The document discusses opportunities for growth and investment in developing economies beyond the BRIC countries. It notes that: - Countries like Brazil, Russia, India and China have transformed rapidly in recent decades, reducing poverty and growing their economies. - A new wave of countries is following a similar path of steady growth above 3% annually with improving business conditions. - These emerging markets represent commercial opportunities in sectors like banking, agriculture, and renewable energy to serve their growing populations and economies. - Successfully capturing these opportunities requires understanding local needs and partnering with key local players, while navigating environmental, social and governance risks.

1. DALBERG GLOBAL DEVELOPMENT ADVISORS
Inside perspectives from BRIC and beyond
Presented by James Mwangi and Gaurav Gupta

2. Dalberg offers strategic advice on development, sustainability and
opportunities in frontier markets
Copenhagen
Geneva
San Francisco New York
Washington DC
Dakar Mumbai
Nairobi
Santiago
Johannesburg

3. Our role is shifting with a changing world
Integrating efforts to assist in development... ... with moves to create and capture value
2

4. BRIC countries provide a template for rapid transformation
3

5. The BRIC countries show us how transformation has played out in the recent past
1990: From widespread poverty 2010: To mass markets
...
BRIC in1990: BRIC in 2010:
• Average GDP per capita: $ 1.815 • Average GDP per capita: $ 5.417
• Foreign Direct Investments to the BRICs: $ 4.5 • Foreign Direct Investments to the BRICs: $ 208 billion
billion • Still 15.3% of population below the national poverty
• India had 36% and Russia 30% of their population line on average
below the poverty line • Literacy in India is 66% while the rest are almost
• China and India were less than 30% urbanized 100%
• India had less than 50% literacy
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6. There are signs that a new wave of countries is embarking on the same path
New emerging economies beyond BRIC are characterized by
• Strong, steady growth of more than 3% per year through the global economic down turn
• A current wealth base of a GDP per capita of more than $500
• Relatively stable security and governance conditions
• Relatively good or improving ease of doing business 5

7. Our entire model for thinking about these countries must shift
From meeting a charitable need To commercial engagement
• 15 countries beyond BRIC have seen an average annual growth above 5% during the global crisis
• By 2020 more than half of African households are expected to have discretionary spending power led by a
growing urban middle class
• Africa’s collective GDP is now at $1,6 trillion – on level with Brazil’s and Russia’s
• Foreign direct investment in Africa has increased from $9 bn in 2000 to $62 bn in 2008
• Since 1990 Western Europe’s share of trade with Africa has shrunk to half while Asia’s has more than doubled
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8. The transformation of these countries will feed on their untapped human potential
• Africa’s labor force is rapidly expanding with more than 40% of the population below 15. It is projected to
reach 1,1 billion in 2040 overtaking China and India
• Basic adult literacy rates are currently 64% for Africa and 80% for Asia
• 1,2 million people from BRIC and beyond are currently studying abroad compared to 5000 from Denmark
(Kenya alone has 10,000)
• 66% of the international students at MIT- on of the world’s top universities – are from Africa, Asia and Latin
America while only 20% are from Europe
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9. Three illustrative cases highlight some of the potential opportunities in these economies
An ATM in every pocket
• Access to financial services is often a key binding constraint in frontier markets
• New approaches are utilizing mobile phone capabilities to deliver a full suite of
financial capabilities and have the potential to create cashless societies
Better farmers and hungry consumers
• Increasing urbanization and a growing middle class in Asia and Africa is driving up
demand for processed agricultural products
• Agricultural production beyond BRIC offers significant opportunities to raise
productivity and claim domestic and export markets
Lighting a hundred million homes
• Large segments of the population in these countries lack access to the electric grid
and are unlikely to be reached in the near future
• New products emerging to affordably and sustainably provide access to clean lighting
and power for some domestic appliances and gadgets
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10. A bank in every pocket: Mobile banking and innovative agent banking models
are providing millions of people with access to financial services
• In 2000 less than 10% of Kenyans had access
to a bank account
• Today 80% have access to mobile phones
• Since the launch of mobile money in 2007
more than 14 million users have signed up
• Today more than 60% of the adult population Million users
has a mobile money account MPesa
• As banks are developing platforms to direct banks
access to banking services and new service
models a steep increase in the access to
financial serices is seen
• Services available for mobile and agent MKesho
banking are developed at a very high pace
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11. Farmers to consumers: Fast growing urban populations drives vast increase in demand
for processed agriculture products
Projected growth in food consumption indexed:
• On the demand side, Frontier markets are SSA vs. developed countries (2000-2018)
urbanizing at an unprecedented rate with Africa’s CAGR
urban population projected to almost double 160
2000-2018
2.6%
from 230M in 2000 to 430M in 2020 155
150
• Rising incomes in the middle class are also 145
changing consumption habits particularly around 140 Sub-Saharan Africa
food 135
130 1.4%
• This creates opportunities for new products to 125
capture uncontested market 120
115 Developed countries
110
• On the supply side productivity in most frontier 105
markets significantly lags behind Europe and the 100
US (e.g. average annual milk production per 2000 2008 2018
cow in EU ~4700 litres, Africa ~500litres)
• Governments and commercial farmers are
increasingly looking at technology and skills to
close these gaps
• There are also opportunities to introduce
technology and business models around
processing and marketing foods for the growing
consumer segment and for export

