tendencias y oportunidades en áfrica

TRENDS AND OPPORTUNITIES IN AFRICA

Rahim Ahamad

Colombia, November 2013

EXECUTVE SUMMARY

INTERWAY GROUP

AFRICAN CONTINENT

OVERVIEW

ANGOLA

OVERVIEW

ECONOMIC ENVIRONMENT

TRENDS AND OPPORTUNITIES

MOZAMBIQUE

OVERVIEW

ECONOMIC ENVIRONMENT

TRENDS AND OPPORTUNITIES

SÃO TOMÉ E PRINCÍPE

OVERVIEW

www.codisa-interway.com

WHO WE ARE

Founded in 2003, the INTERWAY group is a reference in

the markets where operates.

Managed by a high profile team with vast international

experience, namely in Sub Saharan African countries,

started historically operating under the name of CODISA

ANGOLA S.A., considered one of the most dynamic and

innovative companies in Angola.

Currently the group is expanding their business operations

in countries such as Angola, Moçambique and São Tomé e

Príncipe.


WHAT WE DO

WORKSPACES

OPTIMIZATION

LOGISTICS

SOLUTIONS

TECHNOLOGY

SHOPPING

CENTER

MANAGEMENT

AND PROMOTION

LUXURY

RETAIL

HEALTH

ARCHITECTURE

AND INTERIORS

CORPORATE

& BUSINESS

CONSULTING


AFRICA OVERVIEW

PEACE IS NOW THE NORM ACROSS THE AFRICAN CONTINENT

African GDP growth overtook the global average since 2001 and continues to accelerate with the 6% growth

barrier being breached by many nations.

Countries in armed conflicts: 1970 = 20; 2010 = 3


AFRICA OVERVIEW

Source: Mckinsey

$1,6 Trillion

$860 Billion

360 Million

60%

52

Africa collective GDP in 2008,

Roughly equal to Brazil or Russia

The number of new mobile phone subscribers

since 2000

Africa’s share of the world total amount of uncultivated

arable land

The number of cities with more than 1 million people each

NUMBERS – PAST AND PRESENT

20 African Companies have Revenues of at least 3 billion USD each.

Africa’s combined consumer spending in 2008


AFRICA OVERVIEW

146 per 1000 Infant mortality vs 266 p/ 1000 in1960

63% Primary school completion vs 50% in 1999

71% Youth literacy rates vs 64% 1985–1994

52 Life expectancy in 2007 vs 41 years in 1960

THE NUMBERS – PAST AND PRESENT

Despite the development, sectors like health and

education have not improved as fast to lift living

standards more broadly.

Africa’s quality of life metrics are noticeably improving

African governments have significantly improved macroeconomic stability and have been

implementing good measures of Governance

Source: Mckinsey


AFRICA OVERVIEW

THE NUMBERS TOMORROW

$2,6 Trillion

Africa collective GDP in 2020

$1,4 Trillion Africa’s combined consumer spending in 2020

1,1 Billion The number of Africans with working age in 2040

120 Million The number of African Households with discretionary

income in 2020

50% The portion of African living in cities in 2040

A new private sector-driven African economy is emerging. Africa’s wealth in natural resources which benefited

Africa’s growth up to 32% from 2000 to 2008, while the remaining two thirds came from other sectors such as

Telecommunications, Banking, Retailing and Construction.

Source: Mckinsey


AFRICA OVERVIEW

PROMISING LONG-TERM GROWTH PROSPECTS

• African consumption has grown by US$275bn since 2000 – similar to Brazil and more than

India. The consumer goods sector is already more than 50% of all industries.

• African consumption life-cycle evolves towards (Less food) and (more goods) which is a result of

growing wealth among the African population.

30 40 45

73 79 82

70 60 55

27 21 18

Índia Africa China Europe Latina America North America

RuralUrban

594

Share of Population by Region 2010 (%)

100% millions of people

1,219 1,032 1,351 830 349


SUB SAHARAN AFRICA OVERVIEW

• Sub Saharan Africa is the geographical region

south of the Sahara desert

• The Northern Africa Region is the one normally

associated with the Arab World

• The GDP of the Sub Saharan region is growing at

a pace of around 5% against the world average of

3,3% a year

Source: Mckinsey



• Sub-Saharan Africa displays the most linguistic

diversity of any region in the world. The region

contains more than 1000 languages

• Tribal culture is still very important in African culture

and very determinant in relationships between

political groups and countries

• Business relationships are built slowly and trust

between the parties is crucial Niger-Congo A

Niger-Congo B (Bantu)

Afro-Asiatique

Nilo-Saharien

Khoi-San

Austronésien

0% 2% 4% 6% 8% 10% 12% 14% 16%

Sierra Leone

Cote D'Ivore

Rwanda

Ghana

Mozambique

Zambia

Congo, Dem. Rep.

