Africa – The New Growth Frontier?                                           Africa Expansion: Key Considerations          ...
Today’s presenter                 Hendrik Malan, Director of Operations - Africa                 Frost & Sullivan         ...
Agenda  Introduction – Why Africa?  Will Africa Provide Sustainable Growth Opportunities?  What are the Key Challenges Com...
Introduction – Why Africa?•   We have realised that all developed markets are susceptible to    the modern economic flu st...
Agenda   Introduction – Why Africa?   Will Africa Provide Sustainable Growth Opportunities?   What are the Key Challenges ...
Will Africa Provide Sustainable Growth Opportunities?                               Average Expected GDP Growth (Africa), ...
Will Africa Provide Sustainable Growth Opportunities?              Inflation is lower and stabilising.                    ...
Will Africa Provide Sustainable Growth Opportunities?                                                                 The ...
Will Africa Provide Sustainable Growth Opportunities?    Total Trade with Africa (Africa) 2001, 2005 and 2010             ...
Will Africa Provide Sustainable Growth Opportunities? Other Driving Forces:  1   Budget deficits are down  2   Infrastruct...
Will Africa Provide Sustainable Growth Opportunities? All indications are therefore that the African lion is about to star...
Agenda   Introduction – Why Africa?   Will Africa Provide Sustainable Growth Opportunities?   What are the Key Challenges ...
What are the key challenges companies face?Restraining Forces:                                The growth is still of a low...
What are the key challenges companies face?          You truly need a good sense of adventure!                            ...
Agenda   Introduction – Why Africa?   Will Africa Provide Sustainable Growth Opportunities?   What are the Key Challenges ...
What Can Be Considered Best (And Worse) Practice forEntering the African Market?                    Standard Geographic Ex...
What Can Be Considered Best (And Worse) Practice forEntering the African Market?✓   1   What is the size of your canvass?✓...
Conclusion•   There is a significant gap between actual and perceived risk in    Africa – this spells opportunity•   Despi...
Next StepsDevelop Your Visionary and Innovative Skills       Growth Partnership Service                      Share your gr...
Your Feedback is Important to Us          What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive St...
Follow Frost & Sullivan onFacebook, LinkedIn, SlideShare, and Twitter            http://www.facebook.com/FrostandSullivan ...
For Additional Information Christie Cronje             Hendrik Malan Corporate Communications    Operations Director Afric...
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Africa - The New Growth Frontier

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An analyst briefing about African expansion in the global economy.

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Africa - The New Growth Frontier

