The African Growth Story Apex Brasil 25 August 2014
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Transcript of The African Growth Story Apex Brasil 25 August 2014
The African Growth StoryApex Brasil
25 August 2014
Africa’s economyThe continent’s rise is real
Source: IMF World Economic Outlook Database, April 2014.
The size of the African economy has trebled in a decadeGDP, current prices (US$b)
2000 2004 2007 2009 2011 2012 2013 2014* 2016* 2018*
362.4 568.0889.9 964.8
1,314.4 1,344.0 1,393.7 1,471.0 1,694.41,970.8
251.1285.3
447.1523.3
614.9 689.9 697.7 725.7
898.6
1,060.1
North Africa SSA* Estimates
613.5853.3
1,337.11,488.1
1,929.3 2,033.9 2,091.42,196.7
2,593.0
3,030.9
2,737.4
2,535.8
2,249.2
1,870.7
Note: these numbers exclude the recent rebasing of the Nigerian economy.
EY’s 2014 Africa attractiveness survey
Continued growth is expected over the next 5 years
Five year forecast GDP growth rates (%) indicated on a colour spectrum: Green (higher) to red (lower)
Sources: Oxford Economics; EY Growing Beyond Borders
In the context of a still weak global economy, Africa’s overall economic prospects remain robust.
5
Investor perceptionsA dramatic improvement
Respondents citing an improvement in Africa’s attractiveness as a place to do business
Attractiveness over the past year
Attractiveness over the next three years
60%73%
+4 pointsChange vs. 2013 survey
+1 pointChange vs. 2013 survey
Source: EY’s 2014 Africa attractiveness survey (total respondents: 503).
EY’s 2014 Africa attractiveness survey
Actual FDI numbers Strong growth in FDI projects in SSA
SSA 19.5% CAGR since 2007
Pre-crisis aver-age
(2003-07)
2007 2008 2009 2010 2011 2012 2013
225.6 213
524 486 460647 593 621164 196
352259
215
218181 129
North Africa SSA
FDI projects in Africa
EY’s 2014 Africa attractiveness survey
Source: fDi Intelligence.
East, Southern and West AfricaFDI growth spreads across
Source: fDi Intelligence.
EY’s 2014 Africa attractiveness survey
Southern AfricaCAGR: 14%Share: 33%
East AfricaCAGR: 23%Share: 17%
West AfricaCAGR: 28%Share: 17%
New FDI hotspots are emerging in Africa
CAGR (2007-13)
South Africa Mozambique Kenya Tanzania Uganda Rwanda Ghana NigeriaZambia
17%
33% 31%
40%
23%20%
6%
51%
19%
With investment increasingly spread across multiple sectors
Consumer-facing industries rise in prominence
Although investors expect resource-driven sectors to remain the highest potential industries over the next two years, in line with what
the actual numbers tell us, infrastructure and consumer-facing sectors are expected to increase in prominence.
Source: fDi Intelligence; EY analysis
However, Africa remains a challenging place to do business
Source: Kai Krause
Kellogg Africa Strategy Framework
Opportunities and risks do vary widely – African markets are diverse and fragmented
Note: A composite Risk index is indicated on a colour spectrum from green (relatively more positive) to red (relatively less positive).
A fact-based approach to selecting & prioritising markets in Africa is critical.
Source: World Bank; Transparency International; WEF Competitiveness Index; EY Growing Beyond Borders
Executing a growth strategy in Africa
Choices need to be made & multiple lenses applied
Presentation title
Coherent regional blocs can be configured in different ways, for e.g.:
1. Southern: Botswana, Namibia, Malawi, Mozambique, Zambia & Zimbabwe.
2. East: Kenya, Tanzania, Uganda, Rwanda, Burundi & Ethiopia
3. Anglophone West: Nigeria & Ghana
4. Francophone West: Cameroon, Cote d’Ivoire & Senegal
5. Central: DRC & Angola
6. Indian Ocean Islands: Mauritius, Reunion, Madagascar & Seychelles.
1
2
34
6
5
Urban hubs and clusters are the emerging markets of the future
Source: fDi Intelligence; EY’s 2014 Africa attractiveness survey (total respondents: 503).
Top 15 African states/provinces for FDI projects (Share of total FDI projects)
EY’s 2014 Africa attractiveness survey
Respondents who…
…believe Africa’s attractiveness has improved over the past year
73% 39%
…believe Africa’s attractiveness will improve over the next three years
87% 51%…have a specific strategy for investment in Africa
67% 10%
Established Not established
Established Not established
Established Not established
Source: EY’s 2014 Africa attractiveness survey (total respondents: 503).
EY’s 2014 Africa attractiveness survey
The perception gap remains starkEstablished vs. not established
”Over this year, we’ll announce US$1 billion investment into Africa. We’re here for the long term. Africa is going to grow. We need to be here and, as a big company, we can afford to take risks around that. We’re accustomed to taking the long-term view from elsewhere in the world — we’ve been in China for 25 years.” Jay Ireland, President and CEO, General Electric Africa
“We think that Africa is the next major emerging growth market,” Bruno di Leo, GM for Growth Markets, IBM.
Executing a growth strategy in Africa
Perspective is importantConsciously choose a glass half-full perspective