The Rise of the New World’s Frontier and Emerging   Markets: Implications for the Global EconomyPresentation to the EDP CE...
Contents                 The Global Economy** as we shouldknow it
Share of the Global Output, 1 AD
Share of the Global Output, 1500 AD
Share of the Global Output, 1900 AD
Share of the Global Output, 1960 AD
Share of the Global Output, 1990 AD
Share of the Global Output, 2015 AD
The Rise of the BRIC’s         Is South Africa a “deserving member”?
The Shift in Wealth
The Geo-Economic Shift
The Changing World…
The Changing World…
The Changing World…
The Economist: The World in 2011                         “One of the landmarks of change in 2011 will                     ...
Economic Uncertainty
Global Current Account Imbalances Many western economies, particularly the US, ran significant current account deficits th...
US$14.767 trillion debt debacle (3:15pm, Mon26Sep)
Impact of Crisis on GDP & Unemployment
Why its bad to have Lehman Brothers on your CV
Emerging vs. Developing Market Performance
Emerging vs. Developing Crude Oil ConsumptionSource: BP Statistical Review of World Energy
Raging cost of living
Global Cost of Living
Real GDP % Performance – Europe
North vs. South Europe
Debt is out of control (June2011) – Global Debt Clock
Debt “Recovery” (June2011)
African Leading Lights Debt (June2011)
That Debt Problem                                             Source: Bloomberg,                                          ...
The Race to the Bottom           16/10/2010
Outcomes of the G8 2011 Summit in Deauville                                   “G8 Disappoints Sub-Saharan                 ...
The Resulting Impact on Emerging MarketsSource: Thomson Reuters DataStream; EPFRFinancial Times, 14 January 2011
Real GDP Per Person Q4 2007-Q2 2011 % Change
And in Other World News…Key Developments in 2011 and Outlookgoing forward?
Japan’s Devastation
…and the whole event was captured live
North Africa’s Devastation“Tunisia Elections 2011: Voters Turn Out For First Free Vote” – Huffington Post 23/10/11
What about Libya?
Libya – Impact on the Rest of the WorldConsequences for global oil supplyIt is reckoned that Libya has the largest proven ...
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 ris...
Addressing the Facts            Unemployment   GINI          Corruption     Human         Press          Democracy      Yo...
The Young and the Restless?
The Young and the Restless?• There are currently 5 65 320 Facebookusers within Egypt• 50% of these users are between the a...
Top 10 for 2011
Competitiveness in AfricaSelected African economies performance (2005-2011)Country            2005         2006   2007   2...
The Rise of Emerging Markets
Tables have Turned                       The recent                     economic crisis                     has shifted th...
Balance of Power is Shifting East
Balance of Power – where’s the growth coming from?
Output Growth Gap of Emerging vs. Advance Economies               The rise of the BRICs
The Pockets are Full!                                     Foreign exchange reserves    Source: Relevant Country Statistica...
Sovereign or Saviour Wealth Funds?
Saving for Luxury Things & Times           Source: IMF - World Bank Data
Drug Dealer and Addict Syndrome                                 Over- indebted US                  Unsustainable          ...
Is Goldman Sachs Forecasting Still Relevant?
Is Goldman Sachs Forecasting Still Relevant?
Is Goldman Sachs Forecasting Still Relevant?
Implications of Emerging Markets on Established MNCs•   Know your competitors•   Take a hard look ahead, anticipate the ch...
Emerging Africa
Africa’s Abysmal Brand May 2000                August 2002   June 2003
Reporting on Africa July 2005            March 2008   September 2009
Africa in Perspective
Africa as a Frontier Market of 1 Billion
Africa’s Frontier Markets are Looking Up
The Economist’s Top Growers 2001-2010 Source: Economist and IMF forecast
The Economist’s Top Growers 2011-2015 Source: Economist and IMF forecast
How is Africa doing?                                                      Only 8 African                                  ...
Creating Frontier Markets in SSAGrowth underwritten by rising commodity prices; and from low baseImproved macro-economic f...
Africa TodayUS$1.6tr – Africa’s collective GDP in 2008US$860bn – Africa’s combined consumer spending in 2008316m new mobil...
Africa – the untapped market of the futureUS$2.6tr – Africa’s collective GDP in 2020US$1.4tr – Africa’s combined consumer ...
Contributors to Sub-Saharan African GrowthGrowth underwritten by rising commodity pricesImproved macro-economic frameworkC...
SA Inc. as an Emerging Actor in Africa
The Privatisation of Aid
To Conclude…
Concluding Thoughts• From “De-coupling” to “New Coupling”• Emerging markets are the new drivers of growth and determinants...
www.frontieradvisory.comCONFIDENTIALITY and DISCLAIMER: This document and its contents are strictly privateand confidentia...
