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TOWARDS A NEW AFRICAN ECONOMY
SUMMARY
I&P - Africa's Century PAGE 2
Part 1
Africa: the Great Transition
Part 2
A Growth to sustain
Part 3
An economic growth promoting the development of Capital Investment
Part 4
And stimulating the development of African business
I&P - Africa's Century
This presentation was prepared with the support of Pierrick Bataton, economist at I&P and doctoral student at CERDI.
Delta Irrigation, Sénégal © Béchir Malum
1. AFRICA: THE GREAT TRANSITION
PAGE 4 I&P - Africa's Century
A NEW WORLD: THE MOST DYNAMIC REGION OF THE WORLD, WITH SOUTH ASIA
I&P - Africa's Century PAGE 5
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
Source: World Bank Indicators
Real GDP growth
Sub-Saharan Africa World
6,7%
5,1% 4,7%
4,0%
3,1%
1,8% 1,6%
0%
1%
2%
3%
4%
5%
6%
7%
Source : World Bank Indicators
GDP average annual growth rate (2000 - 2012)
A VERY STRUCTURAL GROWTH
• A sounder macro economic environment • Inflation and external public debt falling
• Improving business environment
• Sounder public policies
• The race towards Africa • The rising world demand for raw materials: 30 % of the world mineral reserves, 40 % of gold reserves, 60 % of
cobalt reserves, 72% of chrome reserves, 65 % odf diamond reserves…
• 12% of the world hydropower potential (95% untapped)
• The rush for land: 60% of the world uncultivated lands, i.e 240 millions hectares, 4 times Morocco – and a huge reserve of productivity
• The rush for manpower
• Eighty years of growth ahead of us: the great peoplement • The time of the demographic dividend: 2.1 billion Africans by 2050, but a slowing natality
• The time of cities: already close to 50% of the population living in cities, and 80% by 2050
• The time of agriculture: more people living in rural areas by 2050 than now!
I&P - Africa's Century PAGE 6
A HUGE RISE OF THE DEMAND
I&P - Africa's Century PAGE 7
• 5% yearly average growth of domestic consumption since 2000 • Corporate investment multiplied by 2,5 times during that period • 15% annual growth of imports for the ten past years
-
100
200
300
400
500
600
700
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Co
nst
ant
USD
bill
ion
Source: World Bank
Domestic demand trend
Gross fixed capital formation Household final consumption expenditure
AN ONGOING MAJOR SHIFT OF THE WORLD ECONOMIC CENTER
I&P - Africa's Century PAGE 8
By 2050, the african GDP should at least be multiplied by 7, reaching the current chinese GDP. Africa should be the world most dynamic economic region of the three coming decades.
Sub-Saharan Africa
0%
5%
10%
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30
20
32
20
34
20
36
20
38
20
40
20
42
20
44
20
46
20
48
20
50
Source: "EconMap", CEPII 2014
Real GDP growth
Sub-Saharan Africa Brasil
India China
Russia USA
Sub-Saharan Africa
0
5000
10000
15000
20000
25000
30000
35000
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30
20
32
20
34
20
36
20
38
20
40
20
42
20
44
20
46
20
48
20
50
Co
nst
ant
USD
bill
ion
Source: "EconMap", CEPII 2014
Real GDP trend by region
Sub-Saharan Africa Brasil India
China Russia USA
AFRICAN MIDDLE CLASSES WILL MOVE THE EARTH
I&P - Africa's Century PAGE 9
The African middle class should triple and reach 1,1 milliard people by 2060. The African « Global Middle Class » (income> 10 dollars/day) will grow by 90% by 2030, and its market value is estimated at 940 billion dollars.
