Assessing Opportunities Within the Rising
African Middle Class
Mark Simoncelli
Global Director: Growth Implementation Solu...
Agenda for Today
•

Assessing the African Opportunity

•

African Investment Potential

•

Identifying Africa’s Growth Pot...
Assessing the African Opportunity

The Economist, 3 Dec 2011
1990’s

2000’s

2.2%

5.5%

1990’s

2000’s

GDP Growth

FDI I...
Average Growth Potential Remains Robust in
Sub-Saharan Africa
Average GDP Growth for Most Regions Except Sub-Saharan Afric...
FDI Inflow into Africa Is Expected to Double in the Next 7
Years

56.5bn
56.5bn

2013

2001

36.8bn
19.1bn
2006

5
Return on Investment for Inward FDI was Highest in Africa
in the Last 5 Years
Return on Investment for FDI, 2012

United S...
Identifying Growth Potential
Countries with High Growth and
Investment Potential in Africa, 2013-2015
Nigeria
Ethiopia
Gha...
Africa’s Potential Hinges on Infrastructure Development
to Open Markets and Trade Routes
Power, Transport, and Trade Integ...
What is the Size of the Potential Opportunity of
the Rising African Middle Class?

9
Estimates of the African Middle Class Vary Considerably

% of All Expenditure Groups

African Middle Class by Expenditure ...
Leading a Middle Class Lifestyle in Africa is Expensive
Cost of Living and Grocery Index Comparison, Selected
Countries, 2...
We Should Not Confuse Per Capita Consumption
Expenditure As Middle Class Growth
Rising per capita incomes
translates into ...
Tertiary Education Levels and ICT Development Are A
Strong Indicator of Middle Class Growth and Size
Tertiary Enrolment an...
Geographic Expansion

14
Frost & Sullivan’s Strategic Approach to Geographic
Expansion
Phase 1: Building the
Fact Foundation

Internal Analysis
• A...
Next Steps

Develop Your Visionary and Innovative Skills
Growth Partnership Service

Share your growth thought leadership ...
Your Feedback is Important to Us
What would you like to see from Frost & Sullivan?
Growth Forecasts?
Competitive Structure...
Follow Frost & Sullivan on Facebook, LinkedIn,
SlideShare, and Twitter

http://www.facebook.com/FrostandSullivan

http://w...
For Additional Information

Mark Simoncelli
Global Director
Growth Implementation Solutions
(+27) 21 680 3260
Mark.Simonce...
Upcoming SlideShare
Loading in …5
×

Assessing Opportunities within the Rising African Middle Class

771 views

Published on

Why you should listen On Demand:

- Learn about the key factors in assessing the African middle class
- Identify the political and social dynamics that may influence business in the region
- Assess the growth opportunities in various countries and key focus areas of future development

On Demand: https://www.brighttalk.com/webcast/5562/91115

Published in: Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
771
On SlideShare
0
From Embeds
0
Number of Embeds
5
Actions
Shares
0
Downloads
28
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Assessing Opportunities within the Rising African Middle Class

