The five trends powering Africa‟s enduring allure

The five trends powering Africa‟s enduring allure
Nigeria-South Africa Chamber of Commerce Monthly Forum
Lagos, 6 October 2011
Simon Freemantle*
Senior Analyst, Standard Bank Research
1
Contents
Page
1.
Africa forges a new macroeconomic path
2
2.
The five themes driving Africa‟s enduring allure
5
(i) A larger, more affluent population
6
(ii) Africa‟s urban swell
10
(iii) Leapfrogging through technology
12
(iv) Africa‟s resources potential
16
(v) Deepening financial sector
18
3.
Africa‟s resurgent emerging world partnerships
22
4.
Concluding remarks
27
2
Africa forges a new macroeconomic path
3
Contents
Africa forges a new
macroeconomic path
Africa‟s economic portrait has altered dramatically
Growth rate, 2010-2011 average, %
Economic freedoms are improving
Sources: IMF, Standard Bank Research
Sources: The Heritage Foundation, Standard Bank Research
The five themes
driving Africa’s
enduring allure
(i)
A larger, more
affluent
population
(ii)
Africa’s urban
swell
(iii) Leapfrogging
through
technology
(iv) Africa’s
resources
potential
(v)
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
4
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
(i)
A larger, more
affluent
population
(ii)
Africa’s urban
swell
Improved macroeconomic management has supported growth
Maturity in current account balance
Inflation structurally lower
1980s
2000s
1980s
2000s
(iii) Leapfrogging
through
technology
(iv) Africa’s
resources
potential
(v)
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
More than 20%
More than 10% deficit
10% to 20%
5% to 10% deficit
Less than 10%
0% to 5% deficit
Insufficient data
Surplus
Concluding remarks
Insufficient data
Sources: IMF, Standard Bank Research;
Sources: IMF, Standard Bank Research;
5
The five themes driving Africa‟s enduring
allure
6
1. A larger, more affluent population
7
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
(i)
(ii)
A larger, more
affluent
population
Africa‟s share of the world‟s population is rising
(iv) Africa’s
resources
potential
Percentage
0
70
140
210
280
China
India
18
SSA
152%
12
Latin America
Western Europe
6
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Growth in private consumption, 2000-2010
24
Africa’s urban
swell
(iii) Leapfrogging
through
technology
(v)
A youthful, and increasingly affluent population
MENA
0
World
Africa
India
China
Latin Europe North
America
America
Concluding remarks
North America
1980
2010
2050
Sources: United Nations, Standard Bank Research
Sources: Economist Intelligence Unit, Standard Bank Research
8
Africa 5 – more than 50% middle class by 2020
Africa‟s BOP consumers are increasingly empowered
Percent of households
45
Africa’s urban
swell
(iv) Africa’s
resources
potential
57%
30
50%
15
25%
Deepening
financial sector
0
Africa’s resurgent
emerging world
partnerships
0%
Concluding remarks
<$1,000
2000
2009
$1,000-$5,000
2020
BOP500
(iii) Leapfrogging
through
technology
(v)
75%
BOP1,000
(ii)
A larger, more
affluent
population
60
BOP1,500
(i)
Percent of total
100%
BOP3,000
The five themes
driving Africa’s
enduring allure
BOP2,000
Africa forges a new
macroeconomic path
New opportunities are emerging at both ends of the economic pyramid
BOP2,500
Contents
$5,000-$10,000
$10,000-$25,000 >$25,000
Sources: Euromonitor, Standard Bank Research
BOP spending
BOP population
Sources: IFC, World Resources Institute, Standard Bank Research
9
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
1400
25
1050
20
Nigeria
South Africa
700
10
60
5
350
Mauritius
0
40
-5
Concluding remarks
2010
2020
2050
LatAm & Caribbean
0
N. America
Africa’s resurgent
emerging world
partnerships
80
15
Europe
Deepening
financial sector
100
30
Africa
(iv) Africa’s
resources
potential
Creating the potential for a demographic dividend
Percent
