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The African Growth Story Apex Brasil 25 August 2014 Africa’s economy The continent’s rise is real The size of the African economy has trebled in a decade GDP, current prices 2,737.4 (US$b) 2,535.8 3,030.9 2,249.2 2,593.0 1,870.7 1,929.3 1,337.1 613.5 251.1 362.4 2000 853.3 285.3 568.0 2004 447.1 1,488.1 614.9 1,060.1 2,196.7 2,033.9 2,091.4 689.9 697.7 725.7 898.6 523.3 889.9 964.8 2007 2009 1,314.4 1,344.0 1,393.7 1,471.0 2011 2012 2013 2014* 1,694.4 2016* North Africa * Estimates Note: these numbers exclude the recent rebasing of the Nigerian economy. Source: IMF World Economic Outlook Database, April 2014. EY’s 2014 Africa attractiveness survey 1,970.8 2018* SSA Continued growth is expected over the next 5 years Five year forecast GDP growth rates (%) indicated on a colour spectrum: Green (higher) to red (lower) Sources: Oxford Economics; EY Growing Beyond Borders In the context of a still weak global economy, Africa’s overall economic prospects remain robust. 5 Investor perceptions A dramatic improvement Respondents citing an improvement in Africa’s attractiveness as a place to do business Attractiveness over the past year 60% +4 points Change vs. 2013 survey Attractiveness over the next three years 73% +1 point Change vs. 2013 survey Source: EY’s 2014 Africa attractiveness survey (total respondents: 503). EY’s 2014 Africa attractiveness survey Actual FDI numbers Strong growth in FDI projects in SSA FDI projects in Africa 218 352 259 196 164 Source: fDi Intelligence. 226 213 Pre-crisis average (2003-07) 2007 129 593 621 2012 2013 215 647 524 486 460 2008 2009 2010 North Africa 181 SSA EY’s 2014 Africa attractiveness survey 2011 East, Southern and West Africa FDI growth spreads across New FDI hotspots are emerging in Africa 51% CAGR (2007-13) 40% 33% 31% 23% 17% 20% 19% 6% South Africa Mozambique Zambia Kenya Tanzania Uganda Rwanda Ghana Southern Africa East Africa West Africa CAGR: 14% Share: 33% CAGR: 23% Share: 17% CAGR: 28% Share: 17% Source: fDi Intelligence. EY’s 2014 Africa attractiveness survey Nigeria With investment increasingly spread across multiple sectors Consumer-facing industries rise in prominence Although investors expect resource-driven sectors to remain the highest potential industries over the next two years, in line with what the actual numbers tell us, infrastructure and consumer- facing sectors are expected to increase in prominence. Source: fDi Intelligence; EY analysis However, Africa remains a challenging place to do business Source: Kai Krause Kellogg Africa Strategy Framework Opportunities and risks do vary widely – African markets are diverse and fragmented Note: A composite Risk index is indicated on a colour spectrum from green (relatively more positive) to red (relatively less positive). A fact-based approach to selecting & prioritising markets in Africa is critical. Source: World Bank; Transparency International; WEF Competitiveness Index; EY Growing Beyond Borders Executing a growth strategy in Africa Choices need to be made & multiple lenses applied Coherent regional blocs can be configured in different ways, for e.g.: 4 3 2 5 6 1 Presentation title 1. Southern: Botswana, Namibia, Malawi, Mozambique, Zambia & Zimbabwe. 2. East: Kenya, Tanzania, Uganda, Rwanda, Burundi & Ethiopia 3. Anglophone West: Nigeria & Ghana 4. Francophone West: Cameroon, Cote d’Ivoire & Senegal 5. Central: DRC & Angola 6. Indian Ocean Islands: Mauritius, Reunion, Madagascar & Seychelles. Urban hubs and clusters are the emerging markets of the future Top 15 African states/provinces for FDI projects (Share of total FDI projects) Source: fDi Intelligence; EY’s 2014 Africa attractiveness survey (total respondents: 503). EY’s 2014 Africa attractiveness survey The perception gap remains stark Established vs. not established Respondents who… …believe Africa’s attractiveness has improved over the past year 73% 39% Established Not established …believe Africa’s attractiveness will improve over the next three years 87% 51% Established Not established …have a specific strategy for investment in Africa 67% Established 10% Not established Source: EY’s 2014 Africa attractiveness survey (total respondents: 503). EY’s 2014 Africa attractiveness survey Perspective is important Consciously choose a glass half-full perspective ”Over this year, we’ll announce US$1 billion investment into Africa. We’re here for the long term. Africa is going to grow. We need to be here and, as a big company, we can afford to take risks around that. We’re accustomed to taking the long-term view from elsewhere in the world — we’ve been in China for 25 years.” Jay Ireland, President and CEO, General Electric Africa “We think that Africa is the next major emerging growth market,” Bruno di Leo, GM for Growth Markets, IBM. Executing a growth strategy in Africa