  1. 1. Assessing Opportunities Within the Rising African Middle Class Mark Simoncelli Global Director: Growth Implementation Solutions and Craig Parker Senior Economist: Emerging Markets © 2012 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. 2. Agenda for Today • Assessing the African Opportunity • African Investment Potential • Identifying Africa’s Growth Potential • What is the African Middle Class? • Opportunity of the African Middle Class • Future Drivers of the African Middle Class • Frost & Sullivan’s Geographic Expansion Process 2
  3. 3. Assessing the African Opportunity The Economist, 3 Dec 2011 1990’s 2000’s 2.2% 5.5% 1990’s 2000’s GDP Growth FDI Inflows $66.32bn $342.51bn 1990 2010 15 5 1990’s 2000’s 61.8% 37.4% Civil Wars The Economist, 13 May 2000 Foreign Debt to GDP 3
  4. 4. Average Growth Potential Remains Robust in Sub-Saharan Africa Average GDP Growth for Most Regions Except Sub-Saharan Africa is Significantly Lower After the Financial Crisis 4
  5. 5. FDI Inflow into Africa Is Expected to Double in the Next 7 Years 56.5bn 56.5bn 2013 2001 36.8bn 19.1bn 2006 5
  6. 6. Return on Investment for Inward FDI was Highest in Africa in the Last 5 Years Return on Investment for FDI, 2012 United States 4.8% Africa Asia 8.8% Latin America 9.3% 7.1% A strong infrastructure drive and PPP’s will further raise the ROI for FDI in many African countries 6
  7. 7. Identifying Growth Potential Countries with High Growth and Investment Potential in Africa, 2013-2015 Nigeria Ethiopia Ghana Zambia Africa to Average 4.8% GDP Growth in 2013 Ethiopia GDP Per Average GDP Average Per FDI Stock Capita Growth Capita GDP (Million Growth (%) (%)(2013(US$) US$) (2013-2015) 2015) 3,067 12.9 7.1 53340.9 1,338 12.8 6.5 3964.2 3,723 12.8 6.8 7308.1 1,982 15.3 7.9 9468.4 FDI Stock Growth (%) (5 year average) 85.5 23.0 236.1 70.1 Average Export Growth (%) (2013-2015) 4.7 13.7 16.2 14.4 Ghana Gabon 8.6 3.2 115771.9 17.6 4.0 18,925 15.5 6.6 1570.4 146.3 1.7 Democratic Republic of the Congo 416 11.6 7.2 3336.6 267.6 14.5 Angola DRC 12,250 Gabon Nigeria South Africa 7,067 12.6 6.8 11460.2 -44.0 4.3 Zambi a South Africa Note: Countries based on score determined from weighted average of per capita GDP and potential growth, GDP & GDP potential growth, FDI stock and growth, political stability, export and import growth potential, and population size and population growth potential Nigeria Ethiopia Ghana Zambia Average Average Pop Growth GDP 2013Import Average Pop Political (%) (20132015 Growth (%) (2013-2015) Instability Index 2015) (Billion (2013-2015) US$) 8.2 174.0 5.6 304.87 7.00 7.9 90.9 4.7 50.14 5.10 5.4 26.2 5.2 47.60 5.90 11.1 14.6 5.0 25.69 7.80 South Africa 3.0 52.4 2.4 393.12 7.00 Gabon 5.6 1.6 2.9 20.15 5.10 Democratic Republic of the Congo 6.3 79.3 6.1 20.85 8.20 Angola 7.5 21.5 6.1 135.09 7.20 7
  8. 8. Africa’s Potential Hinges on Infrastructure Development to Open Markets and Trade Routes Power, Transport, and Trade Integration Africa, 2012-2020 Total Intra-trade: $216.00 billion Power Interconnection Investment: $50.00 billion Regional Transport Investment (road, rail): $30.00 billion ICT Infrastructure Development: ` $60.00 billion Planned Electricity Interconnections Inga Interconnection Project Road Infrastructure Development Trilateral Free Trade Agreement (T-FTA) Investment in infrastructure raises the potential for trade and improves the access to goods and services Source: Frost & Sullivan analysis. 8
  9. 9. What is the Size of the Potential Opportunity of the Rising African Middle Class? 9
  10. 10. Estimates of the African Middle Class Vary Considerably % of All Expenditure Groups African Middle Class by Expenditure Split (As Defined By the ADB), 1980-2010 Source: Africa Development Bank 10
  11. 11. Leading a Middle Class Lifestyle in Africa is Expensive Cost of Living and Grocery Index Comparison, Selected Countries, 2013 Mortgage Affordability Comparison, Selected Countries, 2013 0 100 200 300 400 500 600 700 Ghana Venezuela Mauritius Nigeria China The cost of living and buying groceries is almost equal in Nigeria and the United Kingdom Ethiopia Kenya Ghana is ranked 1/103 countries as most expensive to pay a mortgage Brazil Tunisia India Turkey Mortgage as Percentage of Income Note: Mortgage as Percentange of Income is a the ratio of the actual monthly cost of the mortgage to take-home family income. Average monthly salary is used to estimate family income. It assumes 100% mortgage is taken on 20 years for the house(or apt) of 90 square meters which price per square meter is the average of price in city center and outside of city center. Source: Numbeo and Frost & Sullivan 11
  12. 12. We Should Not Confuse Per Capita Consumption Expenditure As Middle Class Growth Rising per capita incomes translates into greater demand potential Ghana Nigeria Kenya South Africa has high GDP per capita, but the top income decile earns 60% of income and has increased in the past decade 2001 2011 South Africa Population in Million GDP Per Capita in US$ 12
  13. 13. Tertiary Education Levels and ICT Development Are A Strong Indicator of Middle Class Growth and Size Tertiary Enrolment and Mobile Subscriber Correlation to Spending ($10 to $20 Per Day) Tertiary sector growth Infrastructure development Urbanisation Source: Africa Development Bank, World Bank and Frost & Sullivan 13
  14. 14. Geographic Expansion 14
  15. 15. Frost & Sullivan’s Strategic Approach to Geographic Expansion Phase 1: Building the Fact Foundation Internal Analysis • Assess internal strength & capabilities • Operational review • Growth strategy and goals • Resource Availability • Readiness for change Country Selection • Analyse selected countries to on macroeconomic and industry variables • Perform analysis and identify focus industries/countries Market Analysis Country specific analyses will be developed for each key business category: • Customer Analysis • Competitive Analysis • Market Analysis • Operational Assessment Phase 2: Recommended Strategic Options Quick wins Strategic Options Test expansion options againstt market information and internal analysis assessing the gap between future and current states to assist in the development of market entry options Phase 3: Business Case Development Business Case Commercial feasibility Organisational feasibility Phase 4: Implementation Initiate Operations • Develop rollout plan • Design systems and procedures • Support on the ground roll-out (structures, asset rollout and staff) • Establish relationships with key marketing contacts, suppliers, and partners Entrench Operations Market Entry Operational feasibility Financial feasibility • Support marketing efforts • Identify, assess and establish relationships with new clients, partners and government agencies • Drive and support relationships with key clients • Support registration with consultants and clients • Sustain and stabilise business over long-term 15
  16. 16. 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 16
  17. 17. 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. 17
  18. 18. 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 https://twitter.com/FrostSullivanSA 18
  19. 19. For Additional Information Mark Simoncelli Global Director Growth Implementation Solutions (+27) 21 680 3260 Mark.Simoncelli@frost.com Craig Parker Senior Economist Emerging Markets (+27) 21 680 3260 Craig.Parker@frost.com Vassilissa Kozouilina Sales Director Africa (+27) 21 680 3260 Vassilissa.Kozouilina@frost.com Samantha James Corporate Communications Africa (+27) 21 680 3260 Samantha.James@frost.com 19

×