New Product Development for Africa

By Patrick Mayoh

A recent report by Mc Kinsey indicates that emerging markets will be worth $30 trillion by 2025 –the biggest growth opportunity in the history of capitalism they suggest--they are worth about $12 trillion nowadays. The report equally suggests that growth will come from second-tier cities people don’t hear much about nowadays like Ahmedabad, Huambo, medan or Douala. Interestingly leading companies of the world get about just 17% of their revenues in these markets when these represent 36% of global GDP.

African Economies are part of those emerging economies in some respect. And because the face of the continent with a fast-growing middle class is rapidly changing, there is room for growth for companies willing to create new market spaces and invest on the African Continent. In this blogpost I will talk about new product development for Africa. I believe western companies willing to gain a stronger position in Africa should:

·         

            --> Develop products and services suited to African consumers

·         -->Invest in Research and Development Centres in and for Africa

·         -->And source local talents to lead their offices in Africa

Products and Services for Africans

I think many western and foreign companies by extension; have gone out of their ways to create products and services that more or less reflect the needs of emerging markets. Unilever the Anglo-Dutch consumer goods giant recently released a new brand of shampoo for the South-African market. Currently it aims to create more products that are reflective of local tastes. I think this is an example that should be followed by many other western companies truly willing to invest on the continent. More Africans have money to spend and more Africans will spend on products that appeal to their needs. As such, businesses have an imperative to rethink their business models as well; that is the way they make and distribute products to customers. A successful example of this is Nestlé spaza shops; a scheme that makes it easier for the company to reach shops in the remotest areas of Africa.

Investing in R&D facilities in Africa

China had about 57 R&D centres in 2007 with global giants like Google, Microsoft, Unilever, P&G and GSK to name just a few; India had about the same number of R&D centres in 2010, though many of the companies are mostly IT ones. No doubt these are high and fast growth economies. According to a recent HSBC report China and India  will be the first and third world economies respectively in 2050, so it only makes sense to invest in these countries in light of all the positive implications.  However Africa will have a strong middle class and it is happening anyway already, plus it will be home to the largest workforce in the world more than China and India combined by 2040 with 52 African cities having a population of at least 1 million each according to another Mc Kinsey report. I believe companies that invest in R&D facilities in African countries are set to reap massive benefits in terms of larger market shares and widespread product adoption for their companies.

Get locals to lead in Africa

Many foreign companies still rely on expatriates to lead. But this does not have to be so. In a previous blogpost I spoke about Africans having all the top qualifications required to help Africa become a great continent economically. Africans have MBAs from top business schools in the world, many have PHDs from top institutions in the US and Western Europe. And therefore many Africans can and should be CEOs in African Subsidiaries of Western and Foreign organisation. There are many advantages to this. For one African CEOs are more likely to understand the needs of customers, consumers will perceive in African CEOs people that have more things in common than others and African CEOs will take more initiatives to expand and grow their companies in Africa because they have a vested interest in that in terms of job creation for example.

This is why I believe foreign companies should think NPD for Africa. See you soon!

And if you have enjoyed reading this please leave a comment to let me know.