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Why Kenya and Ethiopia Lead Africa's Consumer Spending Growth

Africa will be the second largest region for consumer spending growth in the 2020s. Most of that spending will be focused on the basic essentials: food, transport, household goods, education, and healthcare. However, eating out, entertainment, and consumer goods will also experience growth as discretionary spending rises on the back of growing purchasing power.

In a sign of an emerging shift in the growth dynamics of the continent, most growth in consumer spending is coming from relatively smaller markets in value, like Kenya and Ethiopia, rather than the traditional powerhouses, such as South Africa. Both Kenya and Ethiopia are tipped to experience 8% annual growth in consumer spending from 2015 to 2030.

And so, the epicenters of growth in household income are shifting from metropolises like Johannesburg and Cape Town to smaller cities such as Nairobi, Mombasa, and Kisumu in Kenya and Yaoundé in Cameroon. Only a third of disposable income will be spent on food in Nairobi by 2030, as discretionary spending rises there. Overall in Kenya, bottom of the pyramid spending — defined as those with annual disposable incomes of less than $2,500 — will fall from 40% of the total in 2017 to only 5% in 2030.

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