lions’, studying the growing African millennial middle-class, goes on to say that as the largest demographic in the continent, the amount of optimism that this majority-under-35 group obtain means it is almost impossible for them to fail.
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”
“
“Corruption is the single biggest threat to Africa’s growth
- Ali Mufuruki (Veselinovic, 2016)
5.2.2 Governance in West Africa
“
“Africa surely suffers from a remarkable
lack of attention from the international scientific community in regard to health, agricultural, and environmental problems”
”
Africa’s long-standing issues with fraud and lack of official democratic governance run rife in West Africa, and AgyenimBoateng, Benson-Armer and Russo (2015) claim that this has been an aspect of the continental market that has been a reason for international businesses deferring their involvement in the past. This in turn has lead to lack of attention from external nations in different parts of humanity such as environmental and health issues (Bloom and Sachs, 1998). Nevertheless, improvements in West Africa seem to be progressing for the future, with Banoba (2018) stating that the Cote D’Ivoire have recently placed laws that prevent corruption, which optimistically will spread to the neighbouring countries of the region, heightening democracy and lessening the capabilities of autocratic governance.
(Bloom and Sachs, 1998)
28
(Encyclopedia Britannica (2018)
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Key Findings The capability of the luxury market in West Africa has been looked at in great detail over a number of decades, with var-
CONCLUSION
ying opinions being published over the years from authors that support the Africa Rising narrative, and others that feel the narrative is overplayed and not entirely realistic, such as Franks (2015) and Wadongo (2014). Authors such as Wrong (2015) believes the narrative is only current discourse due to it being “fashionable” but this type of literature written around the subject is often combatted, such as the Financial Times letter written by Tyson (2015), as there are multiple reasons why the expansion of the luxury market in West Africa should actually be supported. “It is fashionable, these days, to be upbeat about Africa.”
(Wrong, 2015)
Key aspects of research show; there is already a well-established luxury clientele residing and travelling to and in West Africa, the rate of urbanisation and economic growth in the region is unmatched worldwide, the African millennial is the ideal consumer type for the luxury market and their use of technology and e-commerce has advanced exponentially over the last few years. On the other hand, research shows there are a number of barriers impeding growth but studies show that this is improving at this current time of writing, and shows promise for the future. Reflection When regarding the research analysed in this literature review, arguments can be derived for both why and how the
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potential for the luxury market expansion in West Africa is viable, and also why there are obstructions that contradict the possibility of that very expansion happening in the near future. However, on reflection of both standpoints, it can be said that current published works suggest that the potential for the luxury market in West Africa has substantial grounds for development. There are gaps in existing literature with regards to studies that exclusively target West African countries. In general discourse, West Africa is known to be an area that differs from East and Southern Africa culturally, financially and technologically, but the majority of published literature focuses on sub-Saharan Africa as a whole; in which there are many variables that can affect both quantitative and qualitative data. There is also potential for future study to be undertaken in order to gain more knowledge with regards to the purchasing motivations behind young Africans buying luxury, and how this may differ from young consumers from other nationalities, due to the difficulties associated with such purchases, as stated in this literature review. On reflection there were further limitations than previously stated with regards to the constant reconfiguration of what constitutes a West African as ‘middle-class’. The definitions vary amongst authors; some of which describe a middle-class consumer to be able to afford luxuries and others who would define a middle-class consumer as someone who is simply financially above poverty. However, following analysis of the knowledge that is currently published and evidenced in this review, a conclusion can be deduced that there is to be a gap in the market for a digital-based platform to support the e-commerce of luxury brands to the West African consumer, proved by the combination of advancements in recent years of urbanisation, digitisation and the growth of the economic abilities of young West Africans.
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(Author’s own CAD compliation)
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FIGURES & IMAGES
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FIGURES
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• Figure 6 - Statista. (2018). Liberia - urbanization 2007-2017 | Statistic. [online] Available at: https://www.statista.com/statistics/455869/urbanization-in-liberia/ [Accessed 19 Nov. 2018]. • Figure 7 - Deloitte. (2014). Africa: A 21st Century View. [PDF] Available at: https://www2.deloitte.com/content/dam/Deloitte/ng/Documents/consumer-business/the-deloitte-consumer-review-africa-a-21st-century-view. pdf [Accessed 29 Sep. 2018]. • Figure 8 - Deloitte. (2014). Africa: A 21st Century View. [PDF] Available at: https://www2.deloitte.com/content/dam/Deloitte/ng/Documents/consumer-business/the-deloitte-consumer-review-africa-a-21st-century-view. pdf [Accessed 29 Sep. 2018]. • Figure 9 - KASI Insight. (2018). Consumer confidence dropped in July | KASI Insight | Market research in Africa. [online] Available at: https:// www.kasiinsight.com/single-post/2018/08/22/Consumer-confidence-dropped-in-July [Accessed 19 Nov. 2018]. • Figure 10 - KASI Insight. (2018). Consumer confidence rose in August | KASI Insight | Market research in Africa. [online] Available at: https://www.kasiinsight.com/single-post/2018/10/08/Consumer-confidence-rose-in-August [Accessed 19 Nov. 2018]. • Figure 11 - Deloitte. (2014). Africa: A 21st Century View. [PDF] Available at: https://www2.deloitte.com/content/dam/Deloitte/ng/Documents/consumer-business/the-deloitte-consumer-review-africa-a-21st-century-view. pdf [Accessed 29 Sep. 2018]. • Figure 12 - yStats. (2018). Infographics: Africa B2C E-Commerce Market 2018 - yStats.com. [online] Available at: https://www.ystats.com/info-
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