Statistics show that Africa will have a population of 1.7 billion. Out of this population, Africa is estimated to have a combined consumer and business spending of $6.77 trillion. A study published in 2018 by the Brookings Institution shows that over 96% of African commerce occurs in Small and medium (SME) shops, particularly roadside stalls. This indicates a great business opportunity for middle market businesses that invest in supporting African SMEs.
The supply chain and logistical infrastructure play a crucial role in giving SME vendors access to better quality products. Logistical infrastructure is a fundamental pillar in the transformation of Africa’s commerce from informal to formal. Africa Continental Free Trade Area (AfCFTA) is designed to facilitate the free movement of goods, people, and investment, providing many entry points for middle market businesses wanting to operate in Africa.
Despite the enormous potential of Africa’s logistics, there are risks that investors need to be aware of including non-tariff barriers to limit market access and the downside of a price control regulatory environment. However, investment in efficient logistical networks, retail and distribution channels in Africa remains a raw business opportunity with increasing potential for middle-market businesses. These businesses are best positioned to integrate with Africa’s fragmented informal markets, then formalise and grow rapidly.