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TOWARDS A NEW AFRICAN ECONOMY November 2012
SUMMARY
Part 1
Sustained economic growth in Sub-Saharan Africa (SSA)
Part 2
… Remains to sustain
Part 3
But economic growth which seduces and promotes the development of Capital Investment
Part 4
And that stimulates the development of African business
2 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
1 SUSTAINED ECONOMIC GROWTH IN SUB-Saharan
AFRICA (SSA)
3 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
SUSTAINABLE ECONOMIC GROWTH
• African growth is characterized by good macroeconomic indicators o Inflation decreasing: 15% in 2000 to 8.1% in 2011
o Mastery of foreign debt from 63% of GDP in 2000 to 22.2% in 2012
• And is based on several structural phenomena, demographic and geographic 1. export growth
2. improved terms of trade,
3. strong domestic demand
o final consumption up
o growth of public and private investment
5. significant population growth and increasing urbanization
6. transfers significant and steady migrants
The real GDP of Sub-Saharan Africa (SSA) has increased on average by 3.4% per year between 1990 and 2010, from 273 to USD 573 billion.
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 4
1. EXPORT GROWTH
+ 117% between 2000 and 2010.
They represent 33% of GDP in 2011, against 26% in 1990.
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
19
90
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20
05
20
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20
07
20
08
20
09
20
10
Ind
ice
Bas
e 1
00
en
20
00
Sources : World Bank Indicators, CNUCED
Exportations de biens et services (% du PIB)
Indice du volume des exportations(2000=100)
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 5
2. THE IMPROVEMENT IN THE TERMS OF TRADE
+ 60% between 2000 and 2010
80
90
100
110
120
130
140
150
160
170
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Ind
ice
bas
e 1
00
en
20
00
Source : CNUCED 2011
Improvement in the terms of trade in SSA
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 6
… SOURCE INPUT LARGEST CURRENCY
Between 2004 and 2012, foreign exchange reserves in Sub-Saharan Africa
increased by 60%.
0
2
4
6
8
2004 2005 2006 2007 2008 2009 2010 2011 2012
Mo
nth
s o
f im
po
rts
of
goo
ds
and
se
rvic
es
Source : World Economic outlook avril 2012 (IMF)
Foreign exchange reserves of Sub-Saharan countries
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 7
3. INCREASE THE FINAL HOUSEHOLD CONSUMPTION
+ 4,4% per year between 2000 and 2010
0
50
100
150
200
250
300
350
400
450
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
En m
illia
rds
USD
co
nst
ants
Source : Africa Development Indicators, 2011
Final consumption expenditure in Sub-Saharan Africa
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 8
… PUBLIC AND PRIVATE INVESTMENT AND STRENGTHEN THE DOMESTIC DEMAND.
+ 109% in 10 years
10%
11%
11%
12%
12%
13%
13%
14%
14%
15%
15%
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
En M
illia
rds
USD
co
nst
ants
Source : World Bank Indicators, 2012
FBCF du secteur public et privé
FBCF du secteur privé, en % du PIB
Public and private investment
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 9
4. TRANSFERS OF MIGRANTS
Important source of income for local households, they amounted to USD 21.6 billion
in 2010, nearly half of public development assistance flows.
