Africa Economic Outlook - Insights Shaping your Industry in 2014
 

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This webinar will elaborate on the global analyst briefing, "Global Economic Outlook 2014" and further provide in-depth insights of the current economic state, as well as challenges and opportunities ...

This webinar will elaborate on the global analyst briefing, "Global Economic Outlook 2014" and further provide in-depth insights of the current economic state, as well as challenges and opportunities on the African continent. Industry sectors that will be covered include: Chemicals Materials and Food, Information and Communication Technologies as well as certain Industrial sectors, such as Energy and Environment.

In order to take advantage of the untapped potential in these markets, businesses will need to consider the role that the growth dynamics in these economies will play in shaping strategic plans for 2014 and beyond.

An overview of sectors facing the biggest challenges and those that are ripe with opportunities for growth and expansion into Africa will also be discussed.

Why You Should Attend:

• Understand key hotspots driving growth in 2014
• Identify how the current economic state will affect your industry
• Learn from best practices and successful case studies to take advantage of growth opportunities in 2014

Click the below link to access the on-demand recording.
http://www.frost.com/prod/servlet/analyst-briefing-detail.pag?mode=open&sid=288760337

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  • Downside risk factors to the growth forecast?International pressure (monetary policy) capital flight etc.DebtExport markets?High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/4f8455ba-3ffc-11e3-a890-00144feabdc0.html#ixzz2sX7oyaztIn the past countries in Africa relied heavily on aid from donor countries to finance their needs. Since 2010, however, easy global financial conditions combined with sustained high growth led to a significant increase in private capital inflows. During 2010-12, net private flows to sub-Saharan African countries doubled compared with the 2000-07. Flows to several key regional heavyweights, including Ghana, Kenya, Mozambique, Nigeria, Senegal, Uganda, and Zambia, registered a fivefold increase in the same period.The IMF said African countries should anticipate “continuing volatility and increasing funding costs” as advanced economy central banks gradually move away from their unprecedented accommodative policies. “Given the trend toward deeper integration with global financial markets, sub-Saharan African frontier markets are likely to become increasingly vulnerable to global financial shocks,” it said. African policy makers painted a more sanguine view, however. LamidoSanusi, governor of the central bank of Nigeria, said in an interview that the impact of tighter monetary policy in the US would be felt more acutely in larger emerging economies like India or South Africa than in frontier markets such as Nigeria or Ghana. “Tapering is not going to happen as quickly [as the market fear]”, Mr Sanusi added, saying that the US economy still showed signs of weakness.
  • Long terms drivers of growth in Africa are different from short term drivers we will experience in 2014. Long term drives include diversification of economies, infrastructure development, (political stability is short term), beneficiation, rising populations, urbanization, middle class spending increase etc. Nigeria’s Economy: Nigeria's Gross Domestic Product (GDP) is projected to grow at 6.75% in 2014, higher than 2013 estimate of 6.2%. Despite the optimism, we note that Nigeria's output growth remains susceptible to weather shocks (which affect agriculture) as well as dwindling exports of crude oil resulting from oil theft and a slow-down in global demand. With a new Central Bank of Nigeria (CBN) governor expected on or before June, 2014 poses a lot of uncertainty for monetary policy. Irrespective of who is appointed, we do not expect a sudden overhaul of monetary policy given the destabilising effect this would have on the economy. Hence, we expect to see continued tightening, especially in H1' 14. We see a high probability of Naira devaluation given the likely decline of both crude oil revenues and foreign exchange reserves in 2014. While we expect inflation to be higher in 2014, with core inflation posing a major risk in the face of likely excessive liquidity, single digit average is still achievable for the year. On the fiscal side, though budget assumptions are deemed conservative, achieving the oil production budget benchmark will prove daunting with the challenges of bunkering and pipeline vandalism carried forward from 2013. Political intrigues would heighten in 2014, as the race for 2015 elections peaks - posing some risk to macroeconomic stability.
  • Installed capacity in 2014 versus 2020Oil and gas countries 2000 versus 2014
  • New Technology in gold mining: When the use of cyanide in gold mining and the amount of ore that could be extracted, it revolutionized gold mining. Today, new technology will have the impact that ‘fracking’ is having on the oil industry.  AngloGold Ashanti Ltd., the third- largest producer of the gold in the world, expects to extend the life of its South African mines by as much as 30 years using reef-boring technology that taps new ore from previously drilled areas. The boring machines, which AngloGold has developed with its suppliers, are able to remove just the gold-bearing ore from the reef, replacing it with cement and chemicals that stabilize the mining structure. Using technology rather than manual labour means the company can operate 24 hours a day.South Africa has fallen back to around 170 tonnes of gold production a year, but this technology may well reverse the fall. There are three South African gold mining companies we favour nowThe Nigeria Sovereign Investment Authority (NSIA), managers of the country’s $1 billion sovereign wealth fund, has announced a $10 million agricultural financing to boost investment within the sector and enhance economic diversification.“Agriculture is a sector of strategic importance to the NSIA and an area we see opportunities for significant growth and profit through the facilitation of the enhancement of Nigeria’s critical agriculture infrastructure,” said Uche Orji, CEO of NSIA.NSIA is collaborating with the Nigeria’s Ministry of Agriculture and Rural Development and German state-owned development bank KfW as sponsors and has selected Sahel Capital, an indigenous agriculture-focused investment and advisory firm to manage the fund.It is designed to transform the agriculture finance landscape in Nigeria by providing equity and debt capital to sound Agric-focused SMEs, and is expected to grow from $10 million to $100 million through further collaborations with private sector investors.
  • The oil and gas industry has contributed significantly to growth across the continent. While the majority of reserves and production remain concentrated in six countries - Nigeria, Libya, Algeria, Angola (oil), Sudan (oil) and Egypt (gas) - there have been significant new discoveries in Ghana, Tanzania, Mozambique and Uganda. With prospected fields in other countries, including Sierra Leone, Mali and Kenya.Sudan, now one of Africa's leading producers is faced with the secession of the southern portion of the country and the inevitably controversial management of the oil and gas resources. The sub region is also home to what could be a game-changer for the African oil and gas industry - the deepwater gas prospects off Tanzania and Mozambique.10 th December the construction for the refinery began  ◄will be able to refine 200 thousand barrels of crude oil per day 3:10:38 PM◄Refinery location is Quileva - 10 km from lobito city 3:11:06 PM◄the estimated cost is 5.6 million euros and it will take btween 5 to 6 years to be completed3:12:05 PM