  1. 1. Africa – The New Growth Frontier? Africa Expansion: Key Considerations Hendrik Malan, Africa Operations Director March 2012© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Today’s presenter Hendrik Malan, Director of Operations - Africa Frost & Sullivan MBA from the Vlerick Business School, Belgium BCom Hons (Business Management) from the University of Stellenbosch, South Africa• Hendrik brings a wealth of experience in designing and implementing growth approaches across Africa for some of the top global companies.• His experience spans Africa, Europe, Middle East and Asia and covers a multitude of industries.• His main areas of recent focus include geographic expansions, strategic partnerships and commercial due diligence. 2
  3. 3. Agenda Introduction – Why Africa? Will Africa Provide Sustainable Growth Opportunities? What are the Key Challenges Companies Face When Expanding into Africa? What are the Best Practices of Approaching Expansion into Africa? 3
  4. 4. Introduction – Why Africa?• We have realised that all developed markets are susceptible to the modern economic flu still doing the rounds• Africa as a continent has shown little regard for the turmoil developed markets have experienced over recent years• This has CEOs and investors reconsidering the low base, and paying attention to the fast growing opportunities the continent has to offer• Even the biggest Afro-critics are starting to listen to the rhythmic economic beat of the African drum• The question is therefore raised by many at the moment – is Africa’s growth sustainable? 4
  5. 5. Agenda Introduction – Why Africa? Will Africa Provide Sustainable Growth Opportunities? What are the Key Challenges Companies Face When expanding into Africa? What are the Best Practices of Approaching Expansion into Africa? 5
  6. 6. Will Africa Provide Sustainable Growth Opportunities? Average Expected GDP Growth (Africa), 2011-2016 Tunisia Morocco Algeria Libya Egypt Mauritania Mali Niger Chad SudanEconomic growth is up and is Ghana Nigeria Ethiopia Somalia Cameroon expected to stay up. Gabon Democratic Uganda Kenya Republic of > 7.0% Growth Congo Tanzania 5.0% > 7.0% Growth Angola 3.0% > 5.0% Growth Zambia Mozambique Zimbabwe Madagascar Namibia Botswana South Africa Note: Chart reflects average, yearly GDP growth from 2011-2016 6
  7. 7. Will Africa Provide Sustainable Growth Opportunities? Inflation is lower and stabilising. 7
  8. 8. Will Africa Provide Sustainable Growth Opportunities? The workforce is increasing. 69.4 Years 57.43 38.17 55.2 1950 2010 2050 446.9 Life Expectancy at Birth (Years) 751.0 42.1 719.3 374.4 36.6 652.2 344.5 Population (Million) 590.1 744.2 738.2 5,142.2 4,565.5 4,164.3 2,191.6 1,022.2 1,278.2 2010 2020 2050 Africa Asia Europe Latin America North America Oceania Source: UN Population Estimates and Frost & Sullivan 8
  9. 9. Will Africa Provide Sustainable Growth Opportunities? Total Trade with Africa (Africa) 2001, 2005 and 2010 Africa’s BRICS and Global Trade Split (Global), 2001 and 2010 65% of exports to BRICS are oil exports Source: International Trade Commission and Frost & Sullivan Africa’s trade partners are changing. 9
  10. 10. Will Africa Provide Sustainable Growth Opportunities? Other Driving Forces: 1 Budget deficits are down 2 Infrastructure investment is up 3 Urbanisation is up 4 Armed conflicts are down 5 PE, corporate finance and structured finance up 6 Regulatory reform is up 7 Privatisation is up 8 Economic diversification is up 9 Global trade & financial institutions sentiment up 10
  11. 11. Will Africa Provide Sustainable Growth Opportunities? All indications are therefore that the African lion is about to start roaring, cementing its place in the global economy. 11
  12. 12. Agenda Introduction – Why Africa? Will Africa Provide Sustainable Growth Opportunities? What are the Key Challenges Companies Face When Expanding into Africa? What are the Best Practices of Approaching Expansion into Africa? 12
  13. 13. What are the key challenges companies face?Restraining Forces: The growth is still of a low base 1 The development still fragile 2 Massive diversity 3 Low intra-regional trade 4 Lack of credible data 5 Not cosy and uncomfortable 6 Many teething problems 7 Low economic value add 8 13
  14. 14. What are the key challenges companies face? You truly need a good sense of adventure! 14
  15. 15. Agenda Introduction – Why Africa? Will Africa Provide Sustainable Growth Opportunities? What are the Key Challenges Companies Face When Expanding into Africa? What are the Best Practices of Approaching Expansion into Africa? 15
  16. 16. What Can Be Considered Best (And Worse) Practice forEntering the African Market? Standard Geographic Expansion Process Objectives Short listing of Market Market Roadmap workshop countries assessment entry options Objectives Short listing of Market Market entry Roadmap workshop countries assessment options Output: Output: Output: Market Output: Output: Expansion Development size and Opportunity Implementation objectives of metrics dynamics identification roadmap Output: Output: Output: Output: Stakeholder Development Customer Ranking of mapping of model trends opportunities Output: Output: Output: Output: Selection of Organisational Competitive Penetration shortlisted alignment assessment options markets Output: Value chain assessment 16
  17. 17. What Can Be Considered Best (And Worse) Practice forEntering the African Market?✓ 1 What is the size of your canvass?✓ 2 Are we there yet?✓ 3 It’s not an arm’s length affair…✓ 4 To compete like a local, you have to be a local!✓ 5 The big G✓ 6 We have to do what…?!✓ 7 I know people who know people 17
  18. 18. Conclusion• There is a significant gap between actual and perceived risk in Africa – this spells opportunity• Despite the low base, the growth experienced by the continent attractive and it appears to be more sustainable than in the past• This new ‘African Story’ is driven by consumption, a growing middle class, urbanisation and strong infrastructure needs• The African renaissance is not yet here, but the writing is on the wall• You will have to be well entrenched by the time this hits to be able to capitalise on it• The paradigm is shifting from ‘should we invest in Africa’ to ‘managing risk of not being in Africa’ 18
  19. 19. Next StepsDevelop 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 19
  20. 20. 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. 20
  21. 21. Follow Frost & Sullivan onFacebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/FrostandSullivan http://www.linkedin.com/companies/4506 http://www.slideshare.net/FrostandSullivan http://twitter.com/FrostSullivanSA 21
  22. 22. For Additional Information Christie Cronje Hendrik Malan Corporate Communications Operations Director Africa +27 (0)21 680 3566 +27 (0)21 680 3260 christie.cronje@frost.com hendrik.malan@frost.com 22
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