The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
Abdullah Cerachia CEOs_Forum 21 November 2011
1. The Rise of the New World’s Frontier and Emerging
Markets: Implications for the Global Economy
Presentation to the EDP CEOs Forum
Cape Town South Africa
21 November 2011
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2. Contents
The Global Economy*
* as we should
know it
15. The Economist: The World in 2011
“One of the landmarks of change in 2011 will
be China overtaking America as the biggest
manufacturer. But China too could find itself
being overtaken by India in economic growth,
in what would be a sign of things to come.”
Michael Pilkington
Editor, The Economist
17. Global Current Account Imbalances
Many western economies, particularly the US, ran significant current account deficits that were financed by
current account surpluses in emerging Asian economic powers, particularly China. As the world’s emerging
economies transformed themselves from debtor to creditor economies, geo-economic power began to shift.
32. Outcomes of the G8 2011 Summit in Deauville
“G8 Disappoints Sub-Saharan
Africa”
- All africa.net 28/05/2011
“G8 Summit – a breakthrough
for the Tunisian economy.”
- Tunisia live.net 17/05/2011
33. The Resulting Impact on Emerging Markets
Source: Thomson Reuters DataStream; EPFR
Financial Times, 14 January 2011
40. Libya – Impact on the Rest of the World
Consequences for global oil supply
It is reckoned that Libya has the largest proven oil reserves in Africa
(± 44 billion barrels) – theoretically provide enough oil for another
76 years of production
26/02/2011
Main oil-producing companies in Libya:
BUT
41. Libya – Impact on the Rest of the World
Oil output in Libya has been cut by 50%
Oil prices have risen and are set to rise even further
If oil prices rise to US$ 200 a barrel, it could lead to a double-dip
recession worldwide
26/02/2011
2 March 2011
US$ 115.96
42. Addressing the Facts
Unemployment GINI Corruption Human Press Democracy Young Adult
Rate Coefficient Index Development Freedom (out of 167) Population
(out of 178) Index (out of 196) (% under 25)
Tunisia 13.1% 40.0 59 81 (0.683) 186 144 42.1%
Egypt 9% 34.4 98 101 (0.620) 130 138 52.3%
Libya 13% N/A 146 53 (0.755) 192 158 47.4%
Bahrain 3.7% N/A 48 39 (0.801) 153 122 43.9%
Yemen 35% 37.7 146 133 (0.439) 173 146 30%
Algeria 9.7% 35.3 105 84 (0.677) 141 125 47.5%
Morocco 9.1% 40.9 85 114 (0.567) 146 116 47.7%
Iran 14.6% 44.5 146 70 (0.702) 175 158 34%
Oman ± 15% N/A 41 N/A 153 143 51.5%
Iraq 18% N/A 175 N/A 144 111 60.6%
Jordan 12.5% 39.7 50 82 (0.509) 140 117 54.3%
44. The Young and the Restless?
• There are currently 5 65 320 Facebook
users within Egypt
• 50% of these users are between the ages
of 18-24
• There are currently 305 420 Facebook
users within Libya
• 70% of the users are between the ages
of 18-34
55. Drug Dealer and Addict Syndrome
Over- indebted US Unsustainable
consumers go on an Chinese export
unsustainable binge drive, built on
cheap currency
↓ interest rates
$s earned from ↑ housing prices
export drive went
back into USA Encourages US to loan more to
buy more Chinese goods
“After 1989 capitalism saved China. And after 2009 China saved capitalism”
- David Miliband, Britain’s foreign secretary
59. Implications of Emerging Markets on Established MNCs
• Know your competitors
• Take a hard look ahead, anticipate the challengers
• Design a strategy for the new outlook
– create your own challenger
• Evaluate your operations and nurture your customer ties
• Find ways to ride the wave of globalisation instead of fighting it
– look for new opportunities
68. How is Africa doing? Only 8 African
Countries had a
2010 GDP for African Countries (in billion US$)GDP in 2010 that
1000
was higher than
BHP Billiton
South Africa
Egypt Nigeria
Gross Domestic Product, Current Prices (In billion US$)
Algeria
100 Morocco
Angola Libya
Sudan BHP Billiton, 52.8
Tunisia
Cameroon Côte d'Ivoire Ethiopia Kenya
Equatorial Guinea Tanzania
Ghana Uganda
DRC Zambia
Burkina Faso Gabon Mauritius Namibia Senegal
10
Republic of Congo Mali Mozambique
Madagascar
Benin Chad Rwanda Zimbabwe
Guinea Malawi Niger
Mauritania Swaziland
Central African Republic Togo
Eritrea
Cape Verde Lesotho Sierra Leone
Burundi
1 Djibouti Guinea-Bissau Seychelles
Liberia
The Gambia
Comoros
São Tomé and Príncipe
0.1
Source: IMF Data, Frontier Advisory
69. Creating Frontier Markets in SSA
Growth underwritten by rising commodity prices; and from low base
Improved macro-economic framework
Capital inflows from BRIC economies
SA Inc pushing North, ME sovereign wealth pushing South
Rollout of sizeable infrastructure development
Remittances as a capital provider
Slowly improving intra-regional trade networks
Deepening capital markets – growing equity culture
Emergence of “African multinationals”
Urbanisation and increasing African consumer spend
70. Africa Today
US$1.6tr – Africa’s collective GDP in 2008
US$860bn – Africa’s combined consumer spending in 2008
316m new mobile phone subscribers signed up since 2000
60% of worlds’ total amount of uncultivated, arable land
52 Africa cities with more than 1m people each
20 African companies with revenues of at least US$3bn
But large and varying topography, languages, cultures
Still limited intra-Africa trade and investment
71. Africa – the untapped market of the future
US$2.6tr – Africa’s collective GDP in 2020
US$1.4tr – Africa’s combined consumer spending in 2020
1.1bn African of working age in 2040
128m African households with discretionary income in 2020
50% of Africans will be living in cities by 2030, and
urbanisation offers further productivity and income
opportunities
2bn African consumers by 2050
Continued strong growth trends given changes in global
economy and internal changes in continent’s societies and
economies
72. Contributors to Sub-Saharan African Growth
Growth underwritten by rising commodity prices
Improved macro-economic framework
Capital inflows from BRIC economies
SA Inc pushing up North, ME sovereign wealth pushing South
Rollout of massive infrastructure development
Remittances as a capital provider
Slowly improving intra-regional trade networks
Deepening capital markets – growing equity culture
Emergence of “African multinationals”
Increasing African consumer spend
76. Concluding Thoughts
• From “De-coupling” to “New Coupling”
• Emerging markets are the new drivers of growth and determinants of
the global growth cycle
• Over the medium term, African economies that align their development
needs to the EM reality will succeed, the rest will falter
• States are becoming more interventionist – “The Developmental State”
• Africa will be further marginalised from traditional economies….
• But will gravitate toward the BRICs
• We must differentiate between the growth story and true development
• Geo-strategic economic maps are being redrawn
77. www.frontieradvisory.com
CONFIDENTIALITY and DISCLAIMER: This document and its contents are strictly private
and confidential, privileged and for the information of the intended recipient only. Frontier
Advisory makes no representations or warranties in respect of the content of this
document, and will not be liable for any loss or damage of any nature that may arise from
this document, the content thereof or your reliance thereon. Should you have received this
document in error please contact the sender immediately and destroy this document.
