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UNDERSTANDING AFRICA’S CONSUMER DATA GAPS - Safiyo

UNDERSTANDING AFRICA’S CONSUMER DATA GAPS

UNDERSTANDING AFRICA’S CONSUMER DATA GAPS

Yes, it is common knowledge that there are significant data gaps on Africa’s consumers and largely in response to this problem, the market research industry on the continent has grown steadily since 2010. Mobile data collection start-ups are making it easier than ever to take fast opinion polls and even to maintain contact with respondents over time, allowing for periodic and interconnected polling. 

However, there is more to Africa’s consumer data gaps than data collection and opinion polls. There are other factors to consider. For instance, systems, accessibility and data collection methodologies matter. Also, the effects of lagging data collection and collation capacity on the ground cannot be overlooked.

Here’s a closer look at some of the factors that contribute directly and indirectly to Africa’s lingering consumer data gaps.

1 – LACK OF FORMAL DATA RECORDING AND COLLATING SYSTEMS

Across many of Africa’s markets, billions of cash transactions occur daily, creating billions of data points, but only a small amount, if any, of this data is captured. So, valuable data and information disappear immediately after transactions are concluded, leaving most African markets without enough records that can be mined or sorted meaningfully by businesses. This happens because many of Africa’s markets are still very informal. As a result, despite there being an abundance of data to be harvested, the formal systems needed to record such data are lacking.

Even when vendors document their sales and are able to issue customers with receipts, the utility of their data is limited as there are often no procedures for collating and harmonizing data from multiple vendors to arrive at a clearer picture of consumer purchase trends during a particular period or over an extended period of time. 

2 – DATA INACCESSIBILITY

To a large extent, some formal and regulated sectors such as the public sector, the telecoms sector and the banking sector, have aggregated data on their customers. The problem of accessibility arises because such data is often owned by the government agency or business who generates it and as a result, the data is not available for use by other businesses or investors. Indeed, it is very problematic that in a region where consumer data is already hard to come by, existing data could be out of reach.

The proprietary nature of certain kinds of customer data is not the issue. Nor is the fact that interested parties could be made to pay a fee in order to legally access such data where it is available. The issue is that most times, the modalities for such exchanges are not well known and pertinent issues relating to consumer rights and privacy, for instance, are often not clearly laid-out or well-understood by consumers and interested parties. 

3 – THE PREVALENCE OF ANALOGUE METHODS OF DATA COLLECTION

Most businesses and organizations in Africa still use very traditional methods to collect data, such as questionnaires and interviews. These paper-and-pen surveys are inefficient and often result in incomplete and unclear data. In the end, these kinds of surveys generate large volumes of poor quality data in a format that makes them difficult to manipulate and analyse in depth. 

The inefficiency of these traditional data collection methods is further compounded by insecurity, the remoteness of key population hubs and poor infrastructure. In addition, it is nearly impossible to produce the kind of timely and regular data businesses and policy makers require using these methods. Mobile data collection is increasingly being used by businesses and investors on the continent and this is great news. However, governments have been slower to embrace the opportunities afforded by mobile data collection and this should be cause for concern.

4 – TOP-DOWN VS. BOTTOM-UP APPROACHES

Institutions like the World Bank, IMF, and others have always provided macroeconomic forecasts of growth trajectories for Africa’s economies. However, experts on the ground are increasingly faulting these macroeconomic forecasts for being top-down and consequently, possibly out of touch with the realities of the African consumer. While this is not to say that such forecasts are entirely devoid of merit, it does draw attention to the limits of a top-down approach, which for Africa’s markets, may rely heavily on outdated consumer data and data sourced only from formalized sections of the economy. 

A bottom-up approach is the better way to provide investors with the kind of detailed and nuanced data they need to understand local consumers and local consumption trends as they emerge. Macroeconomic forecasts will also provide a more accurate picture when they incorporate a bottom-up approach to data collection.

5 – CONSUMER DATA PROTECTION LAWS

The role consumer data protection laws play in enabling the collection and exchange of data, though often overlooked, is very critical. These laws and their related regulatory frameworks influence how data collection and market research start-ups operate. They determine which modes of third-party data collection are legal and which are not, and may even limit the kinds of data or information collected and exchanged with third parties. This raises the question of what Africa’s consumer data protection laws look like within individual countries and regions.

Well, the overall legislative framework for consumer data protection has not been harmonized in most African countries. Indeed, less than half the countries in Africa have passed laws to protect consumer data. This obviously creates difficulties for the free flow of data within Africa and even impedes the transfer of data from Europe and America where data protection and regulation laws are well developed. As it is, privacy and data protection are still being discussed in many African countries and relevant laws where established are yet to be fully implemented. It is therefore challenging for businesses to comply with these laws because their legal obligations are simply not clear. It is also worth pointing out that this regulatory landscape will invariably influence how well Africa’s market research industry develops. 

CONCLUSION

The good news is that consumer research start-ups around the continent are playing a critical role in bridging these gaps for businesses, investors and governments. Like Survey54, they are reducing the cost of consumer data collection and data exchange by leveraging mobile technologies and expanding internet access across Africa.

However, there is need for African governments to improve their capacity to collect data in a fast and cost-effective way. Planning for sustainable growth and development depend on the availability of reliable and in-depth development data. Technological advancements are already supporting a great leap forward in this area. That said, there is need to put robust and adaptive regulatory frameworks in place.