africa investment potential
TRANSCRIPT
Africa – Investment Potential
Victor Kgomoeswana24 June 2010
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Contents
►Our African footprint►Signs of African potential►Some growth forecasts ► “African Challengers”► From the Africa Business Centre►Growth points►Key success factors for growth in Sub-Sahara Africa
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Our African Footprint
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“We know everything about how Africans die, but we know very little about how Africans live.”
Swedish Author and Self-Proclaimed African at HeartHenning Mankell
“African markets don’t come ready-made, they must be organised. Firms such as Coca-Cola, Guiness and Gillette use bicycles, pushcarts and even donkeys to take their products into
rural areas.”Author of ‘Africa Rising’
Vijay Mahajan
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Signs of African Potential
► The most reformed country in the world, according to the World Bank’s Doing Business 2010 is Rwanda, moving from position 143 to 67 in one year
► Mobile telephony on the continent grew by 49.3% between 2002 and 2007 (Asia, 27%)
► The continent’s energy crisis, infrastructure backlog, low food security, inept healthcare, mineral wealth and low Internet usage add up to phenomenal growth in business, investment and trade, e.g. SEACOM and WACS
► Corporate activity features more enterprises based in emerging markets and Africa, e.g. Bharti-Zain, Safaricom IPO in Kenya, Standard Bank-ICBC, RMB-China Construction Bank, etc.
► Economic integration is gaining momentum, e.g. East Africa has eliminated customs and import duties in January 2010
► With a few exceptions, the number of violent changes of governments has decreased – exceptions include Niger, Guinea and Madagascar
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BMI – Regional Real GDP Growth Forecasts
0
1
2
3
4
5
6
7
8
9
10
MENA E-A L-A EUR SSA US China
2010
2011
To 2019
*Sub-Sahara Africa does not offer the best growth rate, but the most sustainable trend of all emerging markets over the 10-year period, more stable than China, Emerging Asia (E-A) and Latin America (L-A)
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World Bank’s Real GDP Growth, 2007 - 2011
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0
2007
2008
2009
2010
2011
Sub-Sahara Africa
Developing Countries
Developed Countries
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The latest IMF forecast is that Sub-Sahara Africa will grow by 4.75% in
2010 - compared to the world’s 4.2% -and by 6% in 2011. This comes after the same region registered slower
growth in 2009, as opposed to negative growth in the developed
markets.
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BCG’s “African Challengers”, 2003 - 2008
0
5
10
15
20
25
30
S & P 500 Nikkei 225 DAX 30 AC
Annual Revenues
Operating Margin
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BCG’s African Challengers’ CAGR, 1999 – ‘09
-5
0
5
10
15
20
25
30
MSCI Emerging Markets S&P 500 African Challengers
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Real GDP % Growth
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World Bank’s Investor Protection Index, 1-10
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World Bank’s Doing Business In…2010
Real GDP % Change
Investor Protection Index
Starting a Business -Procedures
Starting a Business - Time in Days
Angola 15 5.7 8 68Democratic Republic of Congo 6 3.3 13 149
Ghana 6.2 6 8 33
Malawi 9.7 5.3 10 39
Mozambique 6.7 6 10 26
Rwanda 10.1 6.3 2 3
Uganda 9.1 4 18 25
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Growth points
Mining & Minerals-Amidst resource nationalism, mining will drive growth, as car sales figures pick up, consumer spending recovers and trade flows return-New mining economies and growth in some –such as Tanzania for gold – will play a role in even creating new industries downstream – e.g. beneficiation and manufacturing
Energy-Alternative/cleaner fuels the future as regions join hands to exploit abundant sunlight (the sunniest spot on land is in Niger according to NASA)- Africa Renewal, estimates only 20% of Africa’s people have access to electricity- The rivers of Africa have hydroelectric capacity to service 3 times the content’s consumption
ICT-EY Telecommunications Survey found that the industry fared better than most in the recession- In Africa, coming of a low base and on the back of WACS and SEACOM, ICT will do even better
Agriculture-Employs approximately 60% of the workers on the continent, though growth in agro-processing- Cash crops – tea, coffee, cocoa – still dominate, but expose the continent’s current account to international commodity price fluctuations
Infrastructure - Roads to connect economies, water and sanitation to improve health, power grids to secure supply for economic growth – but China has dominated investments in exchange for resources
Financial Services- Improving access for the unbanked, globalising the financial services industry, the overlapping of banking services with mobile phones/Internet, consolidation of the banking sector s, recovery of M&A activity/resumption of stalled projects
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“There is a huge amount of potential in Africa and we should remind ourselves of that.
However, much remains to be done to create a hospitable business climate”
Graham Mackay – Chief Executive of SABMiller
“Africa has huge potential and a comparative advantage [in agriculture]. We simply have to
invest in realizing that potential”
Paul Kagame – President of Rwanda
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Key Success Factors for Success in SSA*
1. Defining an appropriate strategy and business model2. Making trade-offs in order to share benefits & burdens3. Partnering with government4. Bulking up for critical mass5. Capturing the opportunity at the bottom of the economic pyramid6. Using expatriates effectively7. Flawless execution
*André Parker – “Africa: The Next Frontier” – Presentation from 2009
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Victor Kgomoeswana
Africa Business Centre
+27 11-772-5249
+27 83-603-4731