5 things you didn’t know about the import market in Africa
Africa, a continent with a fast-growing youth population, thriving economy, rapid urbanization and an expected move of over 50% of its people to cities by 2050, has enormous opportunities for merchants interested in its markets.
The African market is untapped and growing with the wide internet adoption by its youthful population due to the broad expansion of smartphones and mobile devices. High consumer spending, rising household incomes, and improved access to finance also show growth potential for international businesses. As of 2021, the final household consumption expenditure in Africa amounts to 1.93 trillion U.S dollars.
A thriving sector in the African market that is largely increasing imports/exports in and out of the continent is online retail. This sector has seen fast growth in recent years with the high demand for consumer and capital goods in the local markets. Most African economies rely on imports to satisfy the needs and requirements of their large population.
In 2018, Africa imported $273,346 million worth of goods, and its exports were valued at $281,847 million, according to a World Bank report. As a result, many entrepreneurs are drawn to this business in frontier markets.
Intra-African trade is also growing fast and has huge future potential due to the African Continental Free Area Agreement (AfCTFA), which commits countries to remove tariffs on 90% of goods, progressively liberating trade. This new implementation is positioning Africa as the largest free trade area in the world, and international businesses can take advantage of this opportunity.
The African market offers a myriad of opportunities for both local and foreign importers/exporters, but there are certain things merchants should know before venturing into the African market
- Government regulations: Most industries in Africa are heavily regulated by the government. Understand that regulations can arise at any time, so merchants need to familiarize themselves with the regulations governing imports and exports in different countries and also be flexible and ready to adapt when the need arises as African governments tend to be closely involved in the private sector, both officially and unofficially.
- Import restrictions: As certain products are illegal to import, you should have a good understanding of the various international trade regulations and how it affects your business before you decide to venture into the African market. Different countries have different restrictions; check with the country before starting your business.
- Handling Logistics: Perhaps the most complex aspect of importing and exporting is the logistics of taking a product created somewhere and selling it elsewhere. To compete in the thriving import market in Africa, you have to stand out amongst your competitors, and this could be as simple as conquering last-mile delivery.
- Growing middle class: The growing middle-class population in Africa represents people with high spending power and a relatively high income. The middle-class population of sub-Saharan Africa is expected to increase from 114 million in 2015 to 212 million in 2030. For instance, in Nigeria, the middle class accounts for approximately 23% of the population and is estimated to have a combined buying power in excess of US$28 billion. This class has shown remarkable growth in the local market, which is great news for businesses venturing into imports/exports in Africa.
- Cross-border payments: Making and receiving cross-border payments can be slow and tedious. As a merchant, you want to receive payments from your customers with little to no hidden service charges. It’s crucial to explore cross-border payment options like Klasha to help you receive payments from your customers in Africa.
If you are thinking of receiving payments from Africa, choosing Klasha as your payment partner is one of the best decisions you’ll make. To start accepting payments via Klasha, sign up for free here.