Sub-Saharan Africa
0
500
1 000
1 500
2 000
2 500
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30
20
32
20
34
20
36
20
38
20
40
20
42
20
44
20
46
20
48
20
50
Mill
ion
Source: UNCTAD
Population in million inhabitants
Brasil China
India Russia
Sub-Saharan Africa USA
0%
10%
20%
30%
40%
50%
60%
2000 2010 2020 2030 2040 2050 2060
Source: African Development Bank
Middle Class trend in Sub-Saharan Africa (as a % of the population)
First poverty line (1,25 dollars)
Second poverty line (between 1,25 and 2 dollars)
Middle Class (> 4 dollars)
2. A GROWTH TO SUSTAIN
PAGE 10 I&P - Africa's Century
A VERY DIFFERENTIATED ECONOMIC PERFORMANCE
I&P - Africa's Century PAGE 11
Lower middle income countries (Afrique du Sud, Ghana, Sénégal etc.) have grown on average by 3% yearly those twenty past years, against 1,3% for the fragile states (Guinée, Libéria, Togo etc.)
Sub-Saharan Africa
0
500
1000
1500
2000
2500
3000
3500
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
Source: World Bank Indicators
Trend of GDP per capita (in constant USD)
Low-income countries Middle-income countriesOil-exporting countries Fragile StatesSub-Saharan Africa
0
50
100
150
200
250
300
350
400
450
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
USD
bill
ion
Source: World Bank Indicators
GDP growth in Sub-Saharan Africa by income groups
Low-income countries Middle-income countries
Oil-exporting countries Fragile States
AND A VERY DIVERSE CONTINENT
By 2050, SSA’s population will have increased by 1,1 billion people , creating very diverse regions
I&P - Africa's Century PAGE 12
• Nigeria: 440 millions inhabitants, 29% of Africa’s GDP, 40% of the oil reserves of the continent
• East Africa: a region of 520 millions people with Ethiopia, Tanzania, Uganda, Kenya. A relatively spread demographic and economic potential
• Sustainable Giants?
• Manageable size?
• A huge challenger for investment
The “Giants” (Population over 100 million people by 2050)
• Ghana, Côte d’Ivoire, Angola, etc…
• Smaller size, Fast growth
• Important political regional role, agents of regional integration
The Bright Second Tier (between 40 and 60 million inhabitants by 2050)
• A scattered group of dependent countries, that might achieve success without regional influence
• The most exposed group to political volatility and expanded fragility
The Small countries, exposed to all the ups and downs…
A GIANT WITH FEET OF CLAY
• Growing Inequalities… • The second highest level of inequality in the world after Latin America…
• Among the ten countries in the world where inequalities have grown faster, six are in SSA : Namibia, South Africa, Lesotho, Botswana, Sierra Leone and the Central African Republic
• … And Insufficient Growth… • By 2030, 45 million jobs will be created at the current pace of growth, but 110 million people will arrive at working
age…
• Manufacturing growth still slow, and agricultural productivity increasing also slowly…
• Fiscal revenues will not allow to maintain the investment levels that are necessary to raise out of absolute poverty the majority of the continent and to educate, feed and care 1.3 additional Africans by 2050
• …Could increase Political and Social unrest, and hit Success Stories • Local conflicts can easily spread regionally
• Continental and regional migrations as well as rush for natural resources increase conflicts
• Local structural weaknesses can hit the rest of the continent: health disasters…
• The Urbanization Process as the core Challenge • One billion additional urban dwellers by 2050?
• A difficult process for land-tenure, governance and environmental reasons
• A double challenge: welcoming and becoming competitive
I&P - Africa's Century PAGE 13
TOWARDS THE ENVIRONMENTAL COLLAPSE?
• What is the Cost of Growth? • The value of the African natural assets has decreased by 5% between 1995-2005, and if one includes the
demographic growth
• Land, grasslands, and forests value has declined by respectively 17%, 55% et 42%.
• The Sustainability Challenge • 21% of African land is proper for agriculture but 20% is already seriously degradated or not usable anymore
• If land degradation continues, agricultural productivity might decrease by 17 % to 30 % up to 2020,and 50% by 2060.
