Nakumatt Junction supermarket in Nairobi, Kenya. (Photo/ Flickr/ Eduardo Zarate)

Retail Floor Space Surges In African Cities, But The Informal Market Is Still Key

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AFRICA is the fastest-urbanising continent, but the majority of retail trade still happens in informal markets – local markets, kiosks and street vendors. Informal trade still accounts for up to 90% of urban sales in countries such as Ghana and Nigeria.

Still, there has been rapid growth in the development of formal retail floor space. Data from real estate developers Knight Frank showing that among cities in sub-Sahara Africa, Nairobi leads in the total commercial floor area newly available for rent/ lease.

Two Rivers Mall – a mixed use development with over 700,000 sq. ft of leasable space – is set to open in the next month. It will be Kenya’s largest mall,  would shoot Nairobi’s retail space even higher than the data here.

Nairobi has more retail floor space available for rent than Windhoek and Gaborone, which – like cities in South Africa – are considered more formalised markets in retail. It suggests that Nairobi’s commercial property market may be approaching saturation, or already be oversupplied.


Supermarkets and restaurants will take the lions share of the retail opportunity, at least for now. African urban consumers are entering the hot zone, where consumption of food and beverages rises exponentially, according to this report by Pricewaterhouse Coopers, quoting Bruno Olierhoek, managing director for Central Africa at Nestlé.

A decade ago in Ethiopia it was considered improper to buy pre-made injera (a spongy pancake-like flatbread, a staple in Ethiopian cuisine) – it had to be made from scratch at home. However, these days it is more common to buy injera from grocery retailers than it used to be.

In Cote d’Ivoire, the trend has been a growth in demand for fruit juice . “Cote d’Ivoire has a young population. The minute there is a slight improvement in household wealth, children start drinking juice. Demand for fruit concentrate is growing beyond population growth,” said Gilbert-Dominique Guei, acting general manager at Continental Beverage Company in the report.

Those who can afford it are also more health-conscious, favouring nutritious foods and monitoring their sugar intake. That’s an opportunity for specialist, health-oriented grocery outlets.

Retail space Africa graph

Formalisation of retail, however, is not purely associated with shopping malls, as is being seen in Angola where some of the cantinas (small grocery shops) are developing into mini supermarkets with multiple check-out counters and a greater assortment of local products, the PwC report states.

Although modern trade is expected to continue growing, companies shouldn’t underestimate the strength of the informal sector. Didier N’Guessan, a partner at PwC in Côte d’Ivoire, says even the middle and upper-class still frequent open-air markets in the country.


“I don’t think we will see the demise of the informal markets anytime soon because products in the mall are priced at a premium,” he explained in the report.

At Addis Ababa’s bustling Merkato open air market – said to be the largest in Africa – hundreds of traders sell everything from agricultural commodities to kitchen utensils to fuel. Households across the income divide do their shopping here.

The same is replicated in informal markets in other big African cities, especially the ones that sell second-hand clothing. Sometimes one can find designer label clothing (or something just as good) for the fraction of the price in a luxury mall. Aside from Merkato in Addis Ababa, there’s Kantamanto market in Accra, Katangowa market in Lagos, and Owino market in Kampala.

It suggests that commercial developers who rush to build Western-style malls may be getting it all wrong, waiting for “high-end” customers who may never come. They might actually prefer the organic feel and bargaining banter of the local market.

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