We expect sub-Saharan Africa, as well as India, to play starring roles in the emerging-market diets growth story, helping to overturn what has been a China-centric narrative. In this article, we focus on Africa. Although we expect caloric gains in India in the next decade to exceed China's impressive growth of the past decade, the outlook is even better for sub-Saharan Africa, where we expect caloric gains to increase by nearly the total caloric intake of the United States. Why do we view sub-Saharan Africa as fertile ground for diet growth?
Income is the main driver of caloric intake among emerging economies. But beyond GDP of roughly $15,000 per capita, calories tend to plateau at 3,100 to 3,500 kilocalories (kcal). Emerging countries occupy different positions on the income-calorie curve, implying dissimilar growth potential. With average caloric intake approaching that of rich countries, China's high growth days are behind it. The same is true of Brazil. By contrast, sub-Saharan Africa, India, and most of Southeast Asia are likely to see robust caloric intake gains in the decade to come.
Because the young and the old require fewer calories, age composition matters to caloric intake. By 2022, rapidly aging China will have an average caloric requirement on par with Japan today, while younger African, Indian, and Southeast Asian populations portend an age-based lift to caloric intake in the next decade (Exhibit 1).
Fertility rates in sub-Saharan Africa are quite high relative to the rest of the world; the U.N. forecast of medium fertility rates pegs cumulative population growth at 33% from 2011 to 2022. Combined with our outlook for per-capita caloric intake growth, total daily calories consumed in sub-Saharan Africa would grow by 942 billion kcal, or 45%. This is by far the greatest increase of any region we reviewed and roughly on par with the total caloric intake of the United States or that of Germany, France, the U.K., and Italy combined.
These are meaningful increases that will have significant consequences for global food and agriculture markets.
Where Sub-Saharan Africa Is Today
At about 2,440 kcal per capita per day, sub-Saharan Africa sits at the low end of the food development curve, but the region has made solid gains over the past couple of decades. Caloric intake growth was basically stagnant from 1960 to the late 1980s, with average daily intake per capita of just over 2,000 kcal. Since then, food intake has accelerated, growing at a cumulative 17% from 1990 to 2011, comparable to Brazil (20.8%), China (22.2%), and Indonesia (16%).
That's despite sub-Saharan Africa's GDP growth over the same period significantly trailing these other regions. Cumulative GDP growth per capita clocked in at 31.5% for the region from 1990 to 2011 compared with 43.1% for Brazil, a whopping 573.9% for China, and 96.5% for Indonesia.
This apparent disconnect between sub-Saharan Africa's rate of dietary improvement and its economic advancement is a function of the fact that while food consumption rises with income, it rises most strongly at the lowest income levels. Sub-Saharan Africa consists of 50 countries, including some of the poorest in the world. GDP per capita for the region was $3,171 in 2012 compared with a world average of $13,539. Another relatively poor country, India, comes in at $5,050 per capita, nearly 60% higher.1
As one would expect, people in sub-Saharan Africa spend a big chunk of their incomes on food. A United Nations paper2
in 2012 found that 19 countries in the region spent on average 64% of their expenditures on food. By contrast, Americans spend 6.6% on food, according to the U.S. Department of Agriculture. Even India spends only 25% of total consumption expenditures on food.
Also, richer households in sub-Saharan Africa spend a smaller percentage of their incomes on food; highest-income quintile households spent 53.4% of income on food, while lowest-income quintile households spent 69.9%. With such low income levels, the region would seem primed for big gains in caloric intake if the economies of sub-Saharan Africa can grow at a fast clip and people have more money to spend on food.
That's a big if
, however. Over the past decade, sub-Saharan Africa's GDP per capita has expanded at a compounded annual growth rate of 3.2%, considerably slower than other emerging regions such as China (9.9%) and India (6.3%). Further, the International Monetary Fund predicts sub-Saharan Africa's per capita GDP growth rate to decelerate over the next seven years at an annualized rate of 2.7%.
Although economic growth may decelerate, we think sub-Saharan Africa can match its recent growth rate in calories per capita through our forecast period, as the region has proved in the past that its diets can improve in the face of substandard economic growth.
Nigeria Serves as a Benchmark
Wealthier countries within sub-Saharan Africa, South Africa and Nigeria, offer glimpses into the possible dietary future of the region's poorer nations. With GDP per capita more than three times the region average, South Africa has the highest daily caloric supply in sub-Saharan Africa at just more than 3,000 kcal per capita. Excluding South Africa, the average for the region is about 2,425 kcal.
Because South Africa has its own unique history and development story, we believe Nigeria is a better benchmark for other sub-Saharan African countries. With a daily caloric intake of 2,724 kcal per capita in 2011, we think Nigeria represents what the region's caloric intake will look like in 2022, which we forecast to be 2,674 kcal.
Within Nigeria, there is a strong relationship between total household expenditures and food expenditures, as one would expect in a relatively poor country. Poorer states in Nigeria with lower total household expenditures (and thus likely lower incomes) spend less on food. In richer states, food expenditures increase steadily, but there does seem to be some of the topping-off effect (as we see globally), as total annual expenditure per capita reaches NGN 250,000 to NGN 300,000 (roughly $1,525 to $1,850).
If we apply the IMF's Nigeria growth forecast of GDP per capita to per capita household expenditure growth, the average Nigerian will go from spending about NGN 172,700 per year in 2010 to NGN 197,500 in 2022. We estimate that this would imply per-capita food spending of about NGN 127,000 per year, for cumulative increases in total and food expenditures of 14.3% and 13.8%, respectively.
Food Production Is Key
In our view, the drivers of caloric intake in sub-Saharan Africa are unique. According to the International Food Policy Research Institute, agriculture is the primary livelihood for about 65% of Africans and represents 30% to 40% of the continent's GDP. Because subsistence farming is so important to a wide population of Africans, caloric intake in the region depends more heavily on food production than in other more developed areas. Farmers in Iowa don't eat substantially less3
when there's a poor harvest in the state, but poor farmers in sub-Saharan Africa often do. For many living on the continent, food is a source of both nutrition and income. For this reason, food production--a function of yield and area harvested--is important to consider when projecting the region's diets.
Since 1990, food production per capita and caloric supply per capita have grown more or less in tandem. A sizable portion of the gains in food production per capita has come from cassava, a drought-resistant root. Since 1980, production of cassava has grown at a compound annual rate of 3.6%.
Future crop production gains will depend on a number of factors. First, gains in real income outside of agriculture would probably help spur investment in agriculture in the region. Farmers need better seeds, more fertilizer, broader irrigation, larger farms, better infrastructure, and more mechanization to begin catching up to the rest of the world's yields.