Africa is a vast continent whose terrain varies within borders of neighboring countries. Its vibrant cultures and versatile landscape make it a great travel option for those seeking a fresh luxurious destination. Africa as a whole is a unique travel destination. And when it comes to luxury travel, Africa takes it to new heights.
It challenges the urbanism and poverty that many are accustomed to hearing about and offers unique invitations from various countries with stylish getaways that cater to the likeness of a home away from home. If Africa can make infrastructure a priority and keep political tensions — which often hinder tourism development — to a minimum, then it can certainly compete in the big leagues leaving its rival China in the dust.
As the continent grows and develops new business ventures, we can hope to see more expansion and companies from the luxury market. But is Africa’s luxury market one that’s not only openly available to everyday consumers, but one that’s explored enough?
Luxury Tourism
In Africa, one can visit some of the world’s greatest summits like Mount Kilimanjaro or be bask in the sun of the white sand beaches. Having such a vast landscape plays in Africa’s favor when it comes to the travel industry. South Africa, Nigeria, Angola, Ghana and Ethiopia were named by investment management firm T.Rowe Price as “Five Countries to Watch.” So, it’s no surprise that the luxury market has gained an edge over the years globally, but specifically in Africa.
Businesses have had to rethink their customers and strategize for a different audience as growth within the continent is on the rise.
In a Forbes article on trends in luxury tourism, one specific mention was that the types of people who travel are changing. Younger and more affluent individuals are trekking the globe. Also, within the last decade, the number of billionaires has increased. Twenty of these elite are from Nigeria.
Other factors that have increased luxury tourism in some countries, and steadied them in others, are technology and its social media “techover” and experiential travel. People are willing to step out of the confines of their normal travel destinations, which is a plus for Africa.
Keeping multinationals and everyday consumers in mind, Devconia, a New York-based international business development management firm that specializes in enhancing international and sub-Saharan trade, believes Africa is untapped.
“When you talk about luxury goods and the African consumer, you’re talking about a huge opportunity. It would be a disadvantage for American businessmen and women to overlook that opportunity,” director Ken Johnson explained.
Price Tag and Perception
Some have been deterred from buying property and investing in Africa due to political inhibitions and perceptions of poverty. Stemming from the narrative of the continent which people in other parts of the world are fed, the idea of a promising luxury market in Africa is more of a foreign concept. Even with broadening attention on blossoming economies and rising industries like technology and manufacturing, many wonder if Africa’s luxury market should be pursued given the conditions of some countries.
According to an African Business Magazine report on luxury brands, most African consumers don’t frequent luxury markets, but more so because of social influences, aspire to. Fflur Roberts, global luxury manager at Euromonitor International says for some African consumers, the luxury market is an extension of the American Dream.
“What is arguably different in Nigeria to other emerging markets is the pervasive sense of opportunity, even among the poor. It is an African twist on the American dream. People from low-income backgrounds [in Lagos, especially] believe their time will come – and in part this is down to a new offshoot of Christian religion, preaching financial prosperity,” Roberts told African Business Magazine.
Despite misconceptions of Africa’s luxury market and African consumers’ beliefs of becoming a regular consumer, the continent’s expanding middle class is contributing to the market’s success and changing one-sided poverty narratives.
What This Means for Africa
Luxury good consumption among Africans is increasing. Many can afford these items largely in part to the disposable income some now possess. According to the same African Business Magazine report, in 2012 the number of higher-net-worth individuals grew by 9.9 percent, making it the second-highest wealth class growth rate in the world.
U.S. brands like Hugo Boss, Italian fashion label Prada, Mercedes-Benz and Cartier — which is known for its high-end watches — have already made their products readily available for consumers in Africa. South Africa has aided in this increase.
The country used to only hold 10 percent of the world’s luxury consumption but has since surpassed that. Africa continues to capture the eye of many luxury retailers as its economies have had much growth in recent years. Luxury markets aren’t quite yet the primary source of income for many countries. Instead, natural resources like oil and gas heavily contribute to Africa’s economies and the swelling wealth class.
Foreign investors would actually benefit from investing in real estate for several reasons. Some of those benefits are variety of locations, low cost of living and inexpensive high- quality labor and materials which are available.
Still Roberts believes there’s work to be done — and challenges may outweigh the literal and figurative start-up costs:
“Poverty remains widespread, infrastructure is weak, retail markets are undeveloped and brand awareness is lacking, she said. “To succeed, brands have to overcome the challenges of the different African markets through careful research of suppliers, using local partners, understanding consumers and the business environment.”