Are you happy with one summer cottage or are You still looking for a Silver Bullet?
- Opportunities in India, Middle East and Africa
Oskar RautiainenHead of Finland Trade Center, Saudi Arabia
Personal task
1. Concerning either India, Africa or Middle East:- Think about - what are your concerns doing business in these regions – what are you afraid of / unsure?
2. Tell your worries / thoughts to your friend beside you!
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Hundreds of ways to kill a business idea...
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‘Markets are not developed in that
region’
‘Prices there are way too cheap, our products are
not cheap’
‘The political and overall business
environment is not very good in Middle East’
‘I have tried to enter the Africa in the past, and I’ve
decided I am not going again!’
‘I am already in China, why
should I be in Africa also?’
‘REALISM or just a MYTH?
India -Isn’t it a land of snakes,
fakirs and elephants?’
Arabs -Can I really trust the people
there?’
1. Pick up 1(ONE) of these countries (India, Africa (many), Middle East (many)) where you would like to have some business!
2. Tell the name of country to your friend beside you!
Second personal task
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Courage means ability to decide and focus!- in order to get one client you need to leave the other 20000 potential clients behind You!
- for a while at least...
Africa – Multinational and national possibilities
• Development towards democracy - Tunisia, Egypt, Libya...
• Growing importance of social media (Facebook, YouTube, blogs)
• Strengthening EU relations through Association Agreements – future free trade area
• Offshore – many countries offer privileges to companies
• Improving agricultural productivity especially in Algeria
• Increased use and production of health and organic products
• Increase of water and energy needs• Improving security systems• Aging of the population – rehabilitation
services
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Source: AfDB
AfDB Financing in 2010
Financing by sector 2010 USD 6.3 billion
• Infrastructure $ 4.0 billion– Energy supply $ 1.37 billion– Transport $ 1.91 billion– Water supply and sanitation $ 0.68 billion– Communication $ 0.05 billion
• Multisector $ 0.46 billion• Finance $ 0.49 billion• Social $ 0.30
billion– Education $ 0.07 billion– Health $ 0.01 billion– Other $ 0.22 billion
• Agriculture & rural development $ 0.10 billion
• Others $ 0.95 billion
(Private sector total $ 1.9 billion)
Cross-cutting: climate change, gender and environment
© Finpro
Source: AfDB
Examples of AfDB Projects
• Menengai Geothermal Power Project GDC in Kenya (ESIA – Environmental and social impact assessment done by AfDB)
• South Helwan 3 x 650 MW Supercritical Thermal Power Plant project in Egypt (ESIA done by AfDB)
• Multinational: Ethiopia-Kenya Power Systems Interconnection project (ESIA done by AfDB)
• ADF loan of UA 53.59 million to finance the Awoshie-Pokuase Road and Community Development project in Ghana
• ADF loan of UA 14 million to finance Bamako Digital Complex Support project in Mali• Railway Infrastructure Development in East Africa – AfDB USD 40 million for Rift Valley
Railways, total financing USD 165 million (IFC, KfW, Equity Bank of Kenya)• ADB loan of USD 265 million and a CTF (Clean Technology Fund) loan of USD 100
million to finance ESKOM Renewable Energy project in South Africa • Private sector loan of USD 1 billion to TRANSNET to finance the capitalised maintenance
plan part of the 5 year investment program in South Africa• ADB loan of EUR 137.34 million to finance the Gabes-Medenine-Ras Jedir Highway
construction project in Tunisia (connection to Libya)• ADF loan of UA 15 million to finance the Alternative learning and Skills development
project in Tanzania• ADF loan/grant of UA 26 million to finance the Support to Higher education, science and
technology (HEST) project in Malawi• ADF loan of UA 53.59 million to finance the Awoshie-Pokuase road and community
development project in Ghana • Inga Hydroelectric Development project in DRC – ongoing
Opportunities in the Region
• Environment and Energy – Comprehensive waste management
systems, water and sanitation– Use of renewable energies is
increasing (many solar and wind energy projects)
– Energy efficiency
• Agriculture and Forestry– Developing agro-industry (machinery,
irrigation systems)– Improving the quality of cereals,
increasing the use of oat in the feed and food industries
– Sustainable forest management
• ICT– Outsourcing (– educated labour, good
location, reasonable price level)– Increase of mobile- and e-
applications (payment services, e-health, e-learning, e-government)
– Improving telecommunication networks
• Health care– Medical equipment (especially public
hospitals)– Telemedicine– Biotechnology (Tunisia, cooperation
with Technopark of Sidi Thabet)– Health tourism– Pharmaceuticals