Africa’s urban
swell
(iii) Leapfrogging
through
technology
(v)
Mn people
India
(ii)
A larger, more
affluent
population
Africa‟s working age population is swelling
China
(i)
A youthful workforce presents a host of new opportunities
2010-2020 growth rate RHS
Sources: UN, ILO, Standard Bank Research
20
1950
1970
1990
South Africa
2010
2030
Nigeria
Sources: UN, Standard Bank Research
2050
2070
2090
Mauritius
10
2. Africa‟s urban swell
11
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
(i)
(ii)
A larger, more
affluent
population
Urbanisation is bringing people closer to economic opportunities
By 2050, two in three Africans will live in cities
African mega-cities and mega-regions are emerging
100%
75%
Africa’s urban
swell
(iii) Leapfrogging
through
technology
50%
(iv) Africa’s
resources
potential
(v)
Deepening
financial sector
25%
Africa’s resurgent
emerging world
partnerships
Concluding remarks
0%
1950 1965 1980 1995 2009 2020 2035 2050
Rural population
Urban population
Sources: UN Habitat, Standard Bank Research
Sources: UN Habitat, Standard Bank Research
12
3. Leapfrogging through technology
13
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
(i)
(ii)
A larger, more
affluent
population
Africans are embracing technology as a means to connect and uplift
Africa‟s mobile phone revolution
Mobile operators have expanded aggressively
600
540 mn
450
Africa’s urban
swell
(iii) Leapfrogging
through
technology
300
(iv) Africa’s
resources
potential
(v)
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
150
15 mn
0
2000
2002
2004
Fixed telephone lines
2006
2008
2010
Mobile cellular subscriptions
Sources: ITU, Standard Bank Research
Sources: MTN, Bharti Airtel, Vodafone, Standard Bank Research
14
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
1000
100
750
75
500
50
120
90
Africa’s urban
swell
30
0
0
Concluding remarks
Internet users
Middle East
Africa’s resurgent
emerging world
partnerships
25
North America
Deepening
financial sector
250
Latin America
(iv) Africa’s
resources
potential
60
Europe
(iii) Leapfrogging
through
technology
(v)
Users per 100 people
Percent of population
Mn people
Africa
(ii)
A larger, more
affluent
population
Another two decades of rapid growth is likely
Africa lags the world in internet usage
Asia
(i)
Yet, connectivity still remains comparatively low – leaving room for growth
Internet penetration
Sources: ITU, Standard Bank Research
0
1995
2005
2015
Broadband access
2025
2035
2045
Mobile access
Sources: Institute for Security Studies, Standard Bank Research
15
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
Africans are connecting through social media
And new cable linkages are broadening access
Top 20 countries by Facebook users (June 2011)
10000
30
25
(i)
(ii)
A larger, more
affluent
population
Africa’s urban
swell
7500
20
5000
15
(iii) Leapfrogging
through
technology
(v)
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
2500
5
0
0
Egypt
South Africa
Morocco
Nigeria
Tunisia
Algeria
Kenya
Ghana
DRC
Senegal
Cameroon
Ethiopia
Tanzania
Uganda
Mauritius
Angola
Madagascar
Zambia
Mozambique
Botswana
(iv) Africa’s
resources
potential
10
Users ('000)
Penetration rate (%) RHS
Sources: Facebook, Standard Bank Research
Sources: Standard Bank Research
16
4. Africa‟s resources potential
17
Africa’s resurgent
emerging world
partnerships
Manganese
60
6
Cobalt
4
30
Phosphate
Rock
2
Chromite Ore
0
PGM
0
0
25
50
75
100
Concluding remarks
Mine production (2010)
Sources: USGS, Standard Bank Research
Reserves
Cultivable area
Cultivated area
Sources: FAO, IFPRI, Standard Bank Research
Cote d'Ivoire
Deepening
financial sector
8
Vanadium
Namibia
(v)
90
Angola
(iv) Africa’s
resources
potential
10
Titanium
Mozambique
(iii) Leapfrogging
through
technology
12
Algeria
Africa’s urban
swell
120
Gold
Tanzania
(ii)
A larger, more
affluent
