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Emerging Market GrowthEmerging Market Growth--Executive InsightsExecutive Insights
A Real World Look into the Opportunities in A Real World Look into the Opportunities in Africa’s FastAfrica’s Fast--Growing Economic Powerhouse, Growing Economic Powerhouse,
NigeriaNigeria
Strong Economic Growth Continues in Sub-Saharan Africa
Nigeria
Kenya
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GD
P G
row
th (
%)
GDP Growth, Select Developed, Emerging Countries and Sub-Saharan Africa, 2012-2014
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GDP Growth 4-6% (2013)
GDP Growth >6% (2013)
GDP Growth 2-4% (2013)
Mozambique
Angola
South Africa
Estimated GDP Growth
2014
2012 2013 2014
Growth Drivers
• Robust domestic consumption and demand
• Angolan oil expansion
• Nigerian power sector reform
• Resource-rich economies and beneficiation
Sources: IMF and Frost & Sullivan analysis
CAUTION: Abundant Opportunity Ahead
Political Considerations
• Political instability declining – providing more opportunities and opening new markets
• 15 active wars in 1990 to only 5 in 2010
Trade
Effects of the Financial Crisis
• Direct effect of global financial crisis in 2009 and 2012
on African banks was relatively small - because of their low
degree of financial integration into global markets
• The major impacts were the collapse of commodity
prices, declines in workers remittances, declines in FDI
and a fall in export volumes
• Commodity prices have rebounded boosting export
values
Africa’s Economic ResilienceMost of Africa’s financial markets remain relatively unaffected by the 2012 Euro Zone crisis
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Source: International Trade Commission and Frost & Sullivan
Economic Growth
• Growth is highest in eastern Africa
(approximately 8.2 per cent), followed by
southern Africa (6.7 per cent), western Africa
(5.5 per cent), north Africa (5.4 per cent) and
central Africa (4.9 per cent)
• During the pre-crisis period (2005-2008), oil-
exporting countries achieved the highest
growth
Trade
• Approximately 80.0 per cent of Africa’s
exports are oil, minerals and agricultural
goods
• The EU and US receive nearly two-thirds of
all exports
• Intra regional trade is low – 10 per cent of
total African trade
• As global oil and commodity prices rise,
Africa’s terms of trade will improve
The Key to Sustainable African Growth - BeneficiationThrough technology development and financing beneficiation, centres can be created that will increase the value of the exported goods by 5 to 10 times the raw material price
Ghana is Africa’s second largest gold producer with no gold refining capability. It is
expected that Ghana will become the gold refining
capital of West Africa
Nigeria and Angola are the two largest exporters of oil in Africa.
Mozambique has the potential to be one of Africa’s largest sugar
Zambia is Africa’s largest copper producer. Copper is mostly exported in
bulk format after basic refinement. A number of companies are currently
investigating the potential for copper product manufacturing in Zambia
Top Countries on the Continent That Will Benefit From Resource Value Add Activities, Africa, 2012
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largest exporters of oil in Africa. Yet they import most of their
refined product. These countries will grow their value through petrochemical beneficiation
South Africa is the world’s largest platinum producer but has limited platinum catalyst
manufacturing capability. With a strong Automotive industry located in SA, there is
significant opportunity for Platinum beneficiation
Botswana is a major producer of raw diamonds. However, very little value is added to the stones prior to export. Botswana is currently developing a polishing industry
be one of Africa’s largest sugar cane producers, and the country is actively investing in bio-fuel
capability to beneficiate this energy resource
Source: Frost & Sullivan analysis
Nigerian Government Development Initiatives - Vision 20:2020The economic planning initiative targets specific sectors for investment and development through policy
Stimulation of domestic and foreign trade to optimize
production activities
• Informal and dominated by simple technologies
• Crop production accounts for 90% of agricultural production
• Promotion of technology to improve yield• Focus on agro-processing
• Strong policy focus on improvement of health
• Provision is made for private public partnerships to provide healthcare
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Nigeria, Vision 20:2020
partnerships to provide healthcare services
• Local manufacture of pharmaceuticals and vaccines in Vision 20:2020
• Strong policy focus on increasing manufacturing to create greater economic diversification• Policy is targeting the establishment of industrial zones, economic clusters and incubators
Priority sectors in Vision 20:2020
• Chemicals and pharmaceuticals • Non-metallic mineral products
• Basic metal, iron and steel and fabricated metal
• Food, beverages and tobacco
• Textiles, wearing apparel, carpet, leather/leather footwear
Infrastructure SectorTotal Investment
($ Million)
Road 6,480.0
Rail 6,400.0
Airports 550.0
Ports 6,000.0
Current and Future Investment by Key Projects, Nigeria, 2012
Transport42.8%
Water and Sanitation 1.5%
Social 18.4%
Percent of Current and Future Investment in Key Projects by Sector, Nigeria, 2011
Infrastructure - InvestmentUS$45bn has been allocated to developing infrastructure across the priority initiatives and industries
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Ports 6,000.0
Energy and Power 12,010.0
Telecommunications 4,900.0
Water and Wastewater 663.3
Housing 414.4
Healthcare 4,190.0
Education 3,742.9
Total 45,350.6
Source: Frost & Sullivan analysis*Transport: includes Road, Rail, Airports and Ports
Energy and Power 26.5%
Telecommunications 10.8%
*Social: Includes Housing, Healthcare and Education
Concluding Remarks
• Nigeria is a formidable force in Africa and its relative importance is due to its increase in wealth
• The economy is still one sided, middle class is struggling to derive opportunities outside of oil and gas
• Government has indicated the desire to interact with private sector participants, reform current regulations and stimulate private partnerships in the infrastructure sector
• New developments in the power sector may provide significant opportunity for private entrants to distribution
• With the largest mobile subscriber base in Africa , significant investment and potential exists in the information and communication technology (ICT) sector
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Key success factors include:
• Government involvement is a critical component to corporate success
• The first- mover’s advantage is critical. Market pioneers have the advantage of lobbying with theGovernment and introduce favourable trade policies- even influencing imports
• Use local partners to help guide you through the Nigerian markets- this is especially adopted in thechemicals market
• Logistics is key- the ability to deliver a product on time cannot be over stated so some companiesprefer to keep logistics in house. Example: Heineken, Guinness
• Local content promotion or sourcing locally is critical for Government buy-in
For Additional Information
Angie Montoya
Global Webinar Marketing Coordinator
North America
Samantha James
Corporate Communications
South [email protected]
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Sathyajit Rao
Vice President
Emerging Market Innovation
Prerna Mohan
Industry Manager
Emerging Market [email protected]
