Africa’s packaging market growth assured

This was the message from Roy Campbell, a Deloitte partner, speaking at the Packaging & Beyond Africa Innovation Conference.

IMF (International Monetary Fund) forecasts predict annual growth of 6.5% over the next five years in East and West Africa, he told delegates, putting the two regions on par with the fastest growing regions of mainland China and emerging Asia.

‘Expectations for growth in South and Southern Africa are not as optimistic, with IMF forecasts putting GDP increases at around 2% in South Africa and 3 to 4% in Southern Africa over the same time frame. East Africa, however, is expected to have a GDP growth rate of 8.1% by 2016,’ Roy said.

Contrary to some commonly held perceptions, African growth will not be primarily driven by commodities. Eight of the 12 fastest-growing economies in Africa don’t rely on natural resources for their prosperity. Although there are still risks attached to investment in Africa, the IMF expects 15 African countries to grow faster than China. One of the primary factors behind this high growth rate is that it’s generally off a relatively small GDP base and that Africa has youth on its side. Already, 25% of the world’s under 18s are in Africa. This figure, due to grow to 50% by 2100, guarantees growing consumer markets and increased opportunities for packaging.

However, like its international counterparts, the South African and African packaging industries can expect to meet certain challenges, which Roy listed as increasing demand for premium packaging, the emergence of biodegradable plastics, increasing use of small packs and multipacks and a need for sustainability and innovation.

The onus on packaging companies is to ensure that they have the ability to meet these demands. Those failing to do so could find it difficult to survive.

‘If they are to prosper, packaging manufacturers have to remain adaptable, ready to meet changes in global consumer demand and prepared to address the skills shortages that characterise the industry,’ Roy added.

The capacity of the industry to adapt to market changes will be tested by additional challenges such as volatile prices and rising costs of raw materials that mean increased production costs and reduced margins. The search for cheaper substitutes will therefore need to become more widespread.

A highly fragmented market has disrupted and hindered overall growth, as intense price competition has led to vendors reducing selling prices to remain competitive.

‘Companies wishing to take advantage of Africa’s potential will have to stay close to their markets, be adaptable and ready to develop packaging solutions that are better rather than cheaper,’ was his well-received summing up.