Africa: The World's Next Great Economic Story

Oct. 5, 2011
Coca-Cola Co.'s Alexander Cummings recently spoke to Stanford University's Institute for Economic Policy Research and African Leadership Academy about Africa's growing economic power.

Alexander Cummings, executive vice president and chief administrative officer of Coca-Cola Co., was born in Liberia, West Africa, and joined Coca-Cola in 1997 as region manager for Nigeria. In May, he spoke to Stanford University's Institute for Economic Policy Research and African Leadership Academy. The headline above is precisely the title he gave his speech (we couldn’t have said it any better). We’ve excerpted his speech below:

There is an African proverb: "When the music changes, so does the dance." The key question for the world is: Are we truly listening?

The signs of real and lasting change in Africa are all around us. But they can be obscured by the past... and by a tendency for a benevolent world to focus on the problems... to exclusion of the possibilities.

I've been a part of Africa all my life ... and it's a part of me. Even for me, signs of progress can come in unexpected glimpses.

[On a recent trip there] I found myself listening to the flight attendant reading off a list of direct connections ...Lagos ... Kinshasa ... Accra ... Maputo ... Kigali ... Johannesburg ... Cairo. As she read the list, it occurred to me: I was listening to a continent connecting and coming together.

And as I was leaving the airport, I realized something else. I turned on my Blackberry to send a message. I hadn't stopped to see if it was actually working. I just assumed it would. And it did. Those bars that indicated signal strength also indicated market strength.

Again, a continent connecting and coming together. They were two small signs of very significant progress. They are small additions to a body of evidence that is starting to make a case to the world ... this is the time to become part of Africa's story. Africa is indeed an emerging global player.

Coca-Cola [has] been a part of Africa since 1928. We live there, employ there, sell there, buy there, invest there. We are the largest consumer goods company in Africa ... and one of the largest private employers.

Over the last 10 years, we've invested $6 billion in Africa. And over the next 10, we'll invest another $12 billion. We don't invest that kind of money based on hopeful assumptions. We see the opportunity to repeat our success in places like Brazil, where aggressive investment has created one of our strongest markets in the world.

We're not alone. Our largest global customer Walmart placed its bets by buying half of South Africa's Massmart for $2.5 billion. UK's Vodaphone and India's Bharti Airtel are battling for share. Nestle has built more than two dozen factories on the continent.

The list is growing. It's growing because of the inescapable conclusions from some very impressive numbers:

In 2008, Africa had a collective [gross domestic product] of $1.6 trillion -- equal to Brazil and Russia. By 2020, aggregate GDP is expected to be $2.6 trillion. The rate of return on foreign investment is higher than any other developing region.

The Economist and [International Monetary Fund] report that from 2000 to 2010, six of the world's 10 fastest-growing economies were in sub-Saharan Africa. And between now and 2015, it will be seven out of 10.

McKinsey sums up the potential in a report that calls the continent's economic leaders "African Lions," [representing] the same kind of opportunity as "Asian Tigers." [These are] South Africa , Algeria, Botswana, Egypt, Mauritius, Libya, Morocco and Tunisia.

There is an assumption that [these facts] are driven primarily by the extractive industries that mine, drill and harvest ... and then take those resources somewhere else to create value. But … long term, the most important resource [is] the African consumer.

We're witnessing the rise of the next great consumer class. Rising incomes allow millions to aspire to things long out of reach. Their aspirations are made possible by: access, connection and collaboration.

African consumers want the same things that consumers want the world over: They want to move beyond sustaining life to enjoying it. Better nutrition, appliances, a car, a computer, travel, a better home. A cold bottle of Coca-Cola.

Their growing ability to access those wants is clear in a few figures: Consumer discretionary income will rise 50 percent over next 10 years. Already one in every 10 African is a "solvent consumer," able to purchase a variety of consumer goods. Already Africa has a 313-million-strong middle class, about 34 percent of the population, on a par with China and India.

By 2030, the continent's top 18 cities could have a combined spending power of $1.3 trillion, concentrating wealth and the ability of marketers to reach large numbers of people efficiently.

Our business model historically relies on big trucks with big loads delivering to big outlets. In many countries with developing infrastructure, that simply doesn't work.

Rural roads can be too muddy. Neighborhood streets can be too narrow.

So we've set up more than 3,200 small distribution centers that employ 14,000 people and generate more than $600 million in revenues. We call them micro-distribution centers, or MDCs.

Instead of trucks, the entrepreneurs who own the MDCs use bicycles, motorcycles, and hand-carts. In some key markets -- such as Kenya, Tanzania, Uganda, Ethiopia and Mozambique -- we rely on MDCs for a significant amount of our distribution.

For Coca-Cola , these small operations are a way to get our products to consumers in areas we might never reach. For the MDC owners and their communities, they mean jobs and income and local stability.

There is a daunting list of problems. And the solutions will not come quickly. Three of the most significant issues are corruption, bureaucracy and the lack of a sufficient number of competent leaders.

The future never arrives fully formed. It comes together in pieces ... some according to plan; others random and unexpected. It's been a long and uneven process to get to where we are. And the next steps will certainly bring setbacks along with gains, triumphs along with mistakes.

One mistake we cannot make is to allow a vibrant future to be obscured by old assumptions and stereotypes. This is a new Africa. Stronger, better, more hopeful than anything we have seen in the past.

As part of a company, and as a son of Africa, I have the great advantage of seeing progress and opportunity from inside. Certainly, we see the obstacles. But more importantly, we also see beyond them.