0%
1%
1%
2%
2%
3%
3%
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Mill
iard
s U
SD
Source : UNCTAD 2011
Remittances from migrants in the direction of Sub-Saharan countries
En USD courants
En % du PIB
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 10
MAJOR POPULATION GROWTH, ESPECIALLY IN THE CITY, WHICH RESULTS IN AN INCREASE IN BUSINESS
71% over the past 20 years Urbanization: 36% in 2011 against 28% in 1990
69,4%
69,6%
69,8%
70,0%
70,2%
70,4%
70,6%
70,8%
0
100
200
300
400
500
600
700
800
900
1000
19
90
19
91
19
92
19
93
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03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Mill
ion
s
Source : World Bank Indicators
Population totale
Population urbaine
Taux d'activité
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 11
2 GROWTH TO SUSTAIN
12 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
GROWTH IN SUB-SAHARAN AFRICA REMAINS HETEROGENEOUS, FRAGILE AND INSUFFICIENT
• Heterogeneous growth: 48 sub-Saharan African countries do not face the same problems of development o The difference in GDP between middle-income countries and fragile states has doubled in 20 years
• A fragile growth: balance of commodity exports weakens undiversified by exposing them to the volatility of world economies o Outside of South Africa, Sub-Saharan Africa achieve at least 75% of their exports with only 8 products
o In six of them, one type of export accounts for 85% of total exports
• Insufficient growth: the development gap with other regions of the world remain significant o In 2011, the African HDI remains below 52% in the North American HDI, against 56% in 1980
13 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
1. GROWTH UNEVENLY DISTRIBUTED
The International Monetary Fund distinguishes 4 groups of countries:
• Oil countries: Angola, Cameroon, Chad, Congo, Equatorial Guinea, Gabon, Nigeria
• Middle income countries: Botswana, Cape Verde, Ghana, Lesotho, Mauritius, Namibia, Senegal, Seychelles, South Africa, Swaziland, Zambia
• Low-income countries: Benin, Burkina Faso, Ethiopia, Gambia, Kenya, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, Sierra Leone, Tanzania, Uganda
• Fragile States: Burundi, Central African Republic, Comoros, Democratic Republic of Congo, Côte d'Ivoire, Eritrea, Guinea, Guinea-Bissau, Liberia, Togo, Zimbabwe
14 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
TESTIFY IN THE GAPS BETWEEN GROWTH RATE OF THESE GROUPS OF COUNTRIES…
15
> 10 percentage points as between 2000 and 2005
-10,0
-5,0
0,0
5,0
10,0
15,0
20,0
Source : World Bank Indicators, 2012
Rate of GDP growth in SSA
Pays pétroliers
Pays à revenu intermédiaire
Pays à faible revenu
Etats Fragiles
Afrique subsaharienne
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
…AND GDP GROWTH FOR 20 YEARS.
16
From 1990 to 2010, the GDP gap between middle-income countries and fragile states has nearly doubled, reaching USD 201 billion in 2010 against 104 in 1990.
0
50
100
150
200
250
Mill
iard
s
Source : World Bank Indicators, 2012
Real GDP (2000) in SSA
Pays pétroliers
Pays à revenu intermédiaire
Pays à faible revenu
Etats Fragiles
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
2. A FRAGILE GROWTH…
• Exports from Sub-Saharan Africa are largely composed of unprocessed raw materials. This strategy has important disadvantages o Dutch disease: over-appreciation of the exchange rate which hampers the export manufacturing sectors
o Grabbing investment and neglect other productive sectors (more)
o Exposure to the downturn in international prices
o Weak effects of trainings
o Kleptocracy - civil wars
• In addition, sub-Saharan Africa is experiencing a very important infrastructure needs. o In particular, it needs to increase its 7000 MWatt annual capacity of electricity generation
o The World Bank estimates the necessary investment to $ 93 billion per year, 40% for energy
17 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
... BASED PRIMARILY ON EXPORTS OF RAW MATERIALS
18
0
10
20
30
40
50
60
70
80
90
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
80,00%
90,00%
100,00%
Tan
zan
ia
Mad
agas
car
Djib
ou
ti
Nam
ibia
Zim
bab
we
Som
alie
Co
ngo
, De
m. R
ep
.
Mal
awi
Mo
zam
biq
ue
Gam
bia
, Th
e
Cam
ero
on
Togo
Seyc
hel
les
Leso
tho
Bu
run
di
Rw
and
a
Mal
i
Sao
To
mé
et
Pri
nci
pe
Co
te d
'Ivo
ire
Cap
e V
erd
e
Gh
ana
Mau
rita
nie
Co
ngo
, Re
p.
Ch
ad
No
mb
re d
e p
rod
uits re
pré
sen
tant 7
5%
de
s exp
ortatio
ns
In t
he
sh
are
of
exp
ort
s
Source : Africa Development Indicators – Factoid 2011
Diversification of exports from SSA countries in 2009
Part du top 3 des produits exportés dans lesexportations totales
Nombre de produits représentant plus de75% des exportations
For 3/4 of SSA countries, the first three products exported are raw materials, averaging 2/3 of exports.
