africa - the new growth frontier
TRANSCRIPT
Africa Africa –– The New Growth Frontier?The New Growth Frontier?
Africa Expansion: Key ConsiderationsAfrica Expansion: Key Considerations
Hendrik Malan, Africa Operations Director
March 2012
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Hendrik brings a wealth of experience in designing and implementing growth
Hendrik Malan, Director of Operations - Africa
Frost & Sullivan
MBA from the Vlerick Business School, Belgium
BCom Hons (Business Management) from the University of Stellenbosch, South Africa
Today’s presenter
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• Hendrik brings a wealth of experience in designing and implementing growth
approaches across Africa for some of the top global companies.
• His experience spans Africa, Europe, Middle East and Asia and covers a
multitude of industries.
• His main areas of recent focus include geographic expansions, strategic
partnerships and commercial due diligence.
Agenda
� Introduction – Why Africa?
� Will Africa Provide Sustainable Growth Opportunities?
� What are the Key Challenges Companies Face When Expanding into
Africa?
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Africa?
� What are the Best Practices of Approaching Expansion into Africa?
• We have realised that all developed markets are susceptible to
the modern economic flu still doing the rounds
• Africa as a continent has shown little regard for the turmoil
developed markets have experienced over recent years
• This has CEOs and investors reconsidering the low base, and
paying attention to the fast growing opportunities the continent
Introduction – Why Africa?
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paying attention to the fast growing opportunities the continent
has to offer
• Even the biggest Afro-critics are starting to listen to the rhythmic
economic beat of the African drum
• The question is therefore raised by many at the moment – is
Africa’s growth sustainable?
� Introduction – Why Africa?
� Will Africa Provide Sustainable Growth Opportunities?
� What are the Key Challenges Companies Face When expanding into
Africa?
Agenda
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Africa?
� What are the Best Practices of Approaching Expansion into Africa?
Will Africa Provide Sustainable Growth Opportunities?
Economic growth is up and is
Egypt
Nigeria
Algeria
Morocco
Sudan
GhanaEthiopia
Somalia
Chad
Libya
Mali
Average Expected GDP Growth (Africa), 2011-2016
Tunisia
Niger
Mauritania
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expected to stay up.> 7.0% Growth
5.0% > 7.0% Growth
3.0% > 5.0% Growth
Note: Chart reflects
average, yearly GDP growth
from 2011-2016
South Africa
Angola
Kenya
Ghana
NamibiaBotswana
Madagascar
Zimbabwe
MozambiqueZambia
Tanzania
Democratic Republic of Congo
Cameroon
Gabon
Uganda
Will Africa Provide Sustainable Growth Opportunities?
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Inflation is lower and stabilising.
719.3
652.2
751.0
344.5
374.4
446.9
36.6
42.1
55.2
38.1757.43
69.4
1950 2010 2050
Life Expectancy at Birth (Years)
Years
Will Africa Provide Sustainable Growth Opportunities?
The workforce is increasing.
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1,022.2 1,278.2
2,191.6
4,164.3
4,565.5
5,142.2
738.2
744.2 590.1
652.2 344.5
2010 2020 2050Africa Asia Europe Latin America North America Oceania
Po
pu
lati
on
(M
illio
n)
Source: UN Population
Estimates and Frost & Sullivan
Total Trade with Africa (Africa) 2001, 2005 and 2010
65% of exports to BRICS are
Africa’s BRICS and Global Trade Split (Global), 2001 and 2010
Will Africa Provide Sustainable Growth Opportunities?
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BRICS are oil exports
Source: International
Trade Commission
and Frost & Sullivan
Africa’s trade partners are changing.
Other Driving Forces:
Budget deficits are down1
Infrastructure investment is up2
Urbanisation is up3
Armed conflicts are down4
Will Africa Provide Sustainable Growth Opportunities?
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PE, corporate finance and structured finance
up
5
Regulatory reform is up6
Privatisation is up7
Economic diversification is up8
Global trade & financial institutions sentiment up9
Will Africa Provide Sustainable Growth Opportunities?
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All indications are therefore that the African lion is about to start
roaring, cementing its place in the global economy.
Agenda
� Introduction – Why Africa?
� Will Africa Provide Sustainable Growth Opportunities?
� What are the Key Challenges Companies Face When Expanding into
Africa?
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Africa?
� What are the Best Practices of Approaching Expansion into Africa?
Restraining Forces:
The growth is still of a low base 1
The development still fragile 2
Massive diversity 3
Low intra-regional trade 4
What are the key challenges companies face?
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Lack of credible data 5
Not cosy and uncomfortable 6
Many teething problems 7
Low economic value add 8
You truly need a good sense of adventure!
What are the key challenges companies face?
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Agenda
� Introduction – Why Africa?
� Will Africa Provide Sustainable Growth Opportunities?
� What are the Key Challenges Companies Face When Expanding into
Africa?
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Africa?
� What are the Best Practices of Approaching Expansion into Africa?
What Can Be Considered Best (And Worse) Practice for Entering the African Market?
Objectives workshop
Standard Geographic Expansion Process
Objectivesworkshop
Short listing of countries
Market assessment
Market entry options
Roadmap
Short listing of countries
Market assessment
Market entry options
Roadmap
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Output:
Expansion
objectives
Output:
Stakeholder
mapping
Output:
Development
of metrics
Output:
Development
of model
Output:
Selection of
shortlisted
markets
Output: Market
size and
dynamics
Output:
Customer
trends
Output:
Competitive
assessment
Output:
Penetration
options
Output:
Opportunity
identification
Output:
Ranking of
opportunities
Output:
Implementation
roadmap
Output: Value
chain
assessment
Output:
Organisational
alignment
What is the size of your canvass?✓ 11
Are we there yet?✓ 22
It’s not an arm’s length affair…✓ 33
To compete like a local, you have to be a local!✓ 44
What Can Be Considered Best (And Worse) Practice for Entering the African Market?
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The big G✓ 55
We have to do what…?!✓ 66
I know people who know people✓ 77
• There is a significant gap between actual and perceived risk in
Africa – this spells opportunity
• Despite the low base, the growth experienced by the continent
attractive and it appears to be more sustainable than in the past
• This new ‘African Story’ is driven by consumption, a growing
middle class, urbanisation and strong infrastructure needs
Conclusion
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middle class, urbanisation and strong infrastructure needs
• The African renaissance is not yet here, but the writing is on the
wall
• You will have to be well entrenched by the time this hits to be
able to capitalise on it
• The paradigm is shifting from ‘should we invest in Africa’ to
‘managing risk of not being in Africa’
Next Steps
Develop Your Visionary and Innovative SkillsGrowth Partnership Service Share your growth thought leadership and ideas or
join our GIL Global Community
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Join our GIL Community NewsletterKeep abreast of innovative growth opportunities
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For Additional Information
Christie Cronje
Corporate Communications
+27 (0)21 680 3566
Hendrik Malan
Operations Director Africa
+27 (0)21 680 3260
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