12. Lighting a hundred million homes: In Africa alone, the potential market for off-grid
portable clean lighting solutions is estimated at $10Bn
Over the next 20 years, Africa will rapidly surpass Asia to
• African BOP households and small businesses become the largest un-electrified market in the world
currently spend over $10 billion on lighting annually
- growing to over $11bn 809 2009
698
561 589
2030
• Most unelectrified households are currently lit with
battery driven or kerosene lamps which are costly 34 13 21 5
and inefficient Latin Asia Africa Middle East
America
• Africa’s non-electrified population will grow to 120
million households (630 million people) and over 10
million small businesses by 2015 The global solar portable lighting market is
dominated by India and China
• In addition 20 out of 60 million on-grid households 9% 8%
are “under-electrified” 6% Other
30% 22% India
• The market will easily experience 40-50% annual 40%
20% China
sales growth, and 5-6 million African households will
own solar portable lights by 2015 27% 49% US, Canada,
50% Europe,
• It is expected that by 2015 nearly 12 million SPLs will 20% 19% Australia, Japan
be owned by African households and SMEs
Number of Global sales Africa sales
manufacturers
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13. Long-term success requires navigating risk through an ESG lens
Top performing emerging markets are ranked as some Recent media reports of economic, social and
of the most highly corrupt nations of the world governance controversies in India affecting companies
“Stop the Vedanta Project in Orissa”
Economic Times, November 2010,
on allegations of mining
in sensitive areas inhabited
by indigenous people
“Tata pulls out of Singur, blames
Trinamool stir”
Rapid accompanied by a dramatic surge in carbon
emissions Economic Times, November 2010,
on the Tata Nano plant being shifted away
after land acquisition issues
“Rs. 1,50,000 Crore 2G scam may leave
69 licenses scrapped”
Business Standard, November 2010, on the
recent mobile license distribution scam

14. Investing in growth: Why ESG investments makes sense in emerging markets
ESG assets under management
What are the material ESG issues? USD trillions
• Environmental 6,8
• Social +21% 0,5 Australasia
• Governance
3,6 3,6 Europe
2,6
Why is it important to investors? 0,4
1,3
• Risk mitigation: 2,3 2,7
North
2,2 America
– Sustainable companies better avoid crises
– Customer, supplier and employee loyalty 2003 2006 2008
• Earnings and growth impact: Percent of LPs who expect to invest in emerging regions by
– Efficient use of resources can date
reduce/control business costs 2007
68
– Forces long term thinking MESA 83 2008
89
2009
43
• Capital flows CEE+
57
Russia
– Significant capital flows into sustainability 75
themes Latin 20
40
– ESG-oriented investors likely to have longer America
65
horizons/hold periods 4
Asia 30
52
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15. Early signs suggest ESG approach in emerging markets pays off
Much stronger performance for top Corporate Governance quartile in
emerging markets over 5 years
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16. Four crucial questions for you to answer as you approach these new frontiers
How well does your product and
business model align to the
needs of the local market?
Value
proposition
How much of How smoothly
the value Total
Access Strategy for does the value
created by your Economics Value chain
frontier markets chain to your target
product, are and
market function?
you effectively financing
able to capture?
Key
Partners
Who do you critically depend on
in your value chain and what is
the structure of that relationship? 15

17. Some fast movers from Beyond BRIC are already having an impact in Denmark
… can Denmark move fast enough to claim its
share of the emerging opportunities?
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