Africa in Today's Financial Markets

1. AFRICA IN TODAY’S FINANCIAL MARKETSPresentation at the Africa Debt Capital Markets21 June 2011 African Development Bank Group Prof. MthuliNcube Vice President & Chief Economist

2. OUTLINE 2

3. Africa’s Sustained Economic Expansion GDP Growth: Africa’s growth record has been significant after the crisis Trade : Recovery and high demand led to favorable terms of trade Inflation: Inflationary pressures have remained relatively contained Source: AfDB AEO 3

4. The Libya and Côte d’Ivoire Effects Growth rate (%) 4

5. Disparities in Economic Performance in 2011 GDP growth 0.7% North Africa West Africa GDP growth 5.9% Central Africa East Africa GDP growth 5.3% GDP growth 6.7% Southern Africa GDP growth 4.5% 5

6. Nigeria 6.9% Ethiopia 10% Liberia7.3% Ghana 12% DRC 8.4% Tanzania 6.9% The 10 Fastest Growing African Countries in 2011 Angola7.3% Mozambique 7.7% Zimbabwe 7.8% Botswana 6.9% 6

7. Tunisia 1.1% Libya -19% Egypt 1.6% Côte d’Ivoire -7.3% Benin 2.5% The 10 Slowest Growing African Countries in 2011 Comoros 2.5% Madagascar 0.6% Swaziland 1.9% South Africa 3.6% Lesotho 2.9% 7

8. Tunisia: Unemployment Triggered the Revolution Growth rate (%) 8

9. Drivers of Growth External Internal Domestic consumer demand Commodity prices Good macroeconomic policies and management Prices of agricultural export Growth sectors: Agriculture, services, construction and manufacturing 9

10. Inclusive Growth Africa’s slow poverty reduction relative to other developing regions High inequality Youth unemployment Financial Inclusion Foster human development 10

11. Financial Flows to Africa: Considerable slowdown of foreign investment in Africa after the crisis 11

13. Increasing trading volumes and capitalization in stock markets – highest returns in the world.

14. Nascent but buoyant bond and private equity markets.

15. Growing investment rates supported by strong emerging middle class. Source: IMF WEO, AfDB AEO 12

17. However, African capital markets remain narrow and illiquid compared to developed economies and other emerging countries

18. Factors affecting their growth include:

19. Low income levels

20. Ineffective collateral registration systems

21. Weak judicial institutions

22. Exposure to external shocks

23. Weak human capital and financial infrastructure

24. Limited portfolio choice options

26. Inadequate pension fund reform13

27. Selected African Stock Exchanges Source: Bloomberg 14

28. 15 Sovereign Rating of Selected African Countries as at March 2010

29. 16

30. Snapshot of African Bond Performance ( 2 months - April/May 2011) Source: Reuters; Standard Bank Research 17

31. Fundraising in Africa reached a peak of 31 funds and a capital of $ 11.4 billion in 2007 Expansion illustrated through Top 5 Africa-Focused Funds Currently Raising Source: Prepin Private Equity Market in Africa October 2010

32. Potentials for African Capital Markets Rising entrepreneurship activity Growing Middle Class Infrastructure Bonds Diaspora Bonds Extractive Industries Agriculture Clean Energy Emerging Partners (BRICs, Korea, Turkey) 19 Public-Private Partnerships (PPPs) New Technologies – “EG Mobile Banking”