Africa Economic Outlook - Insights Shaping your Industry in 2014 Presentation Transcript

  • 1. Africa Economic Outlook INSIGHTS SHAPING YOUR INDUSTRY IN 2014 20 February 2014 © 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  • 2. AFRICA ECONOMIC OUTLOOK: INSIGHTS SHAPING YOUR INDUSTRY IN 2014 PRESENTERS Mani James Craig Parker Cornelis Van Der Waal Kholofelo Dzvukamanja Ian Duvenage Operations Manager Senior Economic Business Unit Programme Head of ICT, Africa Consultant Leader, Energy and Power Manager, Chemicals, Materials Systems and Food WEBINAR
  • 3. Global Overview and Trends Mani James Operations Manager 3
  • 4. African Growth Outlook Global Mega Trends and its Relevance What is a Mega Trend? Mega Trends are transformative, global forces that define the future world with their far reaching impact on business, societies, economies, cultures and personal lives. Urbanisation – City as a Customer Bricks and Clicks Future Infrastructure Development Smart is the New Green Innovating to Zero Health, Welln ess and Well Being Social Trends New Business Models: Value for Many Future of Mobility Connectivity and Convergence Beyond BRIC: The Next Game Changers 4
  • 5. African Growth Outlook Mega Trends that will Impact Africa Urbanisation High The Middle Bulge Degree of Impact on African Economy Regional Integration Invest Africa Connecting the Unconnected Renewable Power Infrastructure Development Responsible Revolution “Value for Many” Business Model M-Health Space Jam Innovation to Zero Devices Low E-Governance Low Degree of Certainty Note: The size of the bubble represents the scale of opportunity within each Mega Trend The Mega Trends have been plotted based on quantitative and qualitative reasoning High Source: Frost & Sullivan. 5
  • 6. African Growth Outlook Outlook and Implications for Global Growth GDP Growth Prospects for 2014 7.0 6.3 6.5 6.0 6.0 5.4 5.0 GDP Growth (%) 5.0 5.0 3.8 4.0 3.1 3.0 2.7 3.1 2.7 2.3 2.3 2.1 2.0 1.3 1.0 0.0 0.0 European Union Central and Eastern Europe Developing Asia ASEAN-5 2013 Latin America and Middle East and the Caribbean North Africa Sub-Saharan Africa United States 2014 Note: Developing Asia composed of 29 countries including China. ASEAN-5 comprises Indonesia, Malaysia, Philippines, Thailand, and Vietnam. Sources: IMF and Frost & Sullivan 6
  • 7. African Growth Outlook African Growth Predictions – Key Sectors Manufacturing: $130 billion Manufacturing, food packaging and fortification. Infrastructure Development: >US$500 billion Transport infrastructure and rehabilitation, housing, ICT, building and other materials, construction and PPE Africa – The Summary Energy: $450 billion Electricity infrastructure, renewable energy, rehabilitation of existing structures Agriculture: US$120 billion Includes fertilisers, crop protection, animal health, feed and additive products, and plant biotechnology. Oil & Gas: US$300 billion Infrastructure, extraction chemicals, and rehabilitation Water: US$250 billion Includes sanitation, water infrastructure and chemicals, renewable water, and water and wastewater treatment. 7
  • 8. African Growth Outlook Global Growth Predictions for 2014 • Virtual Currency • Big Data gets bigger • Wearable Devices • Last Mile Innovation – Shipping Wars • Circular Economy • 3D Printing • “ME” Commerce • “APPS” Power • Health-Centric Devices & Digital Health 8
  • 9. African Economic Outlook Craig Parker Senior Economic Consultant 9
  • 10. African Growth Outlook Fixed Investment to Drive Growth in Emerging Economies FDI Inflow into Africa Is Expected to Double in the Next 7 Years 2013 56.5bn 2001 36.8bn 19.1bn 2006 Sources: World Bank, United Nations and Frost & Sullivan 10
  • 11. African Economic Outlook Risk Factors to African Growth in 2014 Net Portfolio Investment Flows, Developing Asia, Latin America and Sub-Saharan Africa, 2012 and 2013 • Dependence on oil and commodity prices 120.00 107.256 Net Portfolio Flow ($ Billion) 100.00 • Capital flight vulnerability 80.00 60.00 40.00 • Export markets and high dependence on Asia 38.801 38.457 31.445 20.00 9.677 0.00 -0.113 • Macroeconomic instability -20.00 Developing Asia Latin America and Sub-Saharan Africa the Caribbean 2012 2013 • Political instability Sources: International Monetary Fund and Frost & Sullivan 11