Tanzania

Angola

Nigeria

Gabon

Benin

Namibia

Kenya

São Tomé e Principe

Cameroon

Guinea

Congo, Rep.

Uganda

Madagascar

Botswana

South Africa

Equatorial Guinea



GDP GROWTH RATE 2012

Source: World Bank

4 %

6,8 %

7,4 %



• Angola and Mozambique are growing at 6,8% and 7,4% respectively.

13

12

10

9

6

5

5

2

2

6

24

Whoesale and…

Agriculture

Transport,…

Manufacturing

Financial…

Construction

Real Estate,…

Tourism

Utilities

Other Services

Resources• The main Growth drivers in the African Region are

the Resources, Wholesale and retail, Agriculture and

Transport and communications sectors

• There is also a severe shortage of power supply

across the markets. The 48 sub-Saharan countries,

which have a combined 800 million in population,

produce roughly the same as Spain, with 45 million in

population

• FBN Capital in Nigeria said that there is no capital to finance the 8 billion usd needed yearly, for the

next 10 Years, for the power sector in that country alone.

GDP GROWTH RATE 2012



E N E R G Y

• 50% is rural and with no access to electricity

• Africa generates 47 GW of electricity, less

than 0.6% of global market share.

Many countries are affected by power shortages

• The region has the potential to generate 1,750 TWh of energy, of which only 7% has

been explored

.



M E D I A

• Radio is the major source of information in

Sub-Saharan Africa.

• Television is the second major source of

information. Because of power shortages,

the spread of television viewing has been

limited. Eight percent have television, a total

of 62 million.

.



I N F R A S T R U C T U R E

• It has been argued that Infrastructure investments contributed to more than half of Africa's

improved growth performance between 1990 and 2005 and increased investment is necessary

to maintain growth and tackle poverty.

• In transport and energy a majority of investment is state spending; in ICT and water supply and

sanitation, the private sector represents the majority of capital expenditure.

.

• Less than 40% of rural Africans live

within two kilometers of an all-season

road, the lowest level of rural

accessibility in the developing world.



O I L A N D M I N E R A L

.

• The region is a major exporter to the world of

gold, uranium, chrome, vanadium, antimony,

coltan, bauxite, iron ore, copper and

Manganese.

• Sub-Saharan Africa has been the focus of an

intense race for oil by the West, China, India,

and other emerging economies, even though

it holds only 10% of proven oil reserves, less

than the Middle East.



• The OECD says Africa has the potential to become

an agricultural superbloc if it can unlock the wealth

of the savannahs by allowing farmers to use their

land as collateral for credit

• In some countries ownership of agriculture land is

still challenging for foreigners and there are no

proper records of land titles

A G R I C U L T U R E

.



• The life expectancy at birth is about 55 years and it has

been growing in the last years

• However access to quality health care services and

medicines is still very challenging

H E A L T H

• Logistics in the region is very challenging, except the good

infrastructures in South Africa, due to lack of infrastructure

in the transport area

• Costs of transports is estimated in being 50% of the final

retail price in some landlocked countries or in the interior of

large countries.

L O G I S T I C S


ANGOLA OVERVIEW

Population: 20 million (2012 estimates)

Language : Portuguese

Nominal GDP: 118 Billion USD

9,9%

0,2%

0,8%

47,1%

5,8%

7,7% 0,1%

21,2%

7,2%

Agriculture Fishing and related Diamonds and others

Oil Industry Construction

Energy Commerce Other

GDP COMPOSITION 2011


ANGOLA OVERVIEW

Democracy: Stable since 2002. Presidential elections have been abolished (the president is

appointed by the most voted party) and the role of prime minister has been replaced by that of a

vice president directly under the president’s authority

Current GDP 2011E: 104,4 Bn USD (Africa’s 5th largest economy and 3rd in Sub-Saharan Africa)

