Market Potential Analysis

Emily Nadeau

MKT-336

Executive Summary

The goal of this market potential analysis and the data collected leading up to this

is to identify and evaluate the possible profitable markets in the West African Region, the

countries include Benin, Burkina Faso, Cote D’Ivoire, Ghana, Mali, Niger and Senegal.

Many factors in the environment influence the success of a business in a potential target

market. You must understand and look at more than just the geographic location and the

size of a country. One should also understand the legal, financial, economic and political

factors of the region, it’s important to understand the overall potential for a country, by

understanding all of these factors it sets the foundation for this analysis. The

infrastructure is the basic physical and organizational structures and facilities needed to

operate the society. The infrastructure available in a country’s market affects the access,

availability and distribution of products and services. It gets goods to markets as well as

imports into a country. Paved roads, railways, ports and paved airports larger then 3Km

wide hugely impact the transportation and business in the country. The culture also

highly influences potential international business. In concluding this market potential

analysis on countries in the West African Region, there will be an increase in economic

potential among the countries of Benin, Burkina Faso, Cote D’Ivoire, Ghana, Mali, Niger

and Senegal.

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Introduction

The goal of this market potential analysis and the data collected is to identify

the possible profitable markets in the West African Region. To do business with an

international market we must break down the market that is being considered. By

carefully examining statistics and data we can provide a thorough analysis of

regions in the global marketing environment. The following countries have been

analyzed as potential markets in West Africa: Benin, Burkina Faso, Cote D’Ivoire,

Ghana, Mali, Niger and Senegal.

Through tables and data the analysis will lead to those markets that have the

best potential for market expansion within the next several years. The analysis has

been separated into three chapters. The first section describes the environments of

the seven countries. Also including financial, legal, economic and political

circumstances. The second section includes an analysis of the potential markets

infrastructure and how it affects the markets. The third section outlines the culture

and consumptions of the potential markets. After exploring each of these segments

it will be easy to see which of these West African countries have the potential for

market growth.

I. Environmental Factors

There are many environmental factors to consider that influence the success of

a business in a potential target market. By looking at the legal, financial, economic

and political factors of the region we are able to tell if the country is adequate to

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start new business. The table below illustrates the population, urbanization and

ease of doing business in order to analyze the country’s economic standpoint.

The data above plays an important role in this analysis. First lets look at the

population size. As you see the population size of Burkina Faso, Mali and Niger are

fairly similar. However, the size difference between Benin (smallest country), and

Ghana (largest country), is extremely drastic. Ghana has over double the population

size than Benin, which makes it very attractive for economic development and

incomes. If you look at Cote D’Ivoire and Ghana they have similar numbers in both

population and urbanization. Urbanization is very important for a growing market.

It shows the increasing number of people that migrate from rural to urban areas,

which can lead to economic development in these areas. Ghana and Cote D’Ivoire

have an increasing economy along with an increasing population, which gives it a

much higher potential for a company to strengthen its economic growth. Niger has a

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Country Population Urbanization Ease of Doing Business

Benin 10,160,000 45.6% 174

Burkina Faso 18,365,000 27.4% 157

Cote D’Ivoire 22,848,000 51.3% 167

Ghana 25,758,000 51.9% 67

Mali 16,455,000 34.9% 155

Niger 17,466,000 17.8% 176

Senegal 13,635,000 42.5% 178

Sources Cia.gov Cia.gov Doingbusiness.org

very low urbanization, which affects its economy and hurts its potential for market

entries.

There are a lot of factors that come in to play by doing business in another

country such as; paying taxes, registering property and the time it takes to get

permits. In all seven of the countries it takes a long time to get a permit and is very

expensive. Gaining property rights is also a major issue in Senegal, Niger, Ghana, and

Cote D’Ivoire.

Above is a list of data that shows the number of procedures and days

required to register a firm. The cost income per capita is the percentage of all official

fees for legal and professional services required by law. The paid in minimal

percentage is the amount the entrepreneur needs to deposit in a bank before

registration and up to three months following incorporation. It’s important to

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Country # Of

Procedures

Days Cost

% of income per

capita

Paid-in Min.

