Coronavirus (COVID-19) has shaken up the consumer goods, services and payment industries in Sub-Saharan Africa, putting pressure on supply chains and depressing sales, as lockdowns and job losses squeeze discretionary spending. As a result of the weak economic situation, demand for non-essential products and services has declined, forcing some companies – both small and large – out of business.
Lockdowns imposed in some countries in response to new outbreaks of infection continue to have an impact on economies across Sub-Saharan Africa. Most income groups' disposable incomes will continue to fall across the region, forcing households to cut back on their spending. Consumers' values, priorities and consumption patterns are being reassessed as a result of the economic challenges. As a result, businesses must adopt agile systems and tailor their offerings to reflect changing consumer purchasing habits during and after COVID-19.
Supply chain disruptions caused by import and movement restrictions have resulted in a steady shift towards more localised strategies across industries. As a result, domestic markets have been prioritised in recovery plans in industries such as travel, while leading retailers and financial services have collaborated strategically with local suppliers. The push for localisation – reducing Africa's reliance on international markets, and developing intra-African regional value chains – is expected to continue to be a top priority, particularly given the introduction of initiatives such as the African Continental Free Trade Area (AfCFTA).
Because of the fear of infection, the pandemic has accelerated digital adoption, making room for digitalisation of services across industries. Businesses are working hard to adapt their business strategies in order to better deal with the crisis, with more diverse business models in both online and offline channels, leveraging omnichannel services and digital solutions. It is expected that the incorporation of digital technology into business models across industries will remain critical, with many businesses across the region turning to digital services to overcome channel, distance, price and payment barriers for customers of all income levels.
Consumers have embraced the convenience of mobile payment services, as demand for contactless payment has increased. This trend has boosted innovation in so-called “super-apps” in South Africa, which allow consumers to access several services from one single app and virtual cards. Many fintech companies are also taking a regional approach. As result, leading telecommunications companies, such as MTN, have continued to use rising mobile money penetration in markets including Nigeria and Cameroon to expand services such as MoMo across industries.
Business models will continue to evolve during the recovery period, in response to consumers' fear of being exposed to the virus's resurgence and new variants. The speed of recovery will, however, be determined by governments' ability to contain the virus's spread by increasing the penetration of COVID-19 vaccination programmes. Companies across the region must rethink and re-adjust their product portfolios, distribution channels, promotions and supply chains to accommodate changing consumer behaviour and prepare their businesses for a “new normal”.
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