Africa Economy: Gabon ranked best retail market in Africa

The 2015 African Retail Development Index (ARDI) released on Tuesday show that Gabon has the most attractive markets and offers the most potential in the retail sector.

The report, released by the A.T. Kearney's Global Retail Development Index in Johannesburg, showed that Gabon came on top of the African countries in terms of performance in the retail sector, to be followed by Botswana.

"Gabon has almost double the GDP as compared to South Africa and has high urban rate with most of the people (about 86 percent) concentrated in towns. People there in Gabon have enough spending money," Jaco Prinsloo, co-author of the report, told Xinhua.

Prinsloo said South Africa was ranked the sixth among the 48 countries which were sampled in terms of retail and consumerism.

South Africa fared badly owing to the poor economic situation in the country, Prinsloo said.

"The South African retail market is saturated at the moment with the rand falling and low economic growth. Consumers have less disposable income with these high interest rates. Retail is in a difficult position with competition of shops from other countries,"he said.

Prinsloo gave the example of Choppies from Botswana which has 20 shops in the country. He however noted that the South Africa retail sector is mature with more formal shopping malls than informal sector providing diversified markets for basic and luxury goods.

Botswana was rated the second because of its economic stability among other reasons.

"Botswana has better economic development with rich minerals and some of their retail players which also invaded the South African markets," Prinsloo explained.

South African shops like Shoprite are also found in other countries like Botswana and Zimbabwe. Angola which is one of the fastest growing economies in Africa came fourth and the fifth is the biggest African economy, Nigeria.

"Nigeria has massive room for growth in formal retail with 25 new shopping centres in development," said Mirko Warschun, the AT Kearney partner and leader of the firm's consumer industries and retail practice for Europe, Middle East and Africa.

True spending, however, remains comparatively low as the "true middle class" is a lot smaller relative to the smaller countries ranked higher, Warschun said.

South Africa with a growing middle class is affected with the low economic growth. According to Statistics South Africa, the country's economy contracted in the second quarter, with a gross domestic product falling to an annualised rate of 1.3 percent.

Warschun said the South African markets are likely to face competitions from low discount shops from other countries like Germany and U.S. chain Wal-Mart stores which have also expanded to South Africa.

He recommended that South Africa should diversify their retail shops and also create low discount retail shops.

The research covers the period from June/ July in 2014 to the same months in 2015. Endit