Africa: A New Frontier or False Dawn for Sustainable Private Equity?<br />Presented by Herta von Stiegel<br />November 11,...
Ariya Sustainability Model<br />A holistic approach to sustainable investment<br />	*	Bottom-of-the-Pyramid Consumer; typi...
Leapfrogging technology gaps
Preserve environmental capital
Profitable, competitive and efficient business operations
Demand-driven businesses for growing middle class and BOP* consumers
SME development
Increase tax revenue to governments
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Herta von Stiegel

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Herta von Stiegel

  1. 1. Africa: A New Frontier or False Dawn for Sustainable Private Equity?<br />Presented by Herta von Stiegel<br />November 11, 2010<br />
  2. 2. Ariya Sustainability Model<br />A holistic approach to sustainable investment<br /> * Bottom-of-the-Pyramid Consumer; typically earning ~<US$2 per day<br />1<br />Economic impact<br />Environmental impact<br />Governance<br />Social impact<br />Geography <br /><ul><li>Defined by need and demand
  3. 3. Leapfrogging technology gaps
  4. 4. Preserve environmental capital
  5. 5. Profitable, competitive and efficient business operations
  6. 6. Demand-driven businesses for growing middle class and BOP* consumers
  7. 7. SME development
  8. 8. Increase tax revenue to governments
  9. 9. Reduce gap in value of imports versus value of exports
  10. 10. Sustainable use of natural resources
  11. 11. Promotion of environmentally sound products and services
  12. 12. Resource stewardship
  13. 13. Pollution prevention
  14. 14. Investment in companies addressing climate change
  15. 15. Carbon credits
  16. 16. Management and structures
  17. 17. Business ethics
  18. 18. Management structures and ESG
  19. 19. Compliance with local law and international standards
  20. 20. Responsible corporate citizenship
  21. 21. Certified environmental management systems
  22. 22. Transparency
  23. 23. Support of PRI, Equator Principles
  24. 24. Stakeholder engagement
  25. 25. Community collaboration
  26. 26. Job creation
  27. 27. Skills development
  28. 28. Human health and safety
  29. 29. Economic inclusion and wealth creation at the BOP
  30. 30. Introduction of new technologies
  31. 31. Local ownership schemes</li></ul>Sector<br /><ul><li>Poverty alleviation
  32. 32. Service enabler
  33. 33. Environmental sustainability</li></ul>Investment analysis<br /><ul><li>ESG evaluation
  34. 34. Qualitative and quantitative assessment</li></ul>Accountability <br /><ul><li>Measurement of social and environmental impact
  35. 35. External monitoring</li></li></ul><li>Population 1950<br />Population 2007<br />Population 2050<br />2,199<br />Asia<br />North America<br />731<br />445<br />Europe<br />1,532<br />664<br />339<br />1,409<br />China<br />1,329<br />1,658<br />India<br />South<br />America<br />769<br />1,169<br />572<br />Global Population Growth 1950-2050<br />Africa’s population is expected to double by 2050<br /> Source: UN (Figures in millions)<br />2<br />1,998<br />Africa<br />965<br /><ul><li>Forecast population of 2bn by 2050
  36. 36. 33% of global mineral resources
  37. 37. 20% of the world’s land mass
  38. 38. 3% of global FDI
  39. 39. Labour force expected to grow at 4%</li></li></ul><li>Africa and Climate Change<br />The continent with the lowest emissions stands to lose the most<br />Source: The Lancet Vol 373 May 16, 2009<br />3<br />Comparison of undepleted cumulative CO2 emissions by country for 1950–2000 <br />Regional distribution of four climate-sensitive health consequences (malaria, malnutrition, diarrhoea, and inland flood-related fatalities)<br />
  40. 40. Renewable energy & clean technology<br /><ul><li>Essential for sustainable economic growth
  41. 41. Unreliable energy supply can stunt growth by 4% in SSA
  42. 42. Consumption of energy shows strong links to income per capita</li></ul>Key Sectors for Growth and Impact<br />Enabling sectors that are key to poverty alleviation and economic growth<br />Telecommunications<br /><ul><li>Driver of knowledge based activities
  43. 43. The mobile market has seen a cumulative 50% annual growth rate over the last 5 years
  44. 44. Mobile phone usage increased by almost 20x between 2000 and 2008 in the 11 largest African countries (‘African 11’)</li></ul>Microfinance<br /><ul><li>Key to tackling poverty and fostering entrepreneurship
  45. 45. SME sector contributes more than 50% to gross GDP</li></ul>Source: How Exciting is Africa’s Potential, Goldman Sachs Strategy Series, Oct 2010; The Economics of Renewable Energy Expansion in Rural Sub-Saharan Africa, The World Bank, Jan 2010<br />4<br />
  46. 46. Opportunities for Investment<br />Recognizing Africa’s potential and contributing to its positive growth<br />Source: IMF Data Mapper 2009; How Exciting is Africa’s Potential, Goldman Sachs Strategy Series, Oct 2010<br />5<br />Current International Presence<br />Africa’s Growth Conditions<br />Growth Environment Score<br />(GES)<br />
  47. 47. Rule of Law and Good Corporate Governance<br />Africa 1994/95<br />Africa 2009<br />Not Free<br />Partly Free<br />.<br />Free<br /><ul><li>Elections are scheduled for 2011 in the DRC
  48. 48. Cote D’Ivoire held its first round of presidential elections, which had been postponed 6 times since 2005, last month</li></ul>Prerequisites to attracting foreign investment<br />Source: Freedom House Countries are scored on a scale of 1-7. Combined average rating for civil liberties and political freedom are 3-5 for ‘partly free’ and 5-5-7 ‘not free’<br />6<br /><ul><li>In 2009 successful elections have been held in Malawi, South Africa and Zambia
  49. 49. Zimbabwe and the Rep. of the Congo are the only two countries to have regressed since 1995</li></li></ul><li>African Private Equity Market<br />Africa is a growth area with historic IRRs* of 43.5% for private equity investments<br /> * Ariya Capital research: sample of 40 mid-to-large sized deals in Africa between 2000 - 2007<br />African Private Equity Investments – 2000-2007 mid to large sized deals*<br />There is a significant opportunity to achieve superior financial returns AND positive social and environmental impact by investing in Africa<br />
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