Capital %

Benin 4 15 122.7% 261.2%

Burkina Faso 3 13 44.5% 306.2%

Cote D’Ivoire 5 8 44.4% 164.4%

Ghana 8 14 15.5% 3.7%

Mali 5 11 76.7% 295.2%

Niger 6 17 80.1% 527.8%

Senegal 4 6 64.3% 192.1%

Sources Doingbusiness.org Doingbusiness.org Doingbusiness.org Doingbusiness.org

analyze the ease of doing business internationally due to the fact that all procedures,

taxes, rules and regulations are different no matter where you go.

In Benin starting a business costs more than the level of an average income.

It is the highest of the seven countries when dealing with cost per capita at 122.7%

in fees. It takes more than 200 days to get all the necessary permits. Benin’s formal

labor market has yet to fully develop. The government must help strengthen public

financial management to restart economic growth (Heritage).

Ghana is a little different. It takes about 14 days, costs 15.7% of income per

capita and requires pain-in minimum capital of 3.7% of income per capita. This data

shows that Ghana has the least amount of difficulties and costs to start a business in

this region (Doing Business).

For an understanding comparison the United States has six number of

procedures, five days to process, 1.5% cost of income per capita, 0% paid-in

minimal and is ranked number four with doing business with. Although, there are

far more procedures and days it takes to register a business this comparison will

hopefully help determine how hard it is to start a business in these countries.

The data below lists the financial factors of the potential market regions. These

factors are very important to starting a business since they are dealing with money.

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The data above shows similar exchange and interest rates between all these

countries except for Ghana. The exchange rate in Ghana is much lower than the

other countries listed. The low exchange rate is to do the high inflation rate. As

shown, Ghana also has the highest inflation rate of 9.2% due to high cost of housing,

electricity, housing, transportation and gas. Ghana must increase the infrastructure

so the financial status will get better.

Niger has the lowest inflation rate compared to the other potential countries.

However, they are doing their best to become stable again. The country is prone to

political instability and natural crises such as droughts, floods and bug infestation.

The country is now politically stable after 13 months of military transitions in 2011.

Since Niger is landlocked it has to increase prices and impact on industrial growth.

Almost everything they have is imported. Do to the expensive transportation of

materials to use in factories it prevents industrial investors from starting

businesses. However, there are opportunities in the retail market for supermarkets

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Country Exchange Rate Interest Rate Inflation

Benin 500.7 3.5% 0.7%

Burkina Faso 500.7 3.5% 3.6%

Cote D’Ivoire 504.6 3.5% 1.3%

Ghana 2.018 19% 9.2%

Mali 500.7 3.5% 5.3%

Niger 500.7 3.5% 0.5%

Senegal 500.7 3.5% 1.1%

Sources Cia.gov Cia.gov Heritage.org

and shopping malls. Niger is currently experiencing growth in many markets which

will increase their economy.

The final table in section one illustrates some legal and political factors of the

environmental influences. These factors include Corruption and Aon Political Risk,

which is the risk of political instability in the business world.

The Aon PR for the potential markets shows the majority of the countries

have a Medium to High Political Risk. Some risks include political violence, political

interference, supply chain disruption, exchange transfers, regulatory and legal risk.

As shown Benin, Burkina Faso, Cote D’Ivoire, Mali, Niger and Senegal have a much

higher political risks than that of Ghana.

In 2002 a civil war divided Cote D’Ivoire between a rebel-controlled North

and a government-controlled South. In April 2011 President Laurent Gbagbo was

forced from presidency and is currently in jail. Gbagbo was charged for his role in

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Country Corruption Aon Political Risk

Benin 97/177 Medium-High

Burkina Faso 83/177 Medium-High

Cote D’Ivoire 71/177 High Risk

Ghana 63/177 Medium

Mali 127/177 High Risk

Niger 106/177 High Risk

Senegal 77/177 Medium High

Sources Transparency.org AON

presidential election violence in 2010. Despite the frequency of corruption the

government appears to be taking steps to help stop corruption.

Mali has the highest number listed on the chart above for being corrupted.

