The Middle East and Africa has historically been one of the largest and fastest growing regions in the world in terms of child population, with sales of traditional toys and games rising at a compound annual growth rate of 11% between 2010 and 2015 to reach $2,8-billion.
However, the majority of these sales within the region are concentrated in wealthy countries like the United Arab Emirates and Saudi Arabia. This is because the markets that are contributing the most to the Middle East and Africa’s child population boost are economically poor countries in sub-Saharan Africa, where most incomes are used for non-discretionary spending, according to a Euromonitor International report.
While this trend of high-child-population/low-income countries is having a small impact on sales of toys and games in the Middle East and African is expected to continue through to 2020, signs suggest that things could change in the longer term as Sub-Saharan African countries begin to see greater gains in the middle class.
Population booms with limited impact
The population within the Middle East and Africa has been on a sharp rise, led by sub-Saharan African countries like Nigeria, Tanzania and Uganda. Overall, the 0-14-year-old population in the Middle East and Africa grew by 12% between 2010 and 2015 and is expected to grow by an additional 10% by 2020, all largely led by sub-Saharan African countries.
However, the largest and fastest growing markets for toys and games in the Middle East and Africa from 2010 to 2015 were largely economically-advanced regions like the United Arab Emirates and Saudi Arabia. These areas are not largely driven by population growth, but instead are driven by economic growth that promotes both domestic purchases and has helped develop many of these countries into major shopping centres.
This will likely continue through to 2020, as economically rich countries are once again expected to be the fastest growing and largest countries for sales of toys and games, while most countries with growing child populations will contribute minimally.
However, the population boom of sub-Saharan African countries is expected to continue well beyond 2020, with the child population growing substantially through to 2030. This means that, with the right economic developments, some countries with growing child populations could become markets with opportunities to sell traditional toys and games.
Long-run income changes
Incomes within many sub-Saharan African countries are expected to rise over 2015-2020. However, most of these markets will still largely be comprised of low-income households with disposable incomes of less than $10v000 per year and they will therefore have very constrained discretionary spending.
However, beyond 2020, some sub-Saharan African countries with growing child populations, in particular Nigeria, could start to see real gains in the sizes of their middle-income segments. These middle-income citizens will have disposable incomes above $10 000 and will be more able to afford to buy traditional toys and games for their households.
While they will likely have smaller households than low-income families, they will still be much larger than the global average and be a prime target for toy marketers.
Overall, this means that certain parts of Sub-Saharan Africa could follow a path set by some of the more advanced emerging markets of today, such as China, where population growth will eventually lead to more household formation in the future, which will be combined with increased incomes and urbanisation.
This will also mean fewer children per household and, consequently, a greater amount of discretionary income to spend per child. These combined factors could greatly boost toy spending, and establishing toy brands now may be crucial to capitalising on these future households.
Retail hurdles remain
Even if the middle class of sub-Saharan African countries does manage to achieve strong growth, one hurdle surrounding the translation of this growth into greater traditional toys and games spend is retail access.
Many sub-Saharan African countries have areas with limited access to traditional toys and games products due to current limited demand. While a growing middle class may entice retailers to stock more toys or even bring more full traditional toys and games retailers to the market, many sub-Saharan African countries are facing, or are near countries that are facing, major political instability that might limit such investments.
There may be ways around this issue, such as Amazon’s approach to India, which has seen the company make major investments to allow it to reach far-flung areas of the country.