Herta von Stiegel
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Herta von Stiegel

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Herta von Stiegel Herta von Stiegel Presentation Transcript

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