Africa is rapidly becoming a packaging growth centre and the industry needs to be ready to reap the benefits.
Growth centres for packaging are shifting, with Africa destined to surpass India and China as its population grows, says World Packaging Organisation (WPO) President Tom Schneider.
Africa has the most arable land suited to farming of any continent, meaning that with the right packaging and supply chain knowledge, and achieving population forecasts for 2050, African countries should be able to export across the globe.
By the end of the century, if current demographic patterns continue for another 85 years, Africa would have 4.2 billion people, against 1.1 billion today. Nigeria, whose land mass is similar to Pakistan’s or Venezuela’s, would rise from 180 million today to 910 million, registering one in 12 of the world’s births. This will require more food and more packaging, which is why the World Packaging Organisation runs Residential Training in Packaging (RTP) courses in developing countries including Nigeria, Ghana and Kenya. I have been privileged to be involved in these training schemes and the results have been encouraging.
The challenge in Africa, I found was the packaging of some agricultural products, some local foodstuffs as well as packaging for the informal sector, locally known as ‘open markets’ which is a huge percentage of sales in Nigeria. I visited a Unilever plant in Lagos and saw massive volumes of toothpaste in 15 ml sachets being packed, and was told that this was by far their biggest sales and had far exceeded sales of the larger toothpaste tubes that we are familiar with in Australia. The ‘open markets’ sell practically every possible household goods in small size flow wrapped packs or sachets consisting literally of only one day supply of the product. This is purely driven by cost and affordability.
There is a significant amount of informal packaging happening in Central and West Africa as well as throughout the African continent. This is where vendors buy in bulk and repack into small pack sizes for ‘open market’ sales. It is therefore in this area of packaging that requires support, advice and help.
Africa is on the rise, according to Sarah Smith, a Research Advisor at Reportbuyer. Economy, for the most part, is booming, given the relatively stable political scenario in the region. Africa’s GDP growth from 4.7 percent in 2013 to 5.2 percent in 2014 and the FDI growth of 16 percent, reaching $43 billion in 2014, show a positive economic trend. Countries across Africa, from mineral-rich Sierra Leone and Congo to the economies like Ethiopia and Rwanda, have shown growth across multiple macro-economic parameters, with inflation in Africa going down from 10.7 percent in 2013 to 6.2 percent in 2014. Packaging in Africa is fast catching up to meet the growing needs of a continent that is booming with investment from a vast number of foreign players. Given the relative lack of proper infrastructure, the vast distances that goods need to be transported over land from a few international ports make packaging a necessity.
Food and industrial goods imports into Africa make up a significant share of the packaging market in the region. Rising demand for packaged foods, a need to keep costs down and investments in food processing are propelling the growth of packaging in the region.
Automation of packaging is helping speed up the process of packaged goods, allowing it to meet growing demand. As the demand for packaging increases, so does the demand for automated packaging.
Africa’s middle class (defined as those earning at least US$450 per month) has triples, according to a recent study by Standard Bank. This group in the continent’s 11 biggest economies has tripled, from fewer than five million in 2000, to 15 million today. In the next 15 years its numbers may swell by another 25 million. The GDP of the biggest economies has also grown faster than its population. Africa’s demographic boom is exceptional and all indications are that the continent might be able to cope with it.
This massive growth in Africa’s middle class will have a direct impact on the purchasing power shift into the future. It’s this shift that we in packaging have to be aware of, plan and prepare for, and ensure that necessary steps, like education and training happen now so that all involved can reap the multitude of benefits in the years to come.
Education, I believe, is what stands between wherever we may be now and a successful, productive, competitive and rewarding future. Packaging is a science and if we want to prevent a void of knowledge in the near future, then we need to ensure that we continually update our knowledge.
Management consultants for retailers, wholesalers and manufacturers suggest that the packaging industry will suffer if it does not take itself seriously enough and ensure that its participants are continually being educated to improve packaging knowledge and skills.
Africa in this regard is no different to the rest of the world and so I’d like to suggest that back-to-strong-basics, consolidation of business, a cooperative, consultative approach within the industry, underpinned by ongoing education will ensure that Africa meets the needs of the future in a vibrant packaging industry; and I wish them and those that assist them, every success.
Pierre Pienaar is education director at the Australian Institute of Packaging (AIP).