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Printing Industry In Sub-Saharan Africa: Changes And Continuity

2002
12 April 2016 - By Whitehouse & Associates

The printing industry in Sub-Saharan Africa has undergone a period of sustained growth, but faces the twin headwinds of a faltering global (and regional) economy as well as the challenges of the digital era. What is South Africa’s role in this industry?

There is a common perception in many circles that the advent of the digital age will, and increasingly is, eroding the print industry across the world. Whilst there are increasing challenges to the sector as a whole, does this necessarily hold true across Africa? Travelling through much of Sub-Saharan Africa in the last two years, and over many years before that, it does not appear so.

Sub-Saharan Africa, for so many years the ugly duckling of the global economy and technology in particular, has been coming into its own at a number of levels in recent times, despite the difficult global conditions that now prevail.

A quick glance at some indicators of printing industry growth and consumption indicate that the industry in the region has grown extremely quickly over the last decade or so. Taking a basket of products, including printing machinery and a range of papers used in the industry, it reveals that global exports to Sub-Saharan Africa of these products stood at R9bn (US$681m) in 2000, when the first ‘green shoots’ of Africa’s economic and political change began to become evident. By 2005, when the new commodity boom was well underway, this figure had risen to R18.2bn (US$1.3bn) and by 2010, just before the global slowdown began to impact on many African countries, it had reached a figure of R42bn (US$3bn). By 2014, the figure had reached R46.2bn (US$3.3bn), but had seen some stagnation over these last five years. Nonetheless, it represents growth of 12% a year over almost a decade and a half, which is impressive, given the twin challenges of economic slowdown and digital media that have impacted globally. Source: UN Comtrade, Whitehouse & Associates.

It’s also interesting to note that whilst the region as a whole has seen a slowdown in recent years, much of that has been led by the stagnant economy in South Africa, which has seen growth since 2010 decline by 2% a year on average, whilst the rest of the region saw growth of 4% a year on average. It’s indicative once again of the relative resilience of the rest of the region – and the growth potential that exists once more buoyant economic conditions return. Sub-Saharan Africa, outside of South Africa, has also increased its share of the total consistently since 2010. Exports to the region rose from 62% of the total in 2010, to reach 68% in 2014, a trend that is unlikely to reverse.

This is good news for South African suppliers, many of whom have been struggling in a sluggish domestic market. Indeed, South Africa is the largest exporter of this basket of products to the rest of Sub-Saharan Africa. South Africa accounted for 17% of all exports to the region in 2014, well ahead of Germany’s 12% and China’s 8%. However, that share has slipped in recent years – down from 22% in 2010, whilst those of Germany and China have risen from 11% to 12% and 4% to 8% respectively.

This is indicative of several things: at a basic level, South Africa is struggling to remain competitive in the global supply environment as domestic price pressures take their toll. It is also indicative of the fact that South Africa does not have a large market share outside of Southern Africa. Finally, it should also be remembered that in US$ terms, South African exports will have declined along with the decline in the exchange rate versus the dollar.

South Africa’s lack of penetration outside of the southern cone is not unique to the industry, but cuts across most sectors, where South Africa is the leading supplier into the Southern African cone, but enjoys a far smaller share of the East African market and an almost negligible share of West Africa’s growing market. 82% of South Africa’s exports are destined for other Southern African Development Community (SADC) member states, leaving a paltry 18% for the rest of the region.

This is thrown into even more stark relief when looking at the table [see graphic of table in the images section of this article], where South Africa’s share of the largest five markets, which account for 62% of the region’s imports, excluding South Africa’s, amounted to only 4.4% of the total in 2014. These are large, high-growth markets and South African suppliers have, by and large, not made much of an impression in them. There are many reasons for this, part historical, part distance and part reluctance to enter markets that are not English speaking, but it is indicative of the scope for further development.

By contrast, South African suppliers completely dominate the Southern African region, with almost total supply into other Southern African Customs Union (SACU) countries and very strong market shares in those non-SACU countries that are contiguous to South Africa (Zimbabwe and Mozambique) or are heavily integrated into South Africa’s supply chain and logistics networks (Zambia, southern DR-Congo, Malawi and others).

If the region is growing, what’s driving the growth in consumption of printed goods? The answers are not really hard to find: urbanisation, a growing domestic manufacturing base in many economies, the growth of the formal retail sector and spread of fast food and other franchises, as well as branding for corporates and other actors in the region.

The growth in urbanisation has resulted in a surge in the number of cement plants across the region. For instance, in East Africa alone, the number of plants has grown from 12 in 2010 to around 33 operational or under construction today, all of whom require printed bags, who produce billboards, brochures and the like. A similar situation is underway across most countries with regards to food and beverages, where canning and thus printing, is becoming more common. In Angola, for instance, local supply of beer, fruit juices, dairy products, maize and meats, cleaning materials such as soaps, detergents and similar products has risen sharply over the last five years.

Billboards remain a key advertising and communication medium across the region, and whilst there is evidence of a slow move to digital billboards, the traditional printed boards are very much in evidence. This is for large billboards through to smaller ones, as well as a large variety of public advertising outside of these, including signage on restaurants, car dealerships, retail outlets, fuel stations, hotels and almost any other company or building looking to attract attention in what is rapidly becoming a crowded visual space!

In conclusion, printing has a long road yet to run across the African continent, from locally manufactured FMCG products to advertising and virtually any other type. South African companies are well placed to tap into this – either by printing materials here for use in other countries or by supplying inputs, technology and expertise into the sector. However, as the region becomes a more crowded and competitive business space, companies need to be increasingly agile and competitive as well.