With the countries weak infrastructure and low level of human capital it was easy to

be corrupted. Laws were not enforced and punishments were altered. However,

with the new president the government hopes that the new laws will strengthen the

judges ability to punish a person if found guilty of corruption. These laws are

intended to rebuild citizen’s trust in higher authority.

According to the Aon PR score above Ghana’s political stability has reflected

success. With corruption still a major issue, they are proven to be one of the most

stable countries in the potential market. They are becoming a more mature

democracy, which is improving their economy. Ghana is ranked the 61st most

peaceful country in the world and 5th most stable country. Ghana is also one of only

five countries in Africa with free press.

In conclusion to the first section finance, ease of doing business, corruption,

and political and legal factors have all been evaluated. In section two will only

discuss the following countries; Ghana, Senegal and Burkina Faso. These countries

are adequate to build and maintain a shopping mall.

II. Infrastructure

The infrastructure in the potential markets affects access and distribution of all

products and services. Paved roads, railways, paved airports larger than 3 km and

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ports are necessary factors to know for transporting goods. Below is a table showing

data collected concerning transportation within Ghana, Burkina Faso and Senegal.

Country% Paved

RoadsRailways km

Paved Airports

Airport larger than 3

KmPorts

Burkina Faso 20.60% 622km 2 1 0

Ghana 7.94% 947 km 7 1 2

Senegal 29% 906 km 9 2 1

Source Cia.gov Cia.gov Cia.gov Cia.gov Cia.gov

All of the countries have some paved roads, however majority of the roads

are not paved. The roads that are not paved are made up of dirt, mud, rock and other

organic items. With the limited access to unpaved roads it makes it very difficult for

any sort of driving transportation to occur. Large vehicles are unable to drive

through the rural parts of these countries making it hard to start new business.

Senegal is the largest percentage of paved roads within its country. Making it very

profitable to transport items within the country. Ghana however has the lowest

percentage making it extremely difficult for product transportation. A car company

would not be successful in Ghana do to the lack of paved roads.

Railways are the second cheapest and lowest form of transportation. Ghana

and Senegal both have relatively similar total number of runways. However, they

are not geographically close one another so trade between them is very limited.

Burkina Faso has the lowest percentage of railways, 622km. Burkina Faso and

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Ghana use different rail gauges and this can add delays, cost and inconvenience to

these countries. A Czech proposal was to link Ghana railways with Burkina Faso.

Burkina Faso is also a participant in the AfricaRail project. The AfricaRail is a project

to link the railway systems of Burkina Faso, Niger, Benin and Togo. It hopes to also

link Mali, Senegal, Nigeria and Ghana.

Air transportation is obviously the fastest way to ship products but it is also

the most expensive. Paved runways allow easy landing for planes. Having a paved

airport over 3 Km wide provides access for large planes to land and take off. Having

a paved airport at all in these countries is a major plus for doing business with. The

chart above shows that Senegal has two paved airports over 3Km making it an easy

place to ship more products. By having large airports they are able to attract more

tourist bringing in more money. Ghana has seven paved airports only one is larger

than 3 Km. and Burkina Faso only has 2 paved airports and only one is larger than 3

Km. Burkina Faso is not a targeted market to air ship products. However, if

construction companies can pave the airports and increase the size it will bring in

more revenue.

Ghana and Senegal are the only to potential countries that have ports. Ports

can be very effective depending on the size and location. Ghana has two ports; the

Tema Harbor, which is Africa’s largest manmade harbor, and Takoradi Harbor.

These ports are where most all of the goods are imported and exported. In 2012, the

ports handled 31% of Ghana’s sea traffic, 66% of national exports and handled 19%

of nation imports.

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Senegal has one of the largest deep-water seaports along the West African

coast. The 640-foot-wide access channel and deep-draft structure allows full time

access to the port. The port is located at the western point of Africa and links the

major traffic between Europe and South America.

Communication is also a big influence in doing business with a country.

These factors below will help illustrate the communication outlets and how people

receive their information.

