Mail & Guardian Africa deputy editor Lee Mwiti caught up with Coca-Cola’s president for EuroAsia and Africa Nathan Kalumbu at the World Economic Forum (WEF) for an expert view of the African continent, and how his firm is sizing it all up.
M&G Africa: Does the WEF still have fizz?
Nathan Kalumbu: I think it is a very important forum for getting private sector, civil society and governments in one place to talk about an important subject, which is Africa’s future and how we can accelerate the growth of this great continent. There is a lot of sharing of ideas that comes in, and a lot of insights from what other companies are doing, what governments are doing, what civil society is doing, and then try to cross-pollinate ideas and figure out how other people are solving the problems they face, and also figuring out opportunities. I am glad WEF operates in this regional way, because it allows for focus and brings together the relevant players who make things happen on the continent.
M&G Africa: What new thing is Coca-Cola doing around Africa, I mean you are omnipresent, is there any new playing ground left for you?
NK: We are very optimistic about the future of Africa, we’ve been in Africa for about 87 years; we saw promise as far back as 1928 when the first Coca-Cola was sold in Africa in Johannesburg, and today we see more promise. Sixty-five percent of the population in Africa is below the age of 35: you look at Africa’s growing economy, its growing population, the improvement in infrastructure, the growth of the middle class, urbanisation ... all of these elements are coming together to create such significant growth opportunities and macroeconomic factors that our company is really looking to leverage, and play an important role in improving the prosperity of communities.
It’s amazing to see what economic progress does in consumer goods industries. When economies are growing, when GDP is growing, when personal expenditure is growing, consumers also spend.
M&G Africa: What new consumption trends are you seeing across Africa?
NK: The biggest is the consumption trend of choice. As people earn more money, they demand different products and as companies we need to be very sensitive to that dynamic. As African consumers are getting more and more wealthy, as they are getting more educated, they are demanding more and more choice.
The other dynamic we are seeing is the impact of social media. This is really changing the way we communicate with consumers. It is a growing phenomenon that is changing the way we go to market, and how we interact with consumers.
Another interesting thing that is evident is that consumers, especially the millennials, are also beginning to look past the products and at the character of companies, pushing firms to become more socially aware.
M&G Africa: Talking of millennials and the youth bulge, there is the continent’s population boom. How is Coca Cola anticipating this?
NK: Africa’s population is growing at an average of 2% every year. We are the youngest continent in the world. By 2050 we will have the largest young population in the world. That’s huge potential for the continent, it is the real strength of Africa, the biggest resource we have. We all need to figure out how we promote their prosperity, especially in the area of employment. There’s 10 to 12 million young people who enter the job market in Africa every year, while jobs that are created for them are six to seven million. The gap creates significant social pressures.
As Coca-Cola we are coming up with programmes to give the youth life skills, business skills, connecting them to job and entrepreneurial opportunities and a lot of other phased initiatives, including partnerships with organisations, targeting countries such as South Africa, Kenya, Tunisia and later on others like the big one, Nigeria.
We believe ensuring the youth are employed helps align industry requirements with tertiary institutions and [will] help solve some of Africa’s challenges. This just cannot be done alone.
M&G Africa: What are the main challenges that Coca-Cola has encountered operating across the region?
NK: The infrastructure deficit in Africa is significant. But this is improving, though we are still far behind. I have seen estimates that we need to invest double what we are investing today to cover the infrastructural challenge — roads, rail, bridges, communications — and help reduce poverty and firms’ operational costs.
The other area is electricity. You can imagine the impact of improving electricity availability across Africa in the informal sector, and in reducing the cost of doing business. These in my view are the biggest factors.
Let me also highlight that sometimes governments across Africa are focusing too much on existing sources of raising revenue instead of focusing on broadening the tax base. We need to enable existing companies, current contributors to government fiscus to contribute more through growth, rather than through more taxes. These taxes also need to be more predictable and transparent to allow you to invest more and better.
M&G Africa: Tell me about three things that have surprised you about Africa.
NK: There is [the] numbers of urbanisation. That migration is amazing.
Africa’s current growth rate — at 5% — that is still the fastest growing in the world. Imagine what can be done if we resolve the bottlenecks of infrastructure.
I again must also talk about the young population — Africa’s future is bright whichever way you look at it. The question is, how do you leverage this population to create an even brighter future?