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Africa in Today's Financial Markets

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Africa in Today's Financial Markets

Africa in Today's Financial Markets

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  • 1. AFRICA IN TODAY’S FINANCIAL MARKETSPresentation at the Africa Debt Capital Markets21 June 2011
    African Development Bank Group
    Prof. MthuliNcube
    Vice President & Chief Economist
  • 2. OUTLINE
    2
  • 3. Africa’s Sustained Economic Expansion
    GDP Growth: Africa’s growth record has been significant after the crisis
    Trade : Recovery and high demand led to favorable terms of trade
    Inflation: Inflationary pressures have remained relatively contained
    Source: AfDB AEO
    3
  • 4. The Libya and Côte d’Ivoire Effects
    Growth rate (%)
    4
  • 5. Disparities in Economic Performance in 2011
    GDP growth 0.7%
    North Africa
    West Africa
    GDP growth 5.9%
    Central Africa
    East Africa
    GDP growth 5.3%
    GDP growth 6.7%
    Southern Africa
    GDP growth 4.5%
    5
  • 6. Nigeria
    6.9%
    Ethiopia
    10%
    Liberia7.3%
    Ghana
    12%
    DRC
    8.4%
    Tanzania
    6.9%
    The 10 Fastest Growing African Countries in 2011
    Angola7.3%
    Mozambique
    7.7%
    Zimbabwe
    7.8%
    Botswana
    6.9%
    6
  • 7. Tunisia
    1.1%
    Libya
    -19%
    Egypt
    1.6%
    Côte d’Ivoire
    -7.3%
    Benin
    2.5%
    The 10 Slowest Growing African Countries in 2011
    Comoros
    2.5%
    Madagascar
    0.6%
    Swaziland
    1.9%
    South Africa
    3.6%
    Lesotho
    2.9%
    7
  • 8. Tunisia: Unemployment Triggered the Revolution
    Growth rate (%)
    8
  • 9. Drivers of Growth
    External
    Internal
    Domestic consumer demand
    Commodity prices
    Good macroeconomic policies and management
    Prices of agricultural export
    Growth sectors: Agriculture, services, construction and manufacturing
    9
  • 10. Inclusive Growth
    Africa’s slow poverty reduction relative to other developing regions
    High inequality
    Youth unemployment
    Financial Inclusion
    Foster human development
    10
  • 11. Financial Flows to Africa: Considerable slowdown of foreign investment in Africa after the crisis
    11
  • 12.
    • Growing financial markets driven by improved macroeconomic fundamentals, increased political stability, high commodity prices and robust domestic demand.
    • 13. Increasing trading volumes and capitalization in stock markets – highest returns in the world.
    • 14. Nascent but buoyant bond and private equity markets.
    • 15. Growing investment rates supported by strong emerging middle class.
    Source: IMF WEO, AfDB AEO
    12
  • 16.
    • African capital markets have developed steadily over the years with 29 stock exchanges (from only 7 in 1988)
    • 17. However, African capital markets remain narrow and illiquid compared to developed economies and other emerging countries
    • 18. Factors affecting their growth include:
    • 19. Low income levels
    • 20. Ineffective collateral registration systems
    • 21. Weak judicial institutions
    • 22. Exposure to external shocks
    • 23. Weak human capital and financial infrastructure
    • 24. Limited portfolio choice options
    • 25. Inadequate monetary policy and capital account
    regimes
    • Financial literacy
    • 26. Inadequate pension fund reform
    13
  • 27. Selected African Stock Exchanges
    Source: Bloomberg
    14
  • 28. 15
    Sovereign Rating of Selected African Countries as at March 2010
  • 29. 16
  • 30. Snapshot of African Bond Performance ( 2 months - April/May 2011)
    Source: Reuters; Standard Bank Research
    17
  • 31. Fundraising in Africa reached a peak of 31 funds and a capital of $ 11.4 billion in 2007
    Expansion illustrated through Top 5 Africa-Focused Funds Currently Raising
    Source: Prepin Private Equity Market in Africa October 2010
  • 32. Potentials for African Capital Markets
    Rising entrepreneurship activity
    Growing Middle Class
    Infrastructure Bonds
    Diaspora Bonds
    Extractive Industries
    Agriculture
    Clean Energy
    Emerging Partners (BRICs, Korea, Turkey)
    19
    Public-Private Partnerships (PPPs)
    New Technologies – “EG Mobile Banking”