• Education– Vocational training, higher
education– Innovation, R &D (North Africa:Tunisia
as regional leader)
• Infrastructure– Construction (hotels, business
premises, housing)– Roads, railways, ports, airports
India
Geographic Concentration of Industries and its AncillariesServices sector is more wide spread and caters across the states
Engineering
Power
Sugar
Chemicals and Fertilizers
Automobiles and Auto Components
Metals and Minerals
Textiles and Leather
Pharmaceuticals
Biotechnology
IT, ITES and Electronics
Agro, Food and Diary Based
Petrochemicals, Oil & Gas
India
• India is the second-most attractive destination for FDI in the world ( as per UNCTAD’s World Investment Prospects Survey 2010-12, Doing Business in India by E&Y)
• The strongest labour market is anticipated in the Services sector, where employers report a Net Employment Outlook of +59 per cent ( the strong sectors are Finance, Insurance, Retail , Transportation & Utility services & Information Technology )
• Indian export sector is moving towards a services led export industry– Even though the GDP fluctuated downward from the predictions,
service sector performance was consistent, current growth rate is 9.6% (2011)
– the growth rate of IT-service export growth is expected to be 19.5%
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Composition of GDP:
Services – 56.9%Industry – 28.5%Agriculture – 14.6%
Major Sectors attracting Highest FDI Inflows:
•Services Sector, •Computer Software & Hardware, Telecommunications, •Housing and Real Estate, •Construction Activities, and•Automobile
• 7th largest country geographically – .28 million sq. Km
• 2nd most populous country – 1.19 billion people
• 11th largest economy – USD 1.43 trillion GDP (IMF)
• One of the largest labour forces – 467 million
• One of the largest middleclass population – more than 300 million
• 8th highest Industrial production growth rate – 9.3%
Service Sector Overview
Services Sector Classification• Group – I
– Public administration, Defence
– Retail Trade
– Transports & Storage
– Wholesale Trade
• Group – II– Education
– Health, Social Work
– Hotels & Restaurants
– Other Community, Social & Personal Services
• Group –III– Posts & Communication
– Computer Services
– Financial Intermediation
– Legal, Technical, Advertising
– Other Business Activities
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• Indian export sector is moving towards a services led export industry– Even though the GDP fluctuated downward from the
predictions, service sector performance was consistent, current growth rate is 9.6% (2011)
– the growth rate of service export growth is expected to be 19.5% for IT – BPO services,
– 18.5% for exports and 22.8% for domestic IT related services for the same period
• Top performing sub sectors• Education• Transportation• Real estate & Urban Infrastructure • Retail • Heath care• Tourism• Financial & Banking• Communication & Information
• Other related sectors• Information Technology • Hospitality• Manufacturing
Priority Services Sub-sectorTrends & Opportunities (1/2)
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Education
Largest capitalized space in India with USD 30bn of government spend (3.7% of GDP) Private education is currently estimated at USD 50bn (14% CAGR over FY08-FY12E); expected to reach USD 115bn in the next 10 years 100% FDI allowed through the automatic route,Future potential is high due to
Massive shortfall on the supply side Emerging segments: learning solutions
through high end technology
Education
Largest capitalized space in India with USD 30bn of government spend (3.7% of GDP) Private education is currently estimated at USD 50bn (14% CAGR over FY08-FY12E); expected to reach USD 115bn in the next 10 years 100% FDI allowed through the automatic route,Future potential is high due to
Massive shortfall on the supply side Emerging segments: learning solutions
through high end technology
Retail
Organized retail has grown from USD 2bn in 2002 to USD 37bn today – total size USD 350bn Investments in the range of USD 30+ bn expected by 2011 in Retail and Supply Chain Size of organized retail likely to touch USD 70 bn Over 850K direct jobs to be created in Retail in the next 5 years
Retail
Organized retail has grown from USD 2bn in 2002 to USD 37bn today – total size USD 350bn Investments in the range of USD 30+ bn expected by 2011 in Retail and Supply Chain Size of organized retail likely to touch USD 70 bn Over 850K direct jobs to be created in Retail in the next 5 years
RetailSupply Chain
Logistics and supply chain infrastructure Know how and logistics techniques
Information Technology Communication, collaboration with suppliers,
efficient supply chain management Manpower
Tie-ups with universities ,dedicated retail institutes
Utilize experience of international retailers to train local talent
RetailSupply Chain