population
% of cultivated area
Mali
(i)
Mn ha
Share of world total, %
Nigeria
The five themes
driving Africa’s
enduring allure
Africa‟s untapped agricultural bounty
Africa‟s share of world commodities
DRC
Africa forges a new
macroeconomic path
Africa‟s resources potential remains largely dormant
Sudan
Contents
Irrigation RHS
18
5. Deepening financial sector
19
Bank penetration elevates as incomes grow
The five themes
driving Africa’s
enduring allure
... and as markets urbanise
10,000
32
80
Botswana
5,000
16
40
8
20
0
0
Algeria
1,000.00
2,000.00
Concluding remarks
No. of bank accounts per 1,000 adults
Sources: CGAP, IMF, Standard Bank Research
Commercial bank branches
Ethiopia
Lesotho
3,000.00
Burkina Faso
0
0.00
Nigeria
Zambia
Kenya
Malawi
Uganda
2,500
Benin
Morocco
Cape
Verde
Togo
Tunisia
Algeria
Africa’s resurgent
emerging world
partnerships
Namibia
Gambia
Deepening
financial sector
60
Highly rural
South Africa
(v)
24
Tunisia
(iv) Africa’s
resources
potential
Mauritius
South
Africa
7,500
Africa’s urban
swell
(iii) Leapfrogging
through
technology
Highly urban
Cape Verde
(ii)
A larger, more
affluent
population
GDP per capita, USD
(i)
% of total population
Per 100,000 adults
Zambia
Africa forges a new
macroeconomic path
Africa‟s financial sector is deepening, forging new commercial bridges
Senegal
Contents
Urbanisation rate (RHS)
Sources: CGAP, IMF, UN, Standard Bank Research
20
Contents
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
Financial deepening is covering a wide arc of nations
Africa‟s smaller banks show enviable ROAs
Bank claims in core markets expected to rise
2400
Concluding remarks
Kenya
Ghana
Tanzania
Return on assets (%) RHS
FNB Namibia
Ghana Comm Bank
0
FNB Swaziland
0
Bidvest Bank (SA)
Africa’s resurgent
emerging world
partnerships
2
Commerzbank (Eurasija)
Deepening
financial sector
600
Bank Saderat (UK)
(v)
Nigeria
Angola
4
Bank of Tokoyo-Mitsubishi
Argentina
(iv) Africa’s
resources
potential
1200
Ecobank Ghana
(iii) Leapfrogging
through
technology
6
Std Bank Malawi
Africa’s urban
swell
150,000 300,000 450,000 600,000
South Africa
Crane Bank (Uganda)
(ii)
A larger, more
affluent
population
0
8
1800
(i)
USD bn
10
Uganda
Uganda
Ethiopia
Cote d'Ivoire
Zambia
DRC
Assets (USD mn)
2009
Sources: The Banker, Standard Bank Research
2020
Sources: EIU, Standard Bank Research
21
Contents
Africa forges a new
macroeconomic path
Financial sector expansion has created a host of new corporate champions
SA‟s „big four‟ banks have expanded northwards
FS dominates Africa‟s new challengers
The five themes
driving Africa’s
enduring allure
(i)
A larger, more
affluent
population
(ii)
Africa’s urban
swell
(iii) Leapfrogging
through
technology
(iv) Africa’s
resources
potential
(v)
Financial
services,
25%
Diversified,
8%
Consumer
and retail,
8%
Industrial
goods, 13%
Mining and
natural
resources,
20%
Logistics
services,
13%
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
Technology
, media and
telecoms,
15%
Sources: Boston Consulting Group, Standard Bank Research
Sources: Nedbank, First Rand, ABSA, Standard Bank Research
22
Africa‟s resurgent emerging world
partnerships
23
Africa forges a new
macroeconomic path
The five themes
driving Africa’s
enduring allure
(i)
(ii)
A larger, more
affluent
population
Emerging markets, led by BRICs, growing in stature
USD bn
30%
400
140
25%
300
120
Russia
Brazil
200
India
(iv) Africa’s
resources
potential
(v)
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
USD bn
160
Africa’s urban
swell
(iii) Leapfrogging
through
technology
Africa‟s top 20 trade partnerships
Breakdown of Africa‟s new post-2001 trade
100
20%
60
China
15%
100
Other
0
Growth rate (RHS)
40
20
Nigeria
South Africa
Developed Developing Intra-Africa
80
10%
BRIC
Non-BRIC
or Africa
Change (LHS)
0
China
US
France
Italy
Germany
Spain
India
Neth.