Current p/cap GDP 2011E: 5.336,7 USD

Integrated in the SADC: A potential market of 266 Mn consum

* 10+ million people countries, excluding conflicted Iraq and Afghanistan

World’s fastest growing country worldwide between 2001 and 2010 (11% CAGR)*


ANGOLA OVERVIEW

Economic stability: recently secured a S&P LT rating of BB-

Stronger non-oil economy: 52,7% GDP weight in 2010 compared to 43,9% in 2002

Vast natural resources: 35 of the 45 most important minerals in world trade

Improvements in business climate: Approval of several fiscal & customs incentives to private

investment; approval of anti-money laundering and anti-corruption legislation

Capital Markets: stock exchange expected to open in 2013/14. Angolan Interbank market has now

its own reference rate: LUIBOR

* 10+ million people countries, excluding conflicted Iraq and Afghanistan

10+ million people countries, excluding conflicted Iraq and Afghanistan


ANGOLA OVERVIEW

• The share of the GDP has dropped from oil and the main beneficiaries were Agriculture, Energy,

construction and industry

7,3%

0,3%

2,3%

55,7%

4,8%

4,3% 0,1%

16,8%

8,3%

Agriculture

Fishing and related

Diamonds and others

Oil

Industry

Construction

Energy

Commerce

Other

9,9% 0,2% 0,8%

47,1%

5,8%

7,7% 0,1%

21,2%

7,2% Agriculture

Fishing and related

Diamonds and others

Oil

Industry

Construction

Energy

Commerce

Other

% of GDP 2006 % of GDP 2011

ANGOLA – ECONOMIC ENVIRONMENT



• About 50% of the economy in 2009 was related to the

oil sector. The Angolan market got a big shock in 2009

due to the drop of oil prices.

• Since 2009 the governmental focus changed and the

objective is to turn the Angolan economy into a more

resilient one, diversifying the economy away from the

oil sector



• Several steps are being given to improve the conditions in the market

:

• Special conditions are given to exporting companies that are

establishing in Angola

• Investments in the Energy sector to reduce the power outages

and increase capacity needed for industry and for economic

development in general

• Investments in the transport sector through the construction of

Roads, Railways and Ports to increase the logistical capacity

• Development of a logistical plan to improve the storage of

agricultural products throughout the country

• Decrease the dollarization of the market and rely more on the

national currency to improve the credit creation in the financial

sector


ANGOLA – TRENDS AND OPPORTUNITIES

Housing

There is plenty offer in the luxury housing market and there are

government programs to create affordable housing for the lower

classes. The middle class however doesn’t have a big offer at

affordable prices.

Only now there becoming available house loans from the banks but

still the houses available are very expensive.

Health care

The life expectancy at birth is at 55 years and access to medical

conditions, specially in the rural areas is very basic or inexistent. There

are some private clinics available but very expensive.

The most complicated operation procedures and clinical specialties are

normally done in Portugal or South Africa, by the upper and middle

classes.

EDF SKY RESIDENCE



Education

The education level of the population is still very low. One of the most

challenging aspects that companies face working in Angola is the quality of

the people.

There is a lack of quality private schools at prices aimed at the middle class.

Good technicians are very expensive and they change companies quite often

at a better offer. There are needs for technical schools in the following areas:

Leisure

Restaurants and bars are the main leisure attraction but there is still

lacking a offer for the middle class customer. Also there are very few

tourism done inside the country aimed at the Angolan costumer.



Agriculture and Agro processing

Agriculture is being one of the fastest growing sectors of the economy.

Angola has vast arable lands, although some are still being demined

from the civil war.

Agriculture and food products represent 15% of the imports. The

logistical network is still deficient but investments are being made to

improve. There are already several retail chains of supermarkets where

to flow the products.

Energy

The market for energy services and products will be very interesting

because this will be one of the mains focus of investment of the

government for several years. Angola is very deficietary in power

producing to meet its needs. It will need continuous investment to be

able to sustain the projected growth.



Logistics

The logistic infrastructure in the country is very challenging, specially in

the interior of the country. Distribution country wide is done by each entity

investing in warehouse capabilities, which is not possible for most of the

companies.

There is space for logistic hubs for region integration. This will be

enhanced in the future with the investment being done in roads and

railways.

Information and Communication Technologies

Regarding the communications there are already large players in the market and often is a very

controlled market. However there are still opportunities for service providers for the network expansion.

The institutions and most of the companies operating in the market are still very low users of

information technologies. There has been a effort from the government and large companies to

increase their investment in Information technologies for gains in efficiency and control.


MOZAMBIQUE OVERVIEW

• Population: 24 million (2011 estimates)

• Language: Portuguese

• Nominal GDP: 14,6 Billion USD

29,7%

1,5%

13,7%

5,0% 2,9%

16,4%

10,1%

9,8%

3,8% 7,2%

GDP Composition (2008)

Agriculture

Mining and quarrying

Manufacturing

Electricity, oil, gas & water

Construction

Wholesale & retail trade,restaurants, hotels

Finance, insurance, realestate, etc.