Logistics and supply chain infrastructure Know how and logistics techniques
Information Technology Communication, collaboration with suppliers,
efficient supply chain management Manpower
Tie-ups with universities ,dedicated retail institutes
Utilize experience of international retailers to train local talent
Education
School Solutions: content delivery, carrier orientation etcTechnology solutions: ICT, Multimedia aids, ERP & IT management, Accounting record management etcTeaching, assessment & marketing solutionsInfrastructure services and consultingSkill developmentR&D
Education
School Solutions: content delivery, carrier orientation etcTechnology solutions: ICT, Multimedia aids, ERP & IT management, Accounting record management etcTeaching, assessment & marketing solutionsInfrastructure services and consultingSkill developmentR&D
Trends Opportunities
Priority Services Sub-sectorTrends & Opportunities (2/2)
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Transportation
•Caters to 1.1bn population, contributes approx 6% to GDP, worth USD 3.48bn •Enhancing sector capacity & improving efficiency through policy directives•Increased public funding in India’s 5-year plans and Urban renewal programs
Transportation
•Caters to 1.1bn population, contributes approx 6% to GDP, worth USD 3.48bn •Enhancing sector capacity & improving efficiency through policy directives•Increased public funding in India’s 5-year plans and Urban renewal programs
Building Solutions
•Real estate contributes about 5% to GDP•The total revenue generated in 2010-11 stood at USD 66.8bn •Urban population has been increasing and is expected to cross 590mn by 2030•With a footprint of 888mn sq.ft, Green Building technology, materials & services estimated at USD 100bn by 2013
Building Solutions
•Real estate contributes about 5% to GDP•The total revenue generated in 2010-11 stood at USD 66.8bn •Urban population has been increasing and is expected to cross 590mn by 2030•With a footprint of 888mn sq.ft, Green Building technology, materials & services estimated at USD 100bn by 2013
Building Solutions
Architectural and engineering services for high-rise structures, theme parks & hotels
LEED Facilitation services & Energy Simulation
Urban planning and design Other niche architectural services &
energy efficiency consultancies
Building Solutions
Architectural and engineering services for high-rise structures, theme parks & hotels
LEED Facilitation services & Energy Simulation
Urban planning and design Other niche architectural services &
energy efficiency consultancies
Transportation
Creating infrastructure for Intelligent Transport SystemsR&D activities & application of scientific technologies & toolsReal time integration services Urban Transportation Infrastructure ManagementCongestion management & Road safety
Transportation
Creating infrastructure for Intelligent Transport SystemsR&D activities & application of scientific technologies & toolsReal time integration services Urban Transportation Infrastructure ManagementCongestion management & Road safety
Trends Opportunities
Examples from India
• IL&FS Skills – The Skills Initiatives Group within IL&FS Education catalyses, facilitates and manages large scale, demand-driven skills training and placement programs, to connect industries in need of skilled workers with trained personnel and to address employability issues in both Private and Public Sectors
– IL&FS Skills Development Corporation (ISDC) is a joint venture between IL&FS and the NSDC (National Skill Development Corporation), established with an objective to build and manage 100 multi skill schools across India. It offers
• Vocational training through community colleges• Innovative placement linked programs• Industry driven training modules• Interactive training sessions through K-Yan technology, a community-learning device
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• IBM launches “Centre of Excellence” for smarter commerce at the India Software Lab, Bangalore to offer solutions to automate and accelerate the purchasing, marketing, sales and customer service functions to organisations across India, South Asia and Asia Pacific
• Mobile ad network, Vserv.mobi, a leading mobile ad network, mobile advertising and publishing network for mobile developers, publishers and advertisers is planning to target the global emerging markets for growth
• The Institute of Public Enterprise, (IPE) in association with the U21Global (an online Graduate School that offers postgraduate programs) have signed a MoU to launch their new online, short-term Joint Executive Education Program in the eLearning mode
• Global hospitality major Marriott is reckoning big on India and Asia for its growth and has made huge plans for the hospitality sector
Middle East
Services in Middle East
There is an education drive to bring the population to the current demands of the job market (also because of industry diversification)