CountryElectricity

ProductionTV

StationsRadio

StationsInternet Access

Burkina Faso 670 mil kWh 2 4 .96%

Ghana 8.213 bil kWh 4 2 5.03%

Senegal 2.769 bil kWh 2 2 13.33%

Source Cia.gov Cia.gov Cia.gov Cia.gov

The electricity production includes the outputs of electricity plants that are

designed to produce electricity. Senegal has the highest percentage of the three

potential target markets making it appear functional for new businesses. However,

40,000 of forest are being lost every year do to need of firewood for energy.

Firewood is used 31% of direct energy and 14% is used by charcoal (Energypedia).

Demand for electricity is much higher than the actual supply causing serious

problems. Senegal lacks funds to invest in more power plants and transmission lines

to help increase the demand for power. Power outages are also a problem due to the

massive amounts of power used. Ghana has the lowest percentage of 7.94 for

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electricity production. Ghana must expand the electricity capacity and distribution

to provide electricity to 30% of the population that does not have electricity (EIA).

Radio and Television stations are easy communication outlets that marketers

can use to expand their company. Government controlled outlets can also hinder the

access to reach consumers. All of these countries have at least one government

controlled radio and television station. Ghana has three television stations that are

publically controlled allowing marketers to communicate freely to consumers.

The Internet is another communication tool marketers use to decide their

potential consumers. Senegal has the highest ranked Internet access among these

potential countries. With 13.33% of the population having access to Internet this

makes them a target for some online companies.

Water is also a key factor when starting a business. Below is a chart showing

the data to access of clean water and toilets. While we take these things for granted

in the United States these countries are suffering from the lack of clean water

sources.

Country Access to Clean Water Access to Toilets

Burkina Faso 96.40% 50.10%

Ghana 92.10% 18.80%

Senegal 73.40% 51.40%

Source Unicef.org Unicef.org

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Burkina Faso is listed as the highest country with access to lean water yet it

has many problems. Access to clean water in the rural areas where three quarters of

the population lives is still struggling to access clean water. In the rural cities one

third of the water facilities are out of service due to lack of maintenance. However,

Burkina Faso is one of the rare success stories in the Sub-Saharan African region. In

2008 water source in urban areas increased to 95%. Water supply that used to be

irregular is now continuous. Although access to water supply increased, sanitation

only slightly increased.

Proper sanitation facilities in all of these countries are needed especially for

Ghana. Facilities are needed for girls to have a clean and private place during

menstruation. By building these facilities it will help reduce the sanitation issue.

III. Culture and Consumption

The culture and consumptions influence the decision in a potential market.

The following table lists data of consumption patterns in the home and how they

compare to each other.

CountryLife expectancy

at birth Mother’s age at

first birth# Of children per

womanBurkina Faso 54.78 19.4 5.93

Ghana 65.75 21.8 4.09

Senegal 60.95 21.4 4.52

Source Cia.gov Cia.gov Cia.gov

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Many factors come in to play dealing with consumption and the marketing

potential from the data above. The culture in a country influences the international

business potential. Different traditions, customs and business practices exist in

various countries.

In Burkina Faso it is very important to be married and have children. A

woman that is unmarried and childless in her thirties suffers sever social stigma.

Also, a married couple that is childless can be sent away without any material

resources (Every Culture). This is why the age of first child is so low and the number

of children per woman is so high.

In Ghana and Senegal have similar family roles. Both countries have arranged

marriages and money and gifts are given to the bride. In Ghana chiefs mark their

status by marring dozens of women and having lots of children. If a woman is

infertile the man will divorce her. Many generations live in one household.

Ghanaians also have individual puberty ceremonies for girls. In all of these countries

having children is very important to their cultures.

CountryGDP per

capita Literacy

RateEducation Spending

# Of Universities

Burkina Faso $1500 28.70 3.40% 2

Ghana $3500 71.50% 8.10% 57

Senegal $2100 49.70 5.60% 7

Source Cia.gov Cia.gov Cia.gov 4icu.org

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The GDP per capita is useful when comparing one country to another. An

increase in per capita GDP is a good thing signaling growth in the economy and

productivity. The table above shows that Ghana has the highest GDP at $3500.

Ghana spends a lot to their healthcare and education. They spend about 2.7% per

capita on healthcare and 8.10% on education. Most children attend primary school,

but the secondary schools are in short supply and have high fees. Ghana has 57

universities but only a tiny percentage enter a university. Graduates of the

universities can expect high paying jobs especially in the public sector. Having an

educated country can increase the economy and will build strong markets.