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
3. GROWTH UNEVENLY DISTRIBUTED THAT DOES NOT ALWAYS SUPPORTS DEVELOPMENT
• Sub-Saharan Africa has the rate of extreme poverty the most important in the world despite a decrease of 10 points in 20 years o Between 1990 and 2000, the share of population living on less than $ 1.25 / day increased from 56.5% to
47.5%
o However, population growth is the absolute number of poor has increased by 33% over the same period
• For growth generates human development, economic growth must be inclusive and redistributive. Countries as Equatorial Guinea illustrate that this is not always the case. Between 1990 and 2010: o per capita income has increased by 16
o while it remains the 13th country in life expectancy the lowest in the world (51)
19 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
WHICH RESULTED IN SIGNIFICANT INEQUALITIES
20
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%60,8%
20,9%
8,7% 4,7% 4,8%
36,5%
24,0%
9,9% 10,8% 18,8%
Source : AfDB Market Brief (2011)
Population and income distribution by classes in Africa
Population Revenu
In 2010, six of the most unequal countries in the world were in SSA, especially in southern Africa.
After Latin America, this is the second part of the world with the greatest inequality.
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
AND DOES NOT ALLOW THE SSA TO REDUCE THE GAP WITH THE BRICS AND OECD COUNTRIES
The gap in life expectancy has increased over the past 40 years,
from 14.6 years in 1970 to 19 in 2011.
0
5
10
15
20
25
30
1970 1980 1985 1990 1995 2000 2000 2005 2006 2007 2008 2009 2010 2011
Nu
mb
er
of
year
s
Source : UNDAES 2011
Difference in life expectancy
Différence AfSS - OCDE
Différence AfSS - Brésil
Différence AfSS - Chine
Différence AfSS - Inde
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 21
GROWTH STILL NOT ENOUGH
Life expectancy in SSA increased by 10 years since 1970 to $ 54 in 2011. However, this figure remains low compared to the performance of other regions.
40
45
50
55
60
65
70
75
80
85
1970 1980 1985 1990 1995 2000 2000 2005 2006 2007 2008 2009 2010 2011
Nu
mb
er
of
year
Source : UNDAES 2011
Life expectancy at birth
Brésil
Chine
Inde
AfSS
OCDE
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 22
…EFFECTIVELY FIGHT TO THE POVERTY REDUCTION
The development gap between SSA and other regions of the world just to subside despite an increase of 25% of the African HDI over the past 30 years.
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1
1980 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011
Source : PNUD 2012
Human Development Index
Asie
Amérique du Nord
Afrique subsaharienne
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 23
FINALLY, THE AFRICAN GROWTH MUST BE INCLUSIVE
• Africa has the youngest population in the world and it is growing rapidly o 200 million inhabitants aged 15-24 years in 2011
o 10 million new entrants to the job market each year
o nearly a billion of jobseekers in 2040
• Mass unemployment coupled with a highly urban population may have serious consequences in political and social terms
• A generator inclusive job growth, requires the development of the private sector which is responsible for 90% of employment in developing countries
24 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
FOCUS AREAS OF INTERVENTION I&P
Categories Countries of operation in 2012
Petroleum Exporting Countries Cameroon
Middle-income countries
Ghana
Maurice
Namibia
Senegal
Low-income countries
Benin
Burkina Faso
Madagascar
Mali
Niger
Uganda
Fragile countries
Comoros
Congo, Democratic Republic of Congo
Ivoiry Coast
Mauritania
Togo
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 25
GROWTH RATE LOWER BUT ALSO VOLATILE THAN THE REST OF THE SUB-SAHARAN AFRICA
-1%
0%
1%
2%
3%
4%
5%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source : World Bank Indicators, 2012.
GDP Growth rate per Capita
I&P
AfSS hors I&P
Approx. 2.3% growth in 2010
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 26
STANDARD OF LIVING PER CAPITA ALMOST IDENTICAL
0
100
200
300
400
500
600
700
800
900
1000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
En U
SD c
on
stan
ts
Source : World Bank Indicators, 2012
GDP per Capita
I&P
AfSS hors I&P
< $ 900 per capita
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 27
3 AN ECONOMIC GROWTH WHICH SEDUCES AND PROMOTES THE DEVELOPEMENT OF CAPITAL
INVESTMENT
28 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
3 MAJOR EVENTS ARE TO NOTE
1. The sector increased significantly and knows good prospects
2. The distribution of capital investment improves and targets change
3. Increased Foreign Direct Investment
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 29
1. 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)
• With over less than 100 million and less than greater than $ 1 billion fund money for the rest of the emerging markets
• Relative to GDP, the activity of capital investment in SSA was comparable to that of BRIC in 2008 and 2009 (0.29% and 0.15% of GDP)
30 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
THE ECONOMIC CRISIS HAS SLOWED THE FLOW, WITHOUT STOPPING
31
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
En m
illio
ns
de
do
llars
EU
Fundraising and investment in private equity in Sub-Saharan Africa
Levée de fonds Investissements
1.3 billion of funds raised to $ 1 billion invested in private equity in 2011
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
THE SECTOR KNOWS GOOD PROSPECTS
• 67 % of limited partners interviewed believe attractive Africa in 2011
• 50% plan to make investments in sub-Saharan Africa by 2013
• A growing number of very large businesses include the African continent among their top strategic targets
32 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
2. THE DISTRIBUTION OF CAPITAL INVESTMENT GROWS ON THE CONTINENT
• 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 ...
