After writing yesterday’s post on the proliferation of superficial analysis being used to exemplify emerging consumer market opportunities in Sub Saharan Africa, I was pleased to find this Afribiz article demonstrating clearly how on the ground observations can help identify spaces for innovation and new business in the informal markets:
At first glance, Kinshasa might seem intimidating to a perspective investor because they generally conduct business in an informal way there and have a relatively high poverty rate. But with a little market research, innovation, and follow through doing business in Kinshasa can prove to be very lucrative.
The people in the markets of Kinshasa generally conduct business with cash, avoiding banks. “A single note can touch maybe one million hands before it reaches a bank,” says Claude Ibalanky, Chief Executive Officer for Bantu Investments. “To do business in such a market, you first need to understand this dynamic. Without (understanding) this dynamic, business would not succeed in Congo (consumer markets).” As in other major African cities, you need to modify the way that you do business there and adapt to the local environment.
Claude Ibalanky found success in Kinshasa’s informal market with Nando’s, a popular restaurant based in South Africa. “When we looked at Nando’s,” says Ibalanky, “we saw an opportunity in Congo where most people did not.”
“You go into the streets of Kinshasa at night (and) you find (many) people selling chicken. They’re selling it – cooking it with charcoal and wood in the streets with dust, with rain water, with flies and all those kinds of things. We went to speak to them (the vendors) and we realized behind that was a very, very, very big and huge market. So, we thought a little bit of innovation, a little bit of formal set up could certainly capture a segment of the market which we targeted,” shares Ibalanky.
Bantu’s initial goal was to generate $10 for every person that ate in their Nando’s restaurants and, “after two years of operation we are sitting at about $24 per head,” says Ibalanky. So in an economy where they were expected to fail, they are instead making 2.5 times more than their goal.