Africa’s frontier markets: evolution and opportunities
Giovanni Carbone
ISPI and Università degli Studi di Milano
Panel: Sectoral value chains and industrial cooperationbetween EU-Med and AfricaEUROMED Invest ConferenceMilan, 8 October 2015
“Emerging Africa”:from economic laggard to fast-growth region
sub-Saharan Africa (SSA)
an unprecedented period of economic growth
region-wide: many countries involved
An unprecedented period of growth in Africa: 5.5% annual average growth in 2000-2014
GDP growth
(avg. annual % change)
Mauritania
Cabo Verde
Gambia
Guinea-B.
Senegal
Guinea
Sierra Leone
Liberia
Cote
Mali
Ghana
Togo
Burkina F.
Benin
Niger
Nigeria
ChadSudan
Eq. Guinea
Sao Tome
Cameroon
CARSouth Sudan
Eritrea
Djibouti
Ethiopia
Somaliland
Somalia
Gabon
Congo R.
Congo D.R.
Uganda KenyaRwanda
Burundi
Tanzania
Angola
Zambia
Malawi
Mozambique
Zimbabwe
Namibia
Botswana
South Africa
Lesotho
Swaziland
Comoros
Madagascar
Mauritius
Seychelles
d'Ivoire
& Principe
<3%
3%-5%
5%-7%
>7%
No data
Economic performances across the region, 2000-2013
GDP growth
(avg. annual % change)
Mauritania
Cabo Verde
Gambia
Guinea-B.
Senegal
Guinea
Sierra Leone
Liberia
Cote
Mali
Ghana
Togo
Burkina F.
Benin
Niger
Nigeria
ChadSudan
Eq. Guinea
Sao Tome
Cameroon
CARSouth Sudan
Eritrea
Djibouti
Ethiopia
Somaliland
Somalia
Gabon
Congo R.
Congo D.R.
Uganda KenyaRwanda
Burundi
Tanzania
Angola
Zambia
Malawi
Mozambique
Zimbabwe
Namibia
Botswana
South Africa
Lesotho
Swaziland
Comoros
Madagascar
Mauritius
Seychelles
d'Ivoire
& Principe
<3%
3%-5%
5%-7%
>7%
No data
Four drivers of growth
a) commodity prices (super-cycle)
b) economic reforms since the 1980s
c) constitutional reforms and improved political stability since the 1990s
d) external support (aid and debt) in the 2000s
Systemic banking crises in sub-Saharan Africa, 1980-2014
Improved political and economic contexts:e.g. «deeper and more stable financial systems»
34 crises in 1980-1995
Nigeria
Growing integration in the world economy: international trade
Imports and exports of goods and services in sub-Saharan Africa (current US$ bn, 1990-2013)
Beyond economic growth:Africa is a fast-changing region
Wide-ranging social and political transformations, including:
i. extraordinary demographic growth: from 950m Africans in 2015 to 2.1 bn by 2050
ii. important social improvements: extreme poverty down from 58% in 1999 to 35% in 2015
iii. political progress: more accountable and stable governments (i.e. more elections, less coups d’état)
Yet, two “new” challenges emerged in 2014-2015:
Not so much the Ebola epidemic, but rather
a) the oil price drop & the end of the commodities supercycle
b) jihadism on the rise on the continent
The case of Nigeria
The decline of civil wars between the mid-1990s and 2010
Recent conflictsin Africa (2010-2015):a growing international concern
CRUDE OIL PRICES(US$ PER BARREL, JAN. 2005 – JAN. 2015)
Sources: US Energy Information Administration, www.eia.gov.
Agricultural exporters Metals
and minerals exporters
Energy exporters Others
Burundi
Central African Republic
Côte d'Ivoire
Ethiopia
Gambia, The
Guinea-Bissau
Kenya
Malawi
Rwanda
São Tomé and Príncipe
Swaziland
Togo
Uganda
Botswana
Benin
Burkina Faso
Congo-Kinshasa
Ghana
Guinea
Liberia
Mali
Mauritania
Namibia
Niger
Sierra Leone
Somalia
South Africa
Tanzania
Zambia
Zimbabwe
Angola
Cameroon
Chad
Congo-Brazzaville
Equatorial Guinea
Gabon
Nigeria
South Sudan
Sudan
Cape Verde
Comoros
Eritrea
Lesotho
Madagascar
Mauritius
Mozambique
Senegal
Seychelles
MAIN EXPORTS OF SUB-SAHARAN ECONOMIES
GROWTH PROSPECTS REVISED
2014 FORECASTS VERSUS 2015 FORECASTS (IMF)
A slowdown, but many sectors retain significant potential
consumer goods
natural resources
agriculture/agribusiness
infrastructures/constructions
ICTs
tourism
banking
Agriculture and agribusiness
Africa is rich in land and water, but a net food importer from the 1970s-1980s
agriculture and agribusiness are back at the centre of African development strategies (e.g. Senegal’s 2014 Plan Sénégal Emergent, Nigeria’s 2011 Agricultural Transformation Agenda)
Success stories are possible, e.g. Kenya’s horticultural industry employs 4.5m people
Impressive role of ICTs, e.g. «mobile money» for subsidies and payments, infos on market prices and weather, etc.
key necessary changes include: productivity improvements, infrastructures, access to credit, use of quality seeds and fertilizers.
Constructions and interior design
• fast urbanization demands infrastructures, security, housing, services, etc.
• fast-expanding construction sector
large commercial and residential complexes (e.g. shopping malls for expanding middle classes), tourist facilities (e.g. resorts/hotels)
industrial premises, corporate offices and public buildings
low-cost housing (e.g. South Africa’s government built 1.5m free houses for the poor in 2012-13)
new cities, «self-contained»/work-play-live concept (e.g. Eko Atlantic City in Nigeria, Tatu City in Kenya, City of Light in Ghana)
e.g. Italy’s FederLegnoArredo (confederation of furniture/interior design SMEs) promoted the formation of a network of SMEs to break into the Nigerian market
• main players from: China, Brazil, India, South Korea, Italy and South Africa
> 40-50% increase
Banking and finance
• the unmet needs of the unbanked: < 25% of Africans have a bank account
• “pan-African banks” emerging, such as Standard Bank, Ecobank, United Bank for Africa (UBA)
• telecoms allowed banking to by-pass poorly-developed and costly branch networks: > 80% of Africans have access to a mobile phone
• the M-Pesa success story (Safaricom/Vodafone) in Kenya since 2007 • money transfers, bills, loans, salaries• 12m Kenyan users• exported to India, Qatar and Romania
• some African experiences may be «ahead of the game … for the financial services of the future» (Financial Times)