33 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
CHANGE TARGETS
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 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
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 34
3. SIGNIFICANT DEVELOPMENT FOREIGN DIRECT INVESTMENT
X 5 to sub-Saharan Africa since 2000 3 USD 000 billion is invested in the space of 10 years.
0
1
2
3
4
5
6
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Mill
iard
s
Source : UNCTAD 2011
Inward flow foreign direct investment in Sub-Saharan Africa
En dollars EU courants, taux de changecourants
% de PIB
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 35
EN TÉMOIGNE LE NIVEAU DES INVESTISSEMENTS PRIVÉS DANS LES TÉLÉCOMS
X 4 between 2000 to 2009, reaching $ 12 billion in 2009.
0
2
4
6
8
10
12
14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
En m
illia
rds
USD
co
ura
nts
Source : World Bank Indicators, 2012
Investment in telecoms with private participation in Sub-Saharan Africa
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 36
4 GROWTH WHICH PROMOTES THE DEVELOPMENT
OF AFRICAN BUSINESSES
37 NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
SMES HOLD VITAL ROLE IN ECONOMIC DEVELOPMENT IN SUB-SAHARAN AFRICA
SMEs now have a flexible multiple barriers to their creation and growth, by improving the legal and administrative context:
1. Reducing the time of registration of property rights
2. Reducing the delays in obtaining operating licenses
3. Reducing the costs associated with starting a business in Sub-Saharan Africa
38
SMEs contribute to 30% of GDP and 17% of jobs created.
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
1. REDUCED REGISTRATION DEADLINES PROPERTY RIGHTS
39
40
50
60
70
80
90
100
110
120
2004 2005 2006 2007 2008 2009 2010
Nu
mb
er
of
day
s –
Sub
-Sah
aran
Afr
ica
Source : Doing Business 2011
- 60 days between 2004 to 2010
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
2. TIME LIMIT FOR OBTAINING A LICENSE
40
200
205
210
215
220
225
230
235
2005 2006 2007 2008 2009 2010
Nu
mb
er
of
day
s –
Sub
-Sah
aran
Afr
ica
Source : Doing Business 2011
- 44% between 2004 to 2010, 53 days or less
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
3. COST OF PROCEDURES FOR THE ESTABLISHMENT OF A COMPANY
41
0%
50%
100%
150%
200%
250%
300%
350%
2003 2004 2005 2006 2007 2008 2009 2010 2011
As
a %
of
GN
I - S
ub
-Sah
aran
Afr
ica
Source : Doing Business 2011
- 70% between 2003 to 2011
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC
The phenomenon of the "missing middle" is partly explained by the lack of access to finance for small enterprises.
However we see in developing economies a significant lack of formal SMEs: THE MISSING MIDDLE
Source : http://www.hks.harvard.edu/centers/cid/programs/entrepreneurial-finance-lab-research-initiative/the-missing-middle
Nu
mb
er
of
firm
s
Micro
High-Income Countries
SMEs Large
Nu
mb
er
of
firm
s
Micro
Low-Income Countries
SMEs Large
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 42
THE « MISSING MIDDLE »
Micro-Enterprises
(Invest.: 100€ to 50K€)
Mesofinance
Middle Size Companies
(Invest.: 150K€ to 1000K€)
LARGE COMPANIES
(Invest.: >1M€)
Local Banks,
international investors
MICROFINANCE
INSTITUTIONS
> Gap
funding
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
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 43
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.
NOVEMBER 2012 - TOWARDS A NEW AFRICAN ECONOMIC 44