Banking and insurance sectors have been opened up for foreign operators
IT: telecom and internet grids will be extended. There is a need for operators providing new services and content
Demand for software development As there are an increasing number of elderly people, there will
be a great need for health-care, welfare, and other life-science services
Priority Services Sub-sectorTrends & Opportunities – Saudi figures as an example
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Education
Huge spending on education to boost knowledge-based economy.Saudi Arabia is exerting continuous efforts aimed at realizing a knowledge-based economy as it sees this as the best strategy toward achieving sustained development based on technology and innovation$45 bn of the 2012 budget, representing about 24% of the total spending, allocated to education and training
Education
Huge spending on education to boost knowledge-based economy.Saudi Arabia is exerting continuous efforts aimed at realizing a knowledge-based economy as it sees this as the best strategy toward achieving sustained development based on technology and innovation$45 bn of the 2012 budget, representing about 24% of the total spending, allocated to education and training
Life Science / Health Care
Leads health care expenditure in GCC Has the largest health infrastructure with 408 hospitals and an estimated 55,932 bedsExpected that the health care market in the Kingdom will expand at a compound annual growth rate of 12 percent to $25.7 bn in 2015.
Life Science / Health Care
Leads health care expenditure in GCC Has the largest health infrastructure with 408 hospitals and an estimated 55,932 bedsExpected that the health care market in the Kingdom will expand at a compound annual growth rate of 12 percent to $25.7 bn in 2015.
Life Science / Health Care
High incidence of lifestyle diseases including obesity, diabetes, and cardiovascular diseases.Spending on pharmaceuticals, hospital services and medical devices will increase considerably in the future.Planned to build medical colleges and hospitals at all government universities in the country.Continues to lead an important role in managing local health issues, such as obesity and diabetes, which need enhanced methods of detection, prevention and care, especially in terms of patient health information management
Life Science / Health Care
High incidence of lifestyle diseases including obesity, diabetes, and cardiovascular diseases.Spending on pharmaceuticals, hospital services and medical devices will increase considerably in the future.Planned to build medical colleges and hospitals at all government universities in the country.Continues to lead an important role in managing local health issues, such as obesity and diabetes, which need enhanced methods of detection, prevention and care, especially in terms of patient health information management
Education
Plans to build 742 new schools in addition to the 2,900 already under construction, and 2,000 existing schools will be refurbished. Support the establishment of an electronic college and 40 new collegesDevelopment existing universitiesIncrease in the number of scholarship programs that allow Saudi students to study abroad
Education
Plans to build 742 new schools in addition to the 2,900 already under construction, and 2,000 existing schools will be refurbished. Support the establishment of an electronic college and 40 new collegesDevelopment existing universitiesIncrease in the number of scholarship programs that allow Saudi students to study abroad
Trends Opportunities
Priority Services Sub-sectorTrends & Opportunities (2/2) – all countries
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Energy and Water
Multi billion US$ projects in Oil & Gas, Power & Water, Desalination Projects
Energy and Water
Multi billion US$ projects in Oil & Gas, Power & Water, Desalination Projects
Building Solutions
Multi billion US$ projects in Transport Infrastructures, Railways, Economic Cities, Real State, Medical Cities, Hospitals, shopping malls and educational facilities
Building Solutions
Multi billion US$ projects in Transport Infrastructures, Railways, Economic Cities, Real State, Medical Cities, Hospitals, shopping malls and educational facilities
Building Solutions
Proven innovative technology & Know-How for sustainable solutionsConsulting Services > City planning – Architectural - Interior design, Consulting & supply (strong local presence is necessary to do this)Building & Facility Management Systems, Intelligent buildings and smart network solutions (for coming & future projects, strong advance local presence is necessary)Rail construction, services & maintenance solutions.Tunnel & Bridge construction solutionsAdvanced Waste Collection & management systemsPower & water saving & optimization systems
Building Solutions