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Abdullah Cerachia CEOs_Forum 21 November 2011

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Abdullah Cerachia CEOs_Forum 21 November 2011

  1. 1. The Rise of the New World’s Frontier and Emerging Markets: Implications for the Global EconomyPresentation to the EDP CEOs ForumCape Town South Africa21 November 2011 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.
  2. 2. Contents The Global Economy** as we shouldknow it
  3. 3. Share of the Global Output, 1 AD
  4. 4. Share of the Global Output, 1500 AD
  5. 5. Share of the Global Output, 1900 AD
  6. 6. Share of the Global Output, 1960 AD
  7. 7. Share of the Global Output, 1990 AD
  8. 8. Share of the Global Output, 2015 AD
  9. 9. The Rise of the BRIC’s Is South Africa a “deserving member”?
  10. 10. The Shift in Wealth
  11. 11. The Geo-Economic Shift
  12. 12. The Changing World…
  13. 13. The Changing World…
  14. 14. The Changing World…
  15. 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
  16. 16. Economic Uncertainty
  17. 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.
  18. 18. US$14.767 trillion debt debacle (3:15pm, Mon26Sep)
  19. 19. Impact of Crisis on GDP & Unemployment
  20. 20. Why its bad to have Lehman Brothers on your CV
  21. 21. Emerging vs. Developing Market Performance
  22. 22. Emerging vs. Developing Crude Oil ConsumptionSource: BP Statistical Review of World Energy
  23. 23. Raging cost of living
  24. 24. Global Cost of Living
  25. 25. Real GDP % Performance – Europe
  26. 26. North vs. South Europe
  27. 27. Debt is out of control (June2011) – Global Debt Clock
  28. 28. Debt “Recovery” (June2011)
  29. 29. African Leading Lights Debt (June2011)
  30. 30. That Debt Problem Source: Bloomberg, International Monetary Fund Source: World Economic Forum Global Competitiveness Report 2011
  31. 31. The Race to the Bottom 16/10/2010
  32. 32. Outcomes of the G8 2011 Summit in Deauville “G8 Disappoints Sub-Saharan Africa” - All africa.net 28/05/2011“G8 Summit – a breakthroughfor the Tunisian economy.”- Tunisia live.net 17/05/2011
  33. 33. The Resulting Impact on Emerging MarketsSource: Thomson Reuters DataStream; EPFRFinancial Times, 14 January 2011
  34. 34. Real GDP Per Person Q4 2007-Q2 2011 % Change
  35. 35. And in Other World News…Key Developments in 2011 and Outlookgoing forward?
  36. 36. Japan’s Devastation
  37. 37. …and the whole event was captured live
  38. 38. North Africa’s Devastation“Tunisia Elections 2011: Voters Turn Out For First Free Vote” – Huffington Post 23/10/11
  39. 39. What about Libya?
  40. 40. Libya – Impact on the Rest of the WorldConsequences for global oil supplyIt is reckoned that Libya has the largest proven oil reserves in Africa(± 44 billion barrels) – theoretically provide enough oil for another76 years of production 26/02/2011Main oil-producing companies in Libya: BUT
  41. 41. Libya – Impact on the Rest of the World Oil output in Libya has been cut by 50% Oil prices have risen and are set to rise even further If oil prices rise to US$ 200 a barrel, it could lead to a double-dip recession worldwide 26/02/2011 2 March 2011 US$ 115.96
  42. 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%
  43. 43. The Young and the Restless?
  44. 44. The Young and the Restless?• There are currently 5 65 320 Facebookusers within Egypt• 50% of these users are between the agesof 18-24 • There are currently 305 420 Facebook users within Libya • 70% of the users are between the ages of 18-34
  45. 45. Top 10 for 2011
  46. 46. Competitiveness in AfricaSelected African economies performance (2005-2011)Country 2005 2006 2007 2008 2009 2010 2011SA 42 36 44 45 45 54 50Mauritius 52 55 60 57 57 55 54Namibia 63 72 89 80 74 74 83Botswana 48 57 76 56 66 76 80Nigeria 88 95 95 94 99 127 127Egypt 53 71 77 81 70 81 94Morocco 76 65 64 73 73 75 73Zimbabwe 109 112 129 133 132 136 132 Source: World Economic Forum
  47. 47. The Rise of Emerging Markets
  48. 48. Tables have Turned The recent economic crisis has shifted the global power balance
  49. 49. Balance of Power is Shifting East
  50. 50. Balance of Power – where’s the growth coming from?
