BOP in South Africa

In March 2010, DIBD arranged a study trip for a group of Danish and South African companies that came together to explore the potential for doing BOP business in South Africa. The following sections present the central findings of the study. The first section introduces the BOP in South Africa.

South Africa constitutes a vast and growing market. With a population of around 45 million people or seven million households, South Africa represents a USD 135 billion market for household consumption annually.

South Africa has a unique blend of first and third world economy. This means that the gap between rich and poor is enormous. In large cities there is often only a few hundred meters between the wealthy suburbs and the poor townships.

The majority of the South African people, more than 80 pct., live at the lower part of the economic pyramid. It is estimated that approximately 20 million people, or 40 pct. of the entire population, live in poverty. Calculating the total buying power of the low-income consumer groups, the BOP in South Africa represents a USD 40 billion market – or 1/3 of the entire South African market.

Companies entering the South African market have typically been oriented towards high-income consumers. However, if the poor are included on the list of potential customers, business opportunities increase significantly.