In Burkina Faso has the lowest GDP per capita. Only 3.4% is spent on

education. Education starts at age seven. About one third of children attend primary

school. Children in many villages walk for hours to reach their school. Classes are

large and attendance varies according to the region and gender. The western and

southern areas have attendance rates of over 50%, unlike the northern and eastern

areas, which less than 20% attend. Less than 1% of the population is enrolled in

both universities. Even for those who do graduate it is increasingly difficult to find

jobs.

In Senegal children start their education around age six. The school system

has a primary, secondary and advanced levels, which are all free.

Below I have listed some advanced facts that were not covered in the charts

above. However, these facts are very important to know for starting a new business

in these countries.

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In Burkina Faso the climate has warm dry winters and hot wet summers. It is

a landlocked country that suffers from droughts. The country is also divided into

two parts with different historical backgrounds and political cultures. About 90% of

the population lives in rural villages. Architecture varies by regions and ethnic

groups. Homes range from temporary straw huts to castle-like homes with solid

wood and mud walls with flat roofs. Over a hundred people can live in these castle-

like homes. Markets are placed in the center of the villages and towns not only for

commercial activity but also for communication centers. Meat is a delicacy and is

rarely eaten. They mainly eat millet, which is a fast growing cereal plant, eaten as a

paste with sauces. About 85% of the population is engaged in agriculture. Trying to

expand the tourism market the community produces souvenirs such as

woodcarvings, baskets, and specialty fabrics. There are many small successful

traders and craftsmen shops in the urban central markets. Cotton, animal products

and gold are the three most important exporting items and are the most fast

growing. Almost all external trade is done to southern countries, especially to the

harbors in the Ivory Coast. Main imports for Burkina Faso include: machinery, food

products, corn, barley, rice and fuel for transportation and to generate electricity.

Only state employees and employees in parastatals and other large private

companies benefit from social security. For majority of the country there is no social

security. Etiquette is very important to Burkina Faso. Greeting includes always

shaking hands and conversations are rarely direct. Officials and uniformed people

are always approached with the most respect. Also officials, uniformed people and

official building should not be photographed. When the national flag is lowered

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everyone is expected to stand still. Women are not allowed to wear short skirts and

low-cut dresses. Medical treatment by a doctor or in a hospital is too expensive for

the average person. In village markets medicine pills can be published, they can be

reasonably cheap but of uncertain quality. Bigger villages have a temporary medical

center run by a nurse. Treatment is free however; the prescribed drug is extremely

expensive.

Ghana is located on the west coast of Africa. The Volta River forms the major

drainage feature for the country. Starting at the northern part of the county it breaks

into two branches reaching the eastern part of the country by the sea. The Volta has

been dammed at Akosombo, in the south, as a major hydroelectric project to form

Lake Volta. The climate in Ghana is warm and humid with distinct seasons such as

rainy summers and dry winters. They also have two distinct regions the southern

rain forest and northern savannah. These two major different regions forms diverse

environmental, cultural and economic zones. Approximately two-thirds of the

people live in the rural regions and are very involved in agriculture. Ghanaians are

multilingual, speaking at least one local language besides their native dialects and

English. The basic diet is a starchy staple eaten with a soup. Indigenous diets are

eaten at all social levels, even by the elite. Restaurants are not common outside of

urban business districts. Ghana’s economy depends heavily on cocoa, gold and

timber exports. The economy is primarily agriculture with large service and trading

segment. The culture of Ghana is friendly and welcoming to foreigners. While

greeting it is custom to shake hands and ask about each other’s health and families.

It is common to see men standing or walking together holding hands, this is a sign of

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friendship. The appropriate amount of personal space is about arms length when

speaking. It is rude to take or offer an object or wave with the left hand. Ghanaians

are known to be late to meetings due to the lack of modern conveniences. Ghana is

considered a moderately feminine society. They focus on “working in order to live.”

Ghanaians value quality, solidarity and equality in their working lives. Manufactured

goods are dominated by foreign imports, but some local industries have developed.

