Middle class boosts direct sales

Dar es Salaam. Tanzania’s growing middle class stratum is changing the way people trade, with players in the direct selling arena, coming to grab the opportunities that come with the growth.

The latest entrant is a prominent Asian direct selling company, QNET.

Despite differences in defining who belongs to the middle class and who does not, many believe in the globally accepted definition that simply refers to persons who spend between $2 and $20 a day.

According to the African Development Bank (AfDB), East Africa’s midle class population stands at around 29.3 million, representing an average of 22.6 per cent of the population, with Kenya’s middle class population standign at 44.9 per cent of the total population, 18.7 per cent in Uganda, 12.1 per cent in Tanzania, 7.7 per cent in Rwanda, and 5.3 per cent in Burundi.

With the emerging middle class market, technological innovations and a relaxing of restrictions on capitalism, more people begin to discover the benefits of a market-based economy, resulting into entrepreneurship in Tanzania and across the region.

The direct selling mode of trading provides companies an alternative channel for the distribution and sale of products and or services directly to customers, away from a traditional retail location. The industry uses a variety of distribution methods; multilevel marketing and network marketing being two of them.

Speaking during the launch of QNET agency in Tanzania recently, the Permanent Secretary in the Ministry of Industry, Trade and Investment, Dr Adelhem Meru, said the coming of such companies was a clear testimony to the fact that they have confidence in the prevailing business environment in the country and an available market for its products and services. “It is gratifying to note that the suitable environment has been facilitated by the sound policies that the government has put in place that encourage local and foreign direct investment. It is also testimony to the speed at which the economy grows and thus guaranteeing sustainable opportunity for business growth and the prevailing peace in the country which is a panacea for any entrepreneurial development,” he said.

The QNET’s product offering include a wide range of lifestyle and wellness products such as personal care, nutrition, cosmetics, home care and body, water energies, jewelry and watches as well as holiday packages.

Present at the event, the Deputy Minister for Health, Community Development, Gender, Elderly and Children, Mr Hamisi Kigwangalla exuded confidence that the products meet the standards laid down by Tanzania Food and Drugs Agency (TFDA) and Tanzania Bureau of Standards (TBS).

“It is the policy of the government to make sure Tanzanians enjoy quality products and we are confident QNET products meet the strictest standards set by the ministry of health, TFDA and TBS. At the ministry, we are ready to support companies that are of good will to Tanzania,” said Kigwangwala.

Direct Selling is an international business concept and is defined as the sale of a consumer product or service, person-to-person, away from a fixed retail location. This model of sales is more than 100 years old and originated initially in the USA. Currently, it is a $180 billion industry globally with nearly 90 million people involved in it.

According to an advisor to the QNET board of directors, Mr David Sharma, the agency will work closely with local government officials and authorities to create more entrepreneurial opportunities for the local community.

People involved in direct selling earn commissions on sale of products and services calculated on the basis of the compensation plan of the company they represent. The direct selling model offers a means for individuals to generate an income through self-employment and hard work. Network Marketing is one of the most popular methods of Direct Sales.