• Between 2000 and 2010, 3,4 millions hectares of forest have disappeared yearly, 3x the world average
• 70 % or halieutic reserves are fully or overused
• 375 millions million people are affected by hydric stress, and 500 millions will be by 2030, including the impact of climate change
I&P - Africa's Century PAGE 14
« REAL SAVINGS » DECLINING
I&P - Africa's Century PAGE 15
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source : World Bank
Adjusted net savings, or « real savings », (as a % of GDP)
3. AN ECONOMIC GROWTH
PROMOTING THE DEVELOPMENT OF CAPITAL INVESTMENT
PAGE 16 I&P - Africa's Century
CAPITAL INVESTMENT PROGRESS IN AFRICA
Over the period 2008-2011, SSA has received an average 4.4% of the funds raised for all emerging countries, representing 3.1% of the investment (the major remaining area of Asia)
I&P - Africa's Century PAGE 17
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mill
ion
of
US$
Fundraising and investment in private equity in Sub-Saharan Africa
Levée de fonds Investissements
THE DISTRIBUTION OF CAPITAL INVESTMENT GROWS ON THE CONTINENT
I&P - Africa's Century PAGE 18
• The activity is concentrated in a handful of markets: South Africa, Kenya, Nigeria ...
• But diversification is at work: the three countries in 2010 had fallen to "only" 56% of the total number of investments (against 74% and 73% in 2008 and 2009)
• Among the new countries attraction: Benin, Congo, Ghana, Liberia, Madagascar, Tanzania ...
27%
18%
13%
10%
9%
9%
5%
9%
Sectoral distribution of investments in Sub-Saharan Africa (2009 - 2010)
Infrastructure
Banking & FinancialServices
Industrials &Manufacturing
Services
Energy & NaturalResources
Media & Telecom
Agribusiness
Other
The banking and the infrastructure sector hold a prominent place in the space of capital investment.
In 2010, however, more than half of the operations were carried out in areas such as health and food media and telecommunications
SIGNIFICANT DEVELOPMENT OF FOREIGN DIRECT INVESTMENT
I&P - Africa's Century PAGE 19
Foreing direct investment has been multiplied by 6,6 since 2000, and has reached 45 billion dollars in 2012.
0%
1%
2%
3%
4%
0
5
10
15
20
25
30
35
40
45
50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
USD
bill
ion
Source: UNCTAD
Foreign Direct Investments (FDI) towards Sub-Saharan Africa
Foreign Direct Investment (in USD) % of total FDI in the world
4. THE DEVELOPMENT OF AFRICAN
BUSINESSES
PAGE 20 I&P - Africa's Century
SMES HOLD VITAL ROLE IN ECONOMIC DEVELOPMENT IN SUB-SAHARAN AFRICA
Small and Medium Enterprises (SMEs) contribute to 30% of GDP and 17% of jobs created. They are a key element to a inclusive and sustainable growth on the African continent.
I&P - Africa's Century PAGE 21
• SMEs contribute to poverty alleviation and inclusive growth through 2 main channels
• Improving access to essential goods and services for the domestic market and the bottom of the pyramid
• Creating decent jobs for both skills and unskilled workers
• Most productivity gains can be found in SMEs
• They also contribute to political stability and social redistribution
THE « MISSING MIDDLE » OF AFRICAN ECONOMIES
LOCAL BANKS,
INTERNATIONAL INVESTORS
MICROFINANCE
INSTITUTIONS
> GAP FUNDING: I&P
INVESTMENT TARGET
Today it is difficult to invest in these SMEs because: •The lack of reliable accounting •A lack of management culture •The high cost of monitoring and evaluation in comparison with the amounts invested
I&P - Africa's Century 22
We see in developing countries a significant lack of formal SMEs: this is the ‘’Missing Middle’’. The phenomenon of the "missing middle" is partly explained by the lack of access to finance for small enterprises.
Investisseurs & Partenaires (I&P) intends to meet the
financing needs and support these businesses and thus
contribute to the growth and development of the African
continent.
I&P - Africa's Century 23
The 21st century will be Africa’s century!
• For all its risks and unknown features, Africa is really the new world economic frontier
•Profitability of investments may be high
•The human and environmental impacts of investments may be equally high
•This is a place to make a difference
I&P - Africa's Century PAGE 24
I&P - LE SIÈCLE DE L'AFRIQUE PAGE 25
Investisseurs & Partenaires (I&P) 9, rue Notre Dame des Victoires, 75002 PARIS + 33 1 58 18 57 10
Your contacts: Jean-Michel SEVERINO President [email protected] Emilie DEBLED Business Development and PR Director [email protected] + 33 1 58 18 57 11
To read more: www.ietp.com
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