  • 12. African Economic Outlook Drivers of Growth in 2014 Countries with High Growth and Investment Potential in Sub-Saharan Africa, 2013-2015 • Expansion of construction and infrastructure investment Africa to Average 4.8% GDP Growth in 2013 Ethiopia • Agri-processing Nigeria Kenya Ghana Gabon DRC Zambia Mozambique South Africa Note: Countries based on score determined from weighted average of per capita GDP and potential growth, GDP & GDP potential growth, FDI stock and growth, political stability, export and import growth potential, and population size and population growth potential • Retail and investment into new malls • Policy certainty Source: Frost & Sullivan 12
  • 13. Energy & Power Cornelis Van Der Waal Business Unit Leader, Energy and Power Systems 13
  • 14. African Economic Outlook Energy and Power - Growth Drivers in 2014 Key Growth Drivers • Signing of Oil & Gas agreements • Public-Private Partnerships • Commissioning of Mega-Projects PPP Activity Oil & Gas Chase / Agreements • Regional Projects Mega Projects 14
  • 15. African Economic Outlook Energy and Power – Investments are Happening Installed Capacity 68 GW 2014 90 GW + 2020 Confirmed Oil and Gas Reserves 19 7 2000 2014 15
  • 16. African Economic Outlook Energy and Power – Predictions for 2014 Opportunity Map • Increased competition • Partnership opportunities • Project and products diversification Key Countries to Watch in 2014 Key Countries to Watch till 2024 • Sustainable green projects 16
  • 17. Chemicals Kholofelo Dzvukamanja Programme Manager, Chemicals, Mat erials and Food 17
  • 18. Africa Economic Outlook Increasing Urbanisation and Infrastructure Development • Mature South African market? • Economic diversification? Increasing Urbanisation Infrastructure Development Countries with High Growth and Investment Potential in SubSaharan Africa for Selected Chemicals Markets, 2013-2015 • Sectors driving demand growth for chemicals • Oil and Gas Development and Mining • Construction and Infrastructure Projects DRC • Other Growth Areas • Agriculture Note: Countries based on score determined from weighted average of per capita GDP and potential growth, GDP & GDP potential growth, FDI stock and growth, political stability, export and import growth potential, and population size and population growth potential • Consumer Products Sources: IMF and Frost & Sullivan 18
  • 19. Africa Economic Outlook Long Term Outlook is Positive For 2014 Sector developments Sector Oil and Gas • Development of new gas deposits in Mozambique,- largest discovery globally in the last decade • Key countries: Nigeria, Libya, Algeria, Angola , Sudan , Egypt • New discoveries: Mozambique, Ghana, Tanzania, Kenya • Angola new refinery by 2018 – planned output 200 thousand barrels per day Mining • South African outlook still unstable in the short to medium term • New technologies to extend mine lifespan, increase operation efficiencies • Recovering global economy supports commodity prices Construction and Infrastructure • Providing products and expertise to key projects across the continents • Slowed growth in South Africa • Increased investment into local manufacturing of inputs Agriculture • Accounts for 15 % of the continent‟s total GDP • Largest cocoa producer Cote d‟Ivoire; Ghana and Ethiopia amongst key growth countries • Highly fragmented production, Low penetration of crop protection and fertiliser products Consumer Products Overall Attractiveness • Relatively small manufacturing base • Fast growing middle income population group Low Medium High 19
  • 20. Africa Economic Outlook New Market Expansion by Sector Summary of Key Market Growth Opportunities across Sectors, SSA, 2014 Water Infrastructure & Treatment US$22 billion required to upgrade Africa‟s water infrastructure DRC Paints and Coatings >US $2 billion Manufacturing US$130 billion • New market focus • Selection of industry specific new growth markets • Innovation – products, services, operating models • Strategic customer focus • Leverage technology Crop Protection > US$2 billion Fertilisers >US$5 billion Infrastructure US$ 500 billion Oil & Gas US$130 billion investment opportunity in infrastructure Source: Frost & Sullivan 20
  • 21. Information and Communication Technologies Ian Duvenage Head of ICT, Africa 21
