Six Basic Types of African Countries

Jorge Camarata, a Partner at Strategy&, PWC’s global strategy consulting arm, writes:

Companies from around the world have begun to make expansion across Africa a priority, recognising that, despite many problems, it is among the fastest-growing regions in the world. But their attempts often lack an understanding of local market dynamics…

Africa’s markets are too diverse for one business model to be successful everywhere.

Strategy& classified African countries into six basic categories based on how two criteria are combined: wealth (measured by GDP per capita) and institutional quality (measured by the World Bank Doing Business Index). See chart below:

Often the devil is in the detail, as small differences in local preferences can disrupt the economics of entire business models.

While this high-level classification provides a helpful overview, it’s important to note than there can be, and often are, significant differences within a single country’s borders on the continent:

Firms need to understand the diversity that sits beneath the surface of national markets and factor it into their planning.

In Nigeria, for example, wealth is concentrated in the urban centres of the South South Zone and the Greater Lagos region. Companies whose strengths lie in quality, branding, and innovation need to focus their distribution strategy on these regions.

Download the full report from Strategy&/PWC.