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COUNTRY FOCUS Slowly freeing up Nakumatt has also been trying to gain The attraction of numbers have been opened to foreign investment, Kenya’s biggest supermarket chain with the possibility that others might Ethiopia is now Africa’s fifth largest economy, with GDP growth rates follow,” according to the KPMG Africa access, while UK retailer Tesco is its markets rumoured to have been interested in the averaging 10,6% in the past 10 years, team. When the government prevented according to official statistics. potentially lucrative market. Consultancy SABMiller from buying a local brewery, the company took a 67% stake in the The nation is three years into a Growth KPMG says the retail sector is under- developed, with the eight existing retailers government took the remaining share, representing only 0,5% of the country’s and Transformation Plan that aims to build Ambo mineral water factory and the 16 000km of roads, quadruple power With Ethiopia’s middle class growing and state control of the economy total grocery spend. generation and increase the number giving the global brewer a foot in the door. of mobile phone users from 7-million SABMiller was followed by Diageo So what makes the Ethiopian market easing, Africa’s second most populous nation is becoming an attractive so attractive? In a recently released report, to 40-million. But the World Bank has and Heineken – both of which are also market as consumer demand and spending power continue to rise. Paris-based consultancy Sagaci Research warned that, by not opening the doors international players in the alcoholic found that about 200 000 households to private investment, the country’s beverage market. in Addis Ababa earn US$500 or more projected future growth rate of under 10% Food processing is another field open a month and are therefore budding would be too low to meet the target of to outside investment, as the Ethiopian customers of a more formalised retail becoming a middle-income country with government strives to develop its environment. The city’s population of a gross per capita income of US$1 430. agriculture sector and produce enough 3-million is expected to grow to 4,7-million Last year income per head was US$410. food for its domestic needs. Tiger by 2025, while the number of people living As part of the five-year plan, public Brands, a large SA consumer foods below the national poverty line has fallen spending on infrastructure projects has company, entered Ethiopia in 2011 by 30% – both factors that will enhance been a major focus. This has, in turn, when it bought a controlling stake in consumerism and retail demand driven economic growth and helped to a flour and biscuit manufacturer. Despite the huge potential for retail, create jobs in an economy traditionally Prime Minister Hailemariam Desalegn dominated by agriculture. Indeed, some Understanding the market told the London-based Financial Times 85% of the population is involved in A United Nations Development in October 2013 that the government farming, with coffee the largest export. Programme report entitled ‘Realising was vigilant about allowing huge foreign Mineral extractive industries, dominated Africa’s Wealth’ says a lack of market investors in over fears they might crowd by gold, are also growing and becoming research in countries like Ethiopia out the small, growing domestic retailers. key exports. makes it difficult for marketers to make “Always we are very cautious … if huge informed decisions. companies like Walmart come in, those Opening up It is particularly tricky to understand who are in the trading sector will be in A 2013 US State Department report the lower income segments as the trouble,” he was quoted as saying. maintains that, given the scale of handful of market-research companies Nevertheless, rising food inflation and public investments needed to meet operating in African countries – besides shortages of goods due to government- government’s Growth and Transformation South Africa – do not specialise in the imposed price controls have led the Plan, the country will have to attract bottom rung of the pyramid. For example, authorities to look for alternatives and significant foreign investment. eight million Ethiopians benefit from a consider easing its investment laws. “Recently certain segments of retail social grant and employment COUNTRY FACT FILE Ethiopia is now THIOPIA’S LARGE POPULATION restrictions in other areas, notably Walmart could soon of around 87-million – with beverages, textiles and food processing. enter the country Language: English (for business), the fifth largest E 15% now considered middle The World Bank warned in August last Amharic (official language) economy in Africa class – presents a marketplace of year that the country’s economy would Currency: the Birr opportunity. Until recently, however, not grow at the hoped-for 10% or more this market has been largely a year for the next five years unless the is just one of those hoping to enter Population: 84,9-million (UN, 2010) unreachable, with the government government began to encourage private the market after several years of talks Gross national income denying foreign direct investment into investment. with authorities. If reports from local many potentially lucrative sectors – Certainly, several big global chains media outlet, AddisFortune, are correct, per capita: US$380 A clothing store in Mek’ele, northern including retail, telecommunications, are waiting in the wings. Retail giant Walmart could soon enter the country via (World Bank 2012) Ethiopia. The number of transport and banking. Walmart, which took a majority stake a management contract for a state-run people living below the But this may change. Recently in South Africa’s Massmart retailer in cash-and-carry company in the capital of * Visit www.2merkato.com/ for the poverty line has fallen by the authorities have begun to ease order to gain a foothold on the continent, Addis Ababa. latest tenders available in Ethiopia. 30% in recent years 32 strategicmarketingafrica First quarter 2014 First quarter 2014 strategicmarketingafrica 33