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Understanding the Evolution of Africa’s Trade Corridors

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Understanding infrastructure development is critical to risk mitigation and the development of an accurate view of the potential success of a business in a specific country or region. Key sectors, such as transportation and energy, form the core of infrastructure development plans across the continent and will stimulate increased intra-Africa trade as well as regional integration.

This briefing will provide an overview of key transport infrastructure developments within sub-Saharan Africa that are expected to sustain the subcontinent's economic growth drive.

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Understanding the Evolution of Africa’s Trade Corridors

  1. 1. Understanding the Evolution of Africa’s Trade Corridors Unlocking Africa’s Potential James Fungai Maposa: Consulting Manager – Africa Industrial Business Unit 21st November, 2013 © 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Today’s Presenter James Fungai Maposa (Mphil., BSc. (Hons.)) Consulting Manager – Industrial Frost & Sullivan Africa Follow me on: za.linkedin.com/in/jamesfmaposa/ Six (6 ) years experience in growth consulting and market research. Particular expertise in:  Research and consulting experience on sub-Saharan Africa’s automotive & transportation sector including rail, commercial vehicles & passenger vehicles  Research and consulting experience on sub-Saharan Africa’s infrastructure sectors including social, transport, energy and water sectors 2
  3. 3. Focus Points Focus Point # Analyst biography 2 Africa – Key Infrastructure and Trade Statistics 4 Infrastructure Development in Sub-Saharan Africa 5 Key challenges 6 Sub-Saharan Africa’s Trade Corridors 7 Overview of Transport Infrastructure Major Projects 10 Transport Corridors – How is trade corridor development and implementation expected to evolve over time? 11 Conclusion & Key Takeaways 12 Contacts 16 3
  4. 4. Africa – Key Infrastructure and Trade Statistics 56% $810 billion $403 billion Total spending needed over the next five years to upgrade, rehabilitate and expand Africa’s infrastructure Is the current spending on infrastructure development in Sub-Saharan Africa % of investment in Sub-Saharan Africa on transport infrastructure 30 799Mt Expected increase in SubSaharan African trade volumes from 376Mt in 2009 120.4Mt 50 years Is the number of countries in Africa which have regular power outages (out of 55) Expected increase in intra-regional trade volumes in SubSaharan Africa from 34.9Mt in 2009 It will take 50 years for most countries in Africa to reach universal access to modern infrastructure 50% Infrastructure development has been responsible for more than half of Africa’s improved economic performance Source: World Bank and Frost and Sullivan analysis *based on active projects in 2011 70% In land-locked countries, transp ort accounts for 70% of the value of exported goods
  5. 5. Infrastructure Development in Sub-Saharan Africa – Overview of Development in Key Sectors Transport Energy $174 billion $139 billion Legend: Investment ($ billion) < 0.5 • High value investments (>$1 billion) • Focus on road, rail and port networks 0.5 – 1.0 1.0 – 5.0 • Historical reliance on thermal/hydropower • Increased focus on driving renewables 5.0 – 10.0 0.0 – 15.0 >15.0 Water Total investment in ongoing infrastructure projects in SubSaharan Africa (excluding ICT & Telecoms) amounts to $378 billion $20 billion • Secondary Focus for Govts • Could pose major risk in medium/longterm Social $45 billion • Driven by Millenium Development Goals • High reliance on Development Aid Source: Frost and Sullivan analysis *based on active projects in 2012 5
  6. 6. KEY CHALLENGE: Understanding Transport & Logistics AFRICA: 5.3% Growth (2012) 5.6% Growth (2013)f WHAT IS THE SIGNIFICANCE OF TRANSPORTATION CORRIDORS? 6
  7. 7. SSA Trade Corridors: What is the current status of corridors and what is planned for the future? Rail Planned Projects: Road 26 Planned Projects: Planned Investment: Planned Investment: $9.35 Billion $5.98 Billion Railway Missing network link Key Trunk Road KEY: 61 Trans-African Highway Note: Planned Projects and Investment are based on projections by SADC for the SADC region only, to 2027 Source: SADC, Frost & Sullivan Analysis Sub-Saharan Trade Corridors are currently hindered by a significant lack of connectivity, and operational unreliability 7
  8. 8. African Trade Corridors – what is driving their development and why? C B C B C B C KEY: Corridors Current roads KEY: B Proposed roads Current and proposed ports Oil Gold C C Iron Ore Uranium Current rail Proposed rail Bauxite C C Gas Copper Diamonds Timber Coal Source: Frost & Sullivan Analysis Resources, Agriculture and Retail are the major drivers of trade in Africa 8
  9. 9. Sub-Saharan African Trade Corridors – what does their development mean for trade? 2009 2020 240Mt 408Mt East Africa 45Mt West Africa Central Africa Southern Africa 2030 CAGR 617Mt 4.5% 96Mt 181Mt 6.8% 70Mt 176Mt 300Mt 7.1% 21Mt 43Mt 77Mt 6.4% Source: Africa Transport Outlook 2040 African trade volumes are expected to Triple by 2030, driven by improved transportation infrastructure in East and West African 9
  10. 10. Mega Projects: Extract of major infrastructure projects aimed at improving logistics efficiency $5.3 billion Construction of a new port in Northern Kenya $5.2 billion Rehabilitation of railway to improve transhipment $1.4 billion $2.23 billion Railway linking Tanzania to Rwanda Tema-Accra railway link $2 billion 900km railway linking port of Nacala to Moatize $6 billion Development of a new deep sea port $1.2 billion Increase port capacity from 2.7 to 11.0 million tonnes $9.34 billion 1,100 km railway linking Botswana to Mozambique via Zimbabwe , new port at Matatuine *based on active projects in 2013 Source: Frost & Sullivan Analysis 10
  11. 11. Transport Corridors – How is trade corridor development and implementation expected to evolve over time? 1 Southern Africa will drive trade corridor implementation in the short-term Timeframe: 2020 3 2 Southern and East Africa will connect, ramping up trade in the medium-term Timeframe: 2030 3 2 West and North will lag significantly in corridor development and implementation Timeframe: 2040+ 1 Trade is predicted to evolve in three distinct phases, positioning East Africa as a key trade hub in the medium term 11
  12. 12. Africa’s Trade Corridor Evolution – Four Key Takeaways 1 Sub-Saharan African trade volumes are expected to increase to 1,175Mt by 2030, led by high volume growth in East and West Africa 2 East Africa’s established intra-regional connectivity and improved regulatory environment is likely to drive access to markets in multiple countries 3 In West Africa, taking products to market will be focused on individual countries in the short-tomedium term 4 Intra-regional trade corridors are expected to near completion over the next three decades, in the following sequence: Southern Africa (2020), East Africa (2030), West & North Africa (2040+). 12
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  16. 16. For Additional Information James Fungai Maposa Consulting Manager – Industrial Africa 0027 21 680 3203 James.maposa@frost.com Guillaume de Bassompierre Director of Business Development – Africa 0027 21 680 3582 Guillaume.Bassompierre@frost.com Samantha James Corporate Communications Africa (021) 680-3574 Samantha.James@frost.com 16

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