Palm oil milling, aluminum smelting, beer and soft drink bottling and furniture

manufacturing are some of the industries developed. Education and health care are

the most important public services.

The following information describes the cultural practices of Senegal.

Senegal’s people have lived together peacefully for several generations. The increase

of education and economic opportunities has modified a traditional social structure

based on kinship. They live by the values of respect for one another, good manners

and hospitality. It is located on the western tip of Africa by the Atlantic Ocean. Living

off the land is difficult for people due to the rapid growth of population and

deteriorating environmental conditions. The population is divided into twelve

ethnic groups, each having its own customs and dialects. Agriculture supports the

country’s market economy. However, droughts can cause the economy to go into

severe recessions. Theft occurs frequently, but most of the time people beat the

criminal up before the police arrive. Guns are only allowed to the military and

police. In urban areas alcohol and drugs, weed, have become a major issue. The

main environmental factor is poor sanitation, which affects the health of the

country. Greetings are very important and include questions regarding your health,

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family and general pleasantries. Personal relationships are highly valued. Eye

contact is a must when meeting someone. Like Ghana, the left hand is extremely

rude and should not be shook or waved at. The people of Senegal will avoid

confrontation causing them to agree on certain business deals just to avoid

uneasiness.

IV. Conclusion

In conclusion this potential market analysis has illustrated the

environmental factors of Benin, Burkina Faso, Cote D’Ivoire, Ghana, Mali, Niger and

Senegal. It has also illustrated the infrastructures, cultures and consumptions of

Burkina Faso, Ghana and Senegal. At Heritage.org I was able to compare the three

countries using graphs to display the freedom a business has. I used that data to

make my own chart to see the types of business freedom.

Business Freedom

Trade Freedom Investment Freedom

Property Freedom0

1

2

3

4

5

6

7

8

9

Burkina FasoGhanaSenegalWorld Average

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All of these countries are poor and have multiple problems. However, from

all the data collected we are able to determine which of these countries would be

best to obtain a shopping mall. There are so many factors that must be accounted

for while starting a new business. From all the data and information provided I

think Senegal is a great place to open up a shopping mall. Their geographic location

provides them with many great trade opportunities. They have a very high

potential for tourism and their infrastructure is one of the most developed in the

region. They have two large paved airports and also have access to ports. With

major diversity in their cultures the local mall can help bond them as one. This

market analysis will hopefully increase the knowledge and economy of the Sub-

Saharan African Region.

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Works Cited

Countries and their Cultures. Every Culture. Web. 6 October 2014

<http://www.everyculture.com/Ge-It/Ghana.html>

Ghana. Energy Information Administration 2014. Web. 6 October 2014.

<http://www.eia.gov/countries/country-data.cfm?fips=gh>

Ghana. UNICEF 2013. Web. 6 October 2014.

<http://www.unicef.org/ghana/media_7807.html>

Index of Economic Freedom 2014." Index of Economic Freedom: Promoting

Economic Opportunity and Prosperity by Country. The Heritage

Foundation, 1 Jan. 2014. Web. 6 October 2014. <http://www.heritage.org/index/>

Market Research Library. U.S. Commercial Service, 2014. Web. 6 October

2014.<http://www.buyusainfo.net/adsearch.cfm?search_type=int&

loadnav=no.>

Senegal Energy Situation. Energypedia. Web. 6 October 2014.

<http://energypedia.info/wili/Senegal_Energy_Situation>

Takoradi Port. Ghana Ports. Web. 5 October 2014.

<http://ghanaports.gov.gh/tr/default>

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The World Bank. Working for a World Free of Poverty, 2014. Web. 6 October 2014.

<http://www.worldbank.org.>

The World Factbook. Central Intelligence Agency, 1 Jan. 2014. Web. 6 October

2014. <https://www.cia.gov/library/publications/the-world-factbook/>.

Why Niger might offer better opportunities for business than you think. How we

made it in Africa. Web. 5 October 2014.

<http://www.howwemadeitinafrica.com/why-niger-might-offer-better-opportunities-for-business-than-you-think/32905/>

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<Http://doingbusiness.org>

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