Transport andcommunications

Public administration anddefense


MOZAMBIQUE OVERVIEW

• The main growing sectors in the last years have been Agriculture, Services and Construction

• The mining sector recently had a large growth and it is expected to be one of the main drivers of

the economy. The discovery and the exploration of large reserves of coal and Gas are the main

contributors

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

175%

200%

225%

250%

2001 2002 2003 2004 2005 2006 2007 2008

GDP Growth by Sector

Agriculture Mining and quarrying Wholesale & retail trade, restaurants, hotels Transport and communications


MOZAMBIQUE – ECONOMIC ENVIRONMENT

Here the main bulk of investment is being made by private

companies such as VALE, RIO TINTO, ENI, ANADARKO and

GALP. The government has been privatizing also the railway and

port operations to private entities, because of the lack of

resources to invest, maintain and operate on their own.

Some steps have also been taken to create a free zone in Nacala

to try to capture investments in industries. Some benefits are

given to companies who setup their facilities in there.

The economic reality of Mozambique is very different from the one in Angola. The main contributor for

the GDP are the base metals and the Minerals, specially the Aluminum factory Mozal.

However the country is still far from having an economy that generates a surplus and a more stable and

strong economy.

In the past years the bet has been to develop the large resources deposits of Coal and Gas, which

presently has been bringing into the country large investments and the surrounding business activity.

The main areas of investment are Tete, Nacala, Pemba and Palma.


MOZAMBIQUE – TRENDS AND OPPORTUNITIES

Housing

The main driver in the housing industry has been the expat demand that

are moving into Mozambique. The prices have risen considerable in the

last years due to lack of offerings. This is more acute in the cities outside

Maputo.

Reconstruction works or new units are being done to catch up with the

demand.

Most Mozambicans cannot afford the prices of a house, but the middle

class is starting to have purchasing power although in a very limited way.

Health care

The life expectancy at birth is at 52 years and access to medical conditions, specially in the rural

areas is very basic or inexistent. In Maputo, the more wealthy people and even in the middle class, it

is quite common to have medical exams in South Africa, due to the proximity and quality of the

medical services

In the more remote areas, normally where the multinationals operate, there are clinics sponsored or

owned by the private companies to give first response medical services public.

Edf. Polanas


MOZAMBIQUE – TRENDS AND OPPORTUNITIES

Logistics

The logistic infrastructure in the country is very challenging, specially in the interior of the country.

Distribution country wide is done by each entity investing in warehouse capabilities, which is not

possible for most of the companies.

There is space for logistic hubs for region integration. This will be enhanced in the future with the

investment being done in roads and railways.

Information and Communication Technologies

Regarding the communications there are already large players

in the market and often is a very controlled market. However

there are still opportunities for service providers for the network

expansion.

The institutions and most of the companies operating in the

market are still very low users of information technologies. There

has been a effort from the government and large companies to

increase their investment in Information technologies for gains in

efficiency and control.

Accelerating the Growth of Mobile and

Agribusiness Enterprise.

The institute of Information

Technology of Mozambique


SÃO TOMÉ E PRINCÍPE OVERVIEW

• Population: 187 Thousand (2012 estimates)

• Language : Portuguese

• Nominal GDP: 250 Million USD

15,7%

6,9%

8,9%

2,4% 7,6%

33,3%

19,7%

5,4%

GDP Composition (2008)

Agriculture

Mining and quarrying

Manufacturing

Electricity, oil, gas & water

Construction

Wholesale & retail trade,restaurants, hotels

Transport andcommunications

Other services


SÃO TOMÉ E PRINCÍPE OVERVIEW

• The main growing sectors in the last years have been Agriculture, Oil & Gas and Retail and

services.

• The Oil & Gas sector is expected to be one of the main drivers of the economy in the future. The

discovery and the exploration of large reserves of Oil jointly with the other neighboring countries, will

be have a very high impact

-20%

-10%

0%

10%

20%

30%

40%

50%

2002 2003 2004 2005 2006 2007 2008

Agriculture Electricity, oil, gas & water Wholesale & retail trade, restaurants, hotels

GDP Growth by Sector


STRATEGY FOR BUSINESS SUCCESS IN AFRICA

Permanent Local Presence to Develop Relations and Market Knowledge

Define a Strategic Planning Before Invest, Supported with Reliable Market Research

Strong Financial/Investment Support in any Activity

Select Markets and Business Areas with Low Competition

Establish Strong and Strategic Local Partnership

Understand and Respect the Local Social and Cultural Costumes/Traditions

TRENDS AND OPPORTUNITIES IN AFRICA

THANK YOU

Rahim Ahamad

Colombia, November 2013

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