BATTLE OF THE SUPERMARKET SUPPLY CHAINS IN SUB-SAHARAN AFRICA: CHALLENGES AND OPPORTUNITIES FOR AGRIFOOD SUPPLIERS

by Dave D. Weatherspoon, David Neven, Hikuepi B. Katjiuongua, Richard Fotsin, Thomas Reardon

UNCTAD, December 2004

Researchers have only recently drawn attention to the rapid increase in the number of supermarkets in Africa. Weatherspoon and Reardon (2003), focused mainly on supermarket diffusion in South Africa and Kenya. They analyzed the spectacular gains by domestic supermarkets chains in South Africa and Kenya and, the first wave of foreign direct investment (FDI) by these chains to other countries in the region, mainly in Eastern and Southern Africa. They also described the concomitant changes in procurement systems of supermarkets and induced market change in South Africa.

Those findings upset the traditional image, held by development practitioners, policymakers, and food product suppliers that supermarkets in Africa merely occupy a tiny niche market for the richest consumers. Moreover, their research showed that there is rapid consolidation of procurement systems of supermarkets in South Africa and they are quickly extending northward in sub-Saharan Africa, implying major opportunities but also sharp challenges for producers wanting to be included in the dynamic urban markets, which are quickly being taken over by supermarkets.

At issue is how the procurement system change - and thus induced food market  hanges and challenges to suppliers, can be generalized in other parts of Africa. This report takes a step towards exploring this issue. It examines a spectrum of four countries, from most to least developed in terms of the supermarket sector - South Africa, Kenya, Zambia, and Uganda - and looks in depth at the procurement systems changes in all of them.

The fieldwork for this report was undertaken in those four countries from March-June  f 2003, with interviews in each country with all the large and medium-sized supermarket chains and, in each country roughly 75 per cent of the small supermarket chains, 10-20 per cent of the independent retailers, two to three wholesalers, two to three processors and five to ten public wholesale and retail market sellers. Consumers, mainly in the capital cities, as well as roughly ten to fifteen producers of various size per country were also interviewed.

Each Chapter of the report focuses on the findings in the four study countries, and  lso includes references to other parts of Africa. Chapter2 focuses on patterns of diffusion of supermarkets by size. Chapter 3 analyzes changes in the procurement systems of supermarkets, in particular with respect to the organization and institutions of the systems used. Chapter 4 examines the implications for supply  chain participants. Chapter 5 concludes with policy implications.

Full paper available at http://www.unctad.org/en/docs/ditccommisc20035_en.pdf