High Growth Markets Africa

September 2013

Contents

Africa in Perspective

Africa is bigger in size than China, USA, Western Europe,

India, Argentina and the British Isles...

Combined!

Abundance of natural resources� 30- 90% of the worlds Gold, Platinum, Copper etc� 10% of the worlds oil reserves� 60% of the worlds arable land

One Billion People

� UN forecast population to surpass 1.5 billion mark by 2030� Age demographic� Urbanisation

Single biggest opportunity –Infrastructure

� Africa is playing catch up-� Spending US$45 billion a year vs a requirement of US $95 billion

Poor infrastructure

Spending gap on infrastructure per annum

$45 billion$45 billion

Africa Rising – Even the headlines are telling the story…

A political jungle

1978

Coups, conflict andcorruption

1984

The hopeless continent

2000

Africa’s elusiveDawn

2001

Africa rising

2011

The power of mobile money

2009

SMEs are already playing a critical role in African economies, and their growth is essential to continued economic expansion. While they have great potential, SMEs face significant pressures and challenges

Access to finance / underdeveloped financial sectors

African Development Bank (AfDB) recently reported that only 20% of African SMEs had access to credit

That only 9% of the investments SMEs make are funded by a bank.

This stands in stark contrast to South America and the Caribbean where 44% of SMEs reported access to credit , and to Europe were 23% of SMEs’ investments are financed

through bank loans.

20%20%

55 countries = massive Complexity

Over 3 000 languages spoken in Africa

Do not paint Africa with one brush! There are 55 countries in Africa with 55 different governments, regulatory environments, economic environments… Consolidating the

entire continent and saying that its one opportunity is a big mistake. One size does not fit all across this diverse continent and there in itself lies the challenge…

3 0003 000

Political stability and Regulatory environment still has a way to go

The region’s (SSA) average ranking on ease of doing business is 140 out of 185 – South Africa and Mauritius are the only African

economies among the top 40 globally.

140140

Access to skilled resources

Number of Mozambican chartered accountants today

88

Success Stories

Sector specifics:

Scaffolding, forming, shoring, modular buildings and hygiene

Global footprint:

South Africa; Australia; United Kingdom; New Zealand; Chile

Employees:5 600.

Waco chose AFRICA because:

� It was growing faster than any other areas where their operations were based

� Right on our doorstep – WE have the advantage of being AFRICAN

� They had the right risk appetite as well as the capacity to absorb risk.

� They want to list within the next 2-3 years and this was the only growth strategy which would enable them to attract investors.

Waco chose Africa

Waco’s Expansion

Current expansion

Planned expansion

Rapid increase in consumer spending

Decrease in communicable diseases

Move from destitute to basic needs

Urbanization makes consumer markets more accessible

Cities natural market for consumer goods and services

Telecoms sector is one of the most well funded infrastructure sectors

New trading partners like China

Good governance improvement

Improved human development

Recently highest growth rate in the world

Increasing working population

Middle class African has tripled over the last 30 years

29 Exchanges in Africa 50% of Africans living in cities by 2050

Considerations

The process

Location of investment

• Geography; Language; HR; Judicial System; Policy structure; Regulatory environment; Economic stability; FDI; Tax regime; Infrastructure; Telecoms

Critical Success Factors

• Access to markets; distribution; country contribution; product identification and culture; service development and information technology; competitor landscape

Setting up shop

• Ad-hoc project vs sustainable operation• Joint venture vs alone• Finding on-the-ground contacts• Communicating the African brand

Lessons learned

� Things take time in Africa

� Know your strategy – conservative vs aggressive

� Do not assume anything: gather data

� Understand the customer and their culture

� Know when things are not working

� Have an on the ground team with local knowledge: critical that contacts have credibility in the right circles and know that politics drives decisions.

Endless opportunities

North Africa Renewable Energy OilNatural

GasCapital Markets

Tourism Industrials

Morocco a a a

Algeria a a a

Tunisia a a

Libya a a a

Egypt a a a

West Africa Agriculture Oil Natural Gas Mining Services Telecoms

Senegal a a a a

Ghana a a a

Benin a

Nigeria a a a

Cameroon a a

NIGERIA –the land of

entrepreneurs

Endless opportunities

BURUNDI: promoting its business opportunities to South African SMEs

How we made it into Africa: 30 July 2013

East Africa Agriculture Oil TelecomsNatural

GasMining Services Tourism

Sudan a a a

South Sudan a a a

Ethiopia a a

Kenya a a

Tanzania a a a

Malawi a a

Mozambique a a a

Southern Africa Agriculture Retail Housing Mining TourismCapitalMarkets

Services

Namibia a a

Botswana a

Zimbabwe a a

South Africa a a a a

Lesotho a

Swaziland a

Mauritius a a a

Endless OpportunityWhat does the data say?

GeographiesTotal GDP

2012 (US$ million)

Total population 2012 (“000)

Average Annual Real GDP Growth: 2012 - 2017

Kenya 41 052 43 054 6.2

Ethiopia 41 008 86 579 6.5

Ghana 39 204 25 557 6.4

Tanzania 27 943 47 705 7.0

Cameroon 26 229 20 469 5.6

Source: Euromonitor International from national statistics/UN/IMF, IFS

KPMG Africa Digital : iPad app – KPMG Africa Business Guide

KPMG Africa Digital : iPad app – KPMG Africa Busines s Guide

KPMG Africa Digital : iPad app – KPMG Africa Business Guide

KPMG Footprint

Over 100 years experience

8500 Professionals

33 Practices

430 Partners

1 Africa Chief Executive

6 African Regional Leaders

Globally connected, locally relevant

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