Proven innovative technology & Know-How for sustainable solutionsConsulting Services > City planning – Architectural - Interior design, Consulting & supply (strong local presence is necessary to do this)Building & Facility Management Systems, Intelligent buildings and smart network solutions (for coming & future projects, strong advance local presence is necessary)Rail construction, services & maintenance solutions.Tunnel & Bridge construction solutionsAdvanced Waste Collection & management systemsPower & water saving & optimization systems
Energy and Water
Power & water generation, transmission and distribution operation and maintenance & optimization solutionsSpecialized Engineering Technology for oil & gasDistrict cooling solutions & materials for new projectsMeasurement, leakage control, power & water saving and optimization solutions and equipment for water & electricity distribution to new cities / projects Water & Waste Water treatment and recycling solutions
Energy and Water
Power & water generation, transmission and distribution operation and maintenance & optimization solutionsSpecialized Engineering Technology for oil & gasDistrict cooling solutions & materials for new projectsMeasurement, leakage control, power & water saving and optimization solutions and equipment for water & electricity distribution to new cities / projects Water & Waste Water treatment and recycling solutions
Trends Opportunities
Services in Middle East
ICT IT sector grown by over 10% annually
(Telecom, e-Commerce & Government, Banking, Insurance, Health IT, Data Security) Quality Control, [Industry / Food], Medical applications, Surveillance & Security
Health & Well Care New technologies, Management, Diagnostics, Diabetes control, Rehabilitation, Equipment
Food Functional Food Products & technology development 40 million people high income market – retail services / design and planning of malls More hyper markets are opening across the region – membership programs, ecommerce
Mining Multi billion US$ mining and refining projects – outsources services Mining equipment, services & technology for over 500 million tons of Gold, Phosphate, Bauxite,
Iron, Copper, Zinc
Oil, Gas, Petrochemical Industry Multi billion US$ investments and projects – expertise and consulting Supporting equipment and services like, Boiler plants, Burners, Security, etc services
Transport & Logistics Multi billion US$ port, airport, railways, metro road, etc. projects for transport & logistics related
equipment & services – planning, design, consulting
Examples from Middle East
Saudi Arabia Kingdom will spend an estimated $400 billion (SR1.5 trillion) on large infrastructure
projects over the next five years US$ 67bn housing projects, building of 500,000 low costs houses by 2014. Covering only 25%
of demand Contract for the Phase II of high-speed Haramain railway project (US$ 10bn) has been awarded
to the Al-Shoula consortium. Scope is to supply rolling stock for a high-speed rail line, electrifications services, signaling and telecoms networks.
Saudi Arabia and United Arab Emirates launched high-speed mobile broadband/LTE technology. Consumers are hungry for data turn to 4G devices.
Security Forces Medical cities contract, US$ 6.7bn. will be awarded soon. ABV rock group & Binladin contractors are frontrunners
UAE The Khalifa Industrial Zone and Port – 417 Sqkm for manufacturing, industries and logistics by 2030 Metro – 131 km coverage within the city by 2016 - 2017 100 new schools by 2018 14 new health care facilities (incl. e.g. 4 new public hospitals) US$272 billion investment in infrastructure projects 2011-2016 Will launch tenders for the second stage of its AED40bn (US$10.89bn) national railway system project
Examples from Middle East
Kuwait 108 billion US$ 4 year (2011-2014) development plan approved
The plan includes lots of Mega Projects such as new business hub (Silk City) US$ 77bn, Major container harbor, 25km causeway, railway and metro systems, building facilities for leisure, sport and media sanctuary
The US$25bn GCC rail network project is expected to be tendered this year with development to begin in Kuwait.
Development projects for Bubiyan Island and Mubarak Sea Port, Failakah Island (lot of construction activities re. roads, bridge, port, residential, hotels, etc.)
Qatar New Doha internatíonal airport 11 Billion US$ Barwa Al Khor City 8 Billion US$ Qatar – Bahrain causeway 4 Billion US$
Iran / Iraq Iraq is in the early stages of a large scale reconstruction effort of its entire infrastructure valued at 150
billion US$. The population of Iraq will reach 40 million in 2025 and 2 million additional new housing units are needed
by 2015. In Iran domestic demand for software development has been estimated to grow from its current level of
about US$2bn per year to about US$10bn over the next five-year
If you are looking for a Silver Bullet -
Courage to Decide and Assistance to Execute
Oskar Rautiainen+358 (0)40 500 [email protected]