It’s been a year of incredible challenge and emerging opportunities in consumer and retail markets in Africa. We take a look back at what has happened

There have been two big themes this year in the markets we look at: the severe cost pressures many markets have been under and the slow motion disintegration of Kenya’s Nakumatt supermarket chain.

Both Nigeria and South Africa have limped out of recession in late 2017 to sluggish growth. We have seen a more general pattern of cost and demand pressures that have extended from South Africa, Angola and Nigeria to Algeria, Kenya, Tanzania and Sudan. A pattern of consumer markets  – and retailers – under immense pressure. Inflationary pressures. Rampant costs. Hard to get foreign exchange. Demand falling off, especially in modern channels.

With those pressures we have also seen governments struggle to cope with these crises. Algeria unilaterally withdrew from free trade agreements and then banned imported chocolate, ketchup and canned food. Nigeria has kept adding more import bans to a list that includes soap, spaghetti and fruit juice. Sudan has banned a range of food items from import. Kenya and Tanzania have been engaged in a trade dispute.

From conversations we have had, we know times are tough: the major FMCG manufacturer who told us that sales volumes to Angola were a quarter of levels from a few years ago. The distributor in Kenya who told us that their supply to supermarkets had been cut in half. The chorus of distributors in Nigeria who told us that the lack of foreign exchange through most of this year had left them unable to trade effectively.

But there are is good news too. Despite astronomical cost increases, brewers in Nigeria keep telling us that sales are surging. Many of the retailers we track have used the bad times as a test of their ability to manage costs and grow sustainably.

Which brings to Nakumatt’s well-publicised troubles. We ended last year with news that Nakumatt’s debts were in serious need of a fairy godmother investor. We end 2017 clear on the scale of that debt watching one of Kenya’s great success stories pared down to size by the week. Trendtype tracks more than 500 supermarket chains in 6,500 locations across Africa, and it’s a full time job making sure we know which retailers have added new stores or expanded into new markets. With Nakumatt we have seen stores close, and sometimes get taken over by arch rivals such as Carrefour. It is a chastening lesson in cash flow management and the perils of getting too big too quickly.

While Nakumatt has struggled to swim, other retailers have fared better. None more so than Botswanan supermarket brand Choppies, headed by inimitable former accountant Ram Ottapathu. From a quiet start 31 years ago, this value-oriented chain now has 219 stores across 8 countries. The spotlight often falls on Shoprite, and with good reason. Shoprite’s dogged commitment to building out store networks beyond just the major cities in its growth markets sets the benchmark for all retailers. There are many other exciting retailers, though. Chief among them is are high growth discounters BIM and Kazyon, whose battle in Egypt is changing the supermarket retailing landscape. Or Auchan, which has taken a commanding lead in the Senegalese market. And last, but not least, the 500lb gorilla of Carrefour, disrupting markets as widely as Algeria, Egypt, Morocco, Kenya, Côte d’Ivoire and now Cameroon.

Finally, then, a word for the year ahead: we see real excitement in Cameroon: too many supermarket players, not enough market for them all to play in. Kenya, being reshaped as we write by Naivas, Carrefour, Tusky’s and maybe even a revitalised Uchumi? Senegal – a quiet, stable and increasingly attractive market. Mozambique, which has seen a spate of retailer expansion and new malls. Zimbabwe – could it finally turn a corner now that Mugabe has taken early retirement at the age of 93?

Many other countries, too: investors are working out that the old Africa Rising narrative is emerging again and now is the time to buy cheap with a view to selling in 3-5 years’ time.

This we do know: we cannot predict the rise or fall of oil prices upon which many economies depend. We do know, and have written a series of reports on, that the march of demographics will keep powering African consumer markets into growth in 2018. We think Nigeria will finally turn a corner in 2018 and foreign currency will be easier to come by – creating new appetite for imports. We don’t think South Africa’s intersection of poor governance and income inequality will improve conditions radically in the short term. We think the impact of the supplier payment crisis in Kenya will still hurt distributors and local manufacturers in 2018. We think Egypt is intensely vulnerable to political risk. We still believe Gabon and Senegal are overlooked as investment opportunities.