  51. 51. Output Growth Gap of Emerging vs. Advance Economies The rise of the BRICs
  52. 52. The Pockets are Full! Foreign exchange reserves Source: Relevant Country Statistical agencies and Central Banks
  53. 53. Sovereign or Saviour Wealth Funds?
  54. 54. Saving for Luxury Things & Times Source: IMF - World Bank Data
  55. 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 $s earned from ↑ housing prices export drive went back into USA Encourages US to loan more to buy more Chinese goods “After 1989 capitalism saved China. And after 2009 China saved capitalism” - David Miliband, Britain’s foreign secretary
  56. 56. Is Goldman Sachs Forecasting Still Relevant?
  57. 57. Is Goldman Sachs Forecasting Still Relevant?
  58. 58. Is Goldman Sachs Forecasting Still Relevant?
  59. 59. Implications of Emerging Markets on Established MNCs• Know your competitors• Take a hard look ahead, anticipate the challengers• Design a strategy for the new outlook – create your own challenger• Evaluate your operations and nurture your customer ties• Find ways to ride the wave of globalisation instead of fighting it – look for new opportunities
  60. 60. Emerging Africa
  61. 61. Africa’s Abysmal Brand May 2000 August 2002 June 2003
  62. 62. Reporting on Africa July 2005 March 2008 September 2009
  63. 63. Africa in Perspective
  64. 64. Africa as a Frontier Market of 1 Billion
  65. 65. Africa’s Frontier Markets are Looking Up
  66. 66. The Economist’s Top Growers 2001-2010 Source: Economist and IMF forecast
  67. 67. The Economist’s Top Growers 2011-2015 Source: Economist and IMF forecast
  68. 68. How is Africa doing? Only 8 African Countries had a 2010 GDP for African Countries (in billion US$)GDP in 2010 that 1000 was higher than BHP Billiton South Africa Egypt NigeriaGross Domestic Product, Current Prices (In billion US$) Algeria 100 Morocco Angola Libya Sudan BHP Billiton, 52.8 Tunisia Cameroon Côte dIvoire 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 0.1Source: IMF Data, Frontier Advisory
  69. 69. Creating Frontier Markets in SSAGrowth underwritten by rising commodity prices; and from low baseImproved macro-economic frameworkCapital inflows from BRIC economiesSA Inc pushing North, ME sovereign wealth pushing SouthRollout of sizeable infrastructure developmentRemittances as a capital providerSlowly improving intra-regional trade networksDeepening capital markets – growing equity cultureEmergence of “African multinationals”Urbanisation and increasing African consumer spend
  70. 70. Africa TodayUS$1.6tr – Africa’s collective GDP in 2008US$860bn – Africa’s combined consumer spending in 2008316m new mobile phone subscribers signed up since 200060% of worlds’ total amount of uncultivated, arable land52 Africa cities with more than 1m people each20 African companies with revenues of at least US$3bnBut large and varying topography, languages, culturesStill limited intra-Africa trade and investment
  71. 71. Africa – the untapped market of the futureUS$2.6tr – Africa’s collective GDP in 2020US$1.4tr – Africa’s combined consumer spending in 20201.1bn African of working age in 2040128m African households with discretionary income in 202050% of Africans will be living in cities by 2030, andurbanisation offers further productivity and incomeopportunities2bn African consumers by 2050Continued strong growth trends given changes in globaleconomy and internal changes in continent’s societies andeconomies
  72. 72. Contributors to Sub-Saharan African GrowthGrowth underwritten by rising commodity pricesImproved macro-economic frameworkCapital inflows from BRIC economiesSA Inc pushing up North, ME sovereign wealth pushing SouthRollout of massive infrastructure developmentRemittances as a capital providerSlowly improving intra-regional trade networksDeepening capital markets – growing equity cultureEmergence of “African multinationals”Increasing African consumer spend
  73. 73. SA Inc. as an Emerging Actor in Africa
  74. 74. The Privatisation of Aid
  75. 75. To Conclude…
  76. 76. Concluding Thoughts• From “De-coupling” to “New Coupling”• Emerging markets are the new drivers of growth and determinants ofthe global growth cycle• Over the medium term, African economies that align their developmentneeds 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. 77. www.frontieradvisory.comCONFIDENTIALITY and DISCLAIMER: This document and its contents are strictly privateand confidential, privileged and for the information of the intended recipient only. FrontierAdvisory makes no representations or warranties in respect of the content of thisdocument, and will not be liable for any loss or damage of any nature that may arise fromthis document, the content thereof or your reliance thereon. Should you have received thisdocument in error please contact the sender immediately and destroy this document.

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