UK
Japan
Korea
Brazil
Belgium
SA
Turkey
Canada
UAE
Nigeria
Portugal
Taiwan
Contents
2010
2001
2008
Sources: IMF, ITC, WTO, Standard Bank Research
24
Contents
Africa‟s ten most illustrious EM partnerships
Africa forges a new
macroeconomic path
Russia
Trade: $7 bn
FDI stock: $5 bn
The five themes
driving Africa’s
enduring allure
(i)
(ii)
A larger, more
affluent
population
Africa’s urban
swell
(iii) Leapfrogging
through
technology
Turkey
Trade: $16 bn
FDI stock: $0.4 bn
China
Trade: $127 bn
FDI stock: $33 bn
Saudi Arabia
Trade: $6.5 bn
FDI stock: $5 bn
Thailand
Trade: $8.5bn
FDI stock: $1.3 bn
(iv) Africa’s
resources
potential
(v)
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
India
Trade: $35 bn
FDI stock: $10 bn
Nigeria
Trade: $10.9 bn
FDI stock: $2 bn
Brazil
Trade: $21 bn
FDI stock: $10 bn
Indonesia
Trade: $6 bn
FDI stock: $0.5 bn
South Africa
Trade: $19 bn
FDI stock: $15 bn
Sources: Fortune 500, Standard Bank Group
25
Contents
Africa forges a new
macroeconomic path
Global-minded corporates have emerged, shaking the established players
1996
Canada 10
The five themes
driving Africa’s
enduring allure
(i)
(ii)
203
A larger, more
affluent
population
Mexico 1
Africa’s urban
swell
(iii) Leapfrogging
through
technology
(iv) Africa’s
resources
potential
(v)
US
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
Sweden Finland
Norway 5
1
1
Russia 1
UK 46
20 Germany
Belgium 3
1
Switzerland
Netherlands 14
18
Spain 6 16 Italy
France
Saudi Arabia 1
110
Taiwan 4
Hong Kong 11
Thailand 1
1 Philippines
Malaysia 5 5 Singapore
Indonesia 2
Brazil 4
Argentina 1
South Korea
1
Japan
South Africa 5
2010
8 Australia
New Zealand 1
11
Canada
US
139
Mexico 2
Sweden
Norway
Finland
Denmark
2
5
1
6 Russia
UK 32 2
39 2 Poland
Germany
Belgium 3
China
South Korea
1
Netherlands 8 39 3 Switzerland
10
7 Italy 1 Turkey
India 46
Spain 10
Japan
France
1 UAE
Morocco 1
8
Taiwan 4
71
Saudi Arabia 5
Hong Kong16
Thailand 1
Malaysia 5 3 Singapore
Brazil 7
Indonesia 1
South Africa 6
8
Australia
Sources: Fortune 500, Standard Bank Group
26
Traditional partners still greatest source of capital, but BRIC growing
FDI stock, 2010
Africa forges a new
macroeconomic path
USD bn
The five themes
driving Africa’s
enduring allure
60
(i)
A larger, more
affluent
population
50
(ii)
Africa’s urban
swell
40
(iii) Leapfrogging
through
technology
30
(iv) Africa’s
resources
potential
20
(v)
Deepening
financial sector
Africa’s resurgent
emerging world
partnerships
Concluding remarks
China‟s “go global” strategy manifests across Africa
2010
2005
Energy & power
10
Metals & chemicals
Transportation & communication
0
France
US
China
UK
Italy
South Africa
Netherlands
Switzerland
Brazil
India
Germany
Japan
Norway
Russia
Malaysia
Saudi Arabia
Portugal
UAE
Spain
Denmark
Canada
Korea
Sweden
Thailand
Contents
Finance & real estate
Sources: Heritage Foundation, MOFCOM, IMF, ITC, WTO,
Standard Bank Research
27
Conclusion: what does this mean for Nigeria?
28
Simon Freemantle*
Thank you
Senior Analyst, African Political Economy Unit
Email:
[email protected];
Disclaimer
29
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