Rwanda is among the top five African countries with a rapidly growing retail sector, according to a new study, the first of its kind, published by A.T. Kearney, a leading global strategy consultancy firm.
The study provides global retailers with direction on entering specific African countries. The new study is designed to help large, organized retailers determine where and how to best enter Sub-Saharan Africa’s rapidly growing retail sector.
Rwanda, Nigeria, Namibia, Tanzania and Gabon occupy the top five places of the inaugural A.T. Kearney African Retail Development Index (ARDI). Rwanda ranked top due to its higher potential and urgency to enter the country.
Other countries in the top 10 included Ghana, South Africa, Botswana, Mozambique and Ethiopia respectively.
Rwanda’s performance in this study may not be surprising as the country has seen tremendous transformation in policy and economic trends- that have paved way for economic growth and large investment interests over the last decade.
Rwanda has made it easy to register a business and the Rwanda Development Board has launched a mandatory online registration for all business as a way of making it easy to start a business in Rwanda and reduce on the paper work that has previously entailed the process.
Rwanda was ranked best performer in making it easy to do business and was ranked in position 32 out of 189 countries in the latest World Bank data provided on Doing Business 2014. Rwanda’s economy is expected to expand by 8 percent, as the country also plans on gripping the inflation rate, which was at an accelerating to 7.5 percent by the end 2013.
The ARDI was based on four elements: Market Size, Market Saturation, Country Risk, and Time – and the top 10 markets in the Index are segmented into three high level approaches: Start with the Basics, Move Quickly, and Differentiate.
On the ‘Start with the Basics’- Rwanda among many other countries ranked top due to the promising markets trends, favorable demographics and recent growth trends – despite the fact that vast majority of African countries have limited market saturation, but also low maturity.
While only Nigeria and Gabon managed to fit the ‘Move Quickly’ category due to rapidly evolving retail dynamics and demographics, with some established retail players and many other global retailers planning entries.
And on the ‘Differentiate’: Botswana, Namibia, and South Africa markets have Africa’s most advanced retail sectors as well as an existing presence of international retailer.
A.T. Kearney partner and ARDI co-author, Mike Moriarty says that despite the many challenges, Africa has reached a point in its economic development where global retailers must evaluate the significant potential for growth in this market.
While Bart van Dijk, also a co-author believes that there is need to explore the opportunities and limitations of each country as a critical element of the retail expansion decision, since each has differences in infrastructure and supply chain development.