  • 22. Africa Economic Outlook ICT - Nexus of Cloud Computing, Big Data, Mobility and the Internet of Things 2 Cloud allowing access to content on any device in any location. Big data enables value to be of Cloud extracted out of 1 Rise Big Data and exponential increase in data. Ubiquitous Wireless WiFi, 3G & LTE becoming standard connectivity modes. Industry Verticals 3 Rise of Apps 4 Internet of Things Cloud and mobility driving the emergence of apps which can be used on any IP enabled device. IPv6 driving proliferation of IT enabled sensors/devices across industry-specific activities. 22
  • 23. Africa Economic Outlook ICT – Big Data Gets Bigger The Big Data value chain begins with initial data collection, continues through data management and processing, and then proceeds to end-user application. Acquisition Communications Providers Management Storage Vendors Processing Computing Power Vendors Application End Users Analytics Application Developers Integrated Platform Source: Frost & Sullivan 23
  • 24. Africa Economic Outlook ICT - Emerging Healthcare Opportunities & M-Health Total Healthcare Market: Emerging Healthcare Opportunities, 2012–2015 • Analysis & Content Management Preventive healthcare and wellness monitoring • Stock Management Mobile healthcare EMR/EHR Biosimilars vaccines Robotic surgery • Demand Generation Growth Traditional pharmaceuticals Silver industry equipment (home care) Molecular diagnostics • Mobile Monitoring MIS Hospital services Telemedicine • Partnership opportunities in Mobile Healthcare Digital imaging • Wireless Health Broker & Service Provider Innovation Trigger Super Growth Normalisation Time Leadership Source: Frost & Sullivan analysis. 24
  • 25. Key Success Factors for Africa & Strategic Questions Mani James Operations Manager 25
  • 26. Africa Economic Outlook Key Success Factors for Africa – What has Worked ? Robust country and regional strategy Trusted brand & loyalty Strong local presence Direct Consumer approach is key – absolute must have Key Success Factors Affordable Pricing and Promotion targeting the middle class Focus on maintaining key cash cow products in the broad range Position the global quality brand in the market Strong local partnerships Strengthen the ecommerce platforms 26
  • 27. Africa Economic Outlook Case Study of GSK’s Story in Africa Brief description: Headquartered in the UK, GSK are a global pharmaceutical organisation Markets served: Public and Private pharmaceutical markets, NGO‟s Geographical footprint in Africa: Offices in Algeria, Morocco, Kenya, Ghana, Nigeria, South Africa Product range (Pharmaceuticals): Prescription medicines, vaccines, and consumer healthcare ` Success factors: • Physical presence in key geographies • Charitable grants and low margin product strategy • Extensive product portfolio • Affordable pricing • Robust brand equity • GSK ASPEN distribution agreements 27
  • 28. Africa Economic Outlook What Are the Strategic Questions You Need to Consider? Regional and country strategies – What is your strategy & why ? More global companies locating to Africa – How do you defend your turf ? Consumer focus – Customer„s customer – Do you know the need ? Customised solutions – Are you ready and capable ? Strategic Questions for Africa Distribution Strategy – How strong are your partnerships ? Physical Proximity – Are to your customer ? Product Porfolio differentiation – How do you differentiate ? Tough infrastrucure and regulatory framework – How do you navigate ? 28
  • 29. Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities 29
  • 30. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation. 30
  • 31. Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/FrostandSullivan http://www.linkedin.com/companies/4506 http://www.slideshare.net/FrostandSullivan http://twitter.com/FrostSullivanSA 31
  • 32. For Additional Information Mani James Regional Director for Africa +27 (0)21 680 3208 Mani.james@frost.com Cornelis van der Waal Business Unit Leader for Energy & Environment +27 (0)21 680 3266 Cornelis.vanderWaal@frost.com Vassilissa Kozoulina Sales Director for Africa +27 (0)21 680 3279 Vassilissa.Kozoulina@frost.com Samantha James Corporate Communications +27 (0)21 680 3574 Samantha.james@frost.com 32