A presentation done by Dr Andrew Shaw (Associate Director: PricewaterhouseCoopers), at the Transport Forum SIG: "Visiting the port of Walvis Bay and the Launch of the Namibian Logistics Hub Forum" on 5 December 2014 in Walvis Bay, hosted by WBCG. The topic of the presentation was: "Transport and logistics infrastructure a key to sustaining Africa's growth".

1. Transport and logistics
infrastructure a key to
sustaining Africa's growth
www.pwc.com/transport
Dr Andrew Shaw
5th December 2014

2. PwC
This report aims to give interested
investors insight into the key economic
regions and countries in Africa
Africa gearing up
Africa is the next place-to-be for doing business 
The lions follow the tigers:
• 6 of the top ten fastest growing economies
2001-10 were in Africa
• Between 2010 and 2016 it will be another 6
• Africa is home to 1 billion people
• By 2035, Africa’s labour force will be larger
than China’s
 Growing demand offers huge potential for
T&L companies
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3. PwC
10 Countries in profile
10 most relevant economies for
T&L due to:
• Significantly high GDP
• Strong growth expectations
• Rich in natural resources
• Natural exit to land-locked
adjoining countries
 high transit traffic volumes
• Potential gateways to the region
• Rapidly improving transport
infrastructure
Coverage of all major regions:
• North Africa
• Sub-Saharan Africa (east, west and
southern regions)
DRC
Angola
South
Africa
Mozam-
bique
Tanzania
Kenya
Egypt
Algeria
Nigeria
Ghana
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4. PwC
‘Sizing up’ the growth potential
The size of the bubbles represents the size of the economy (GDP 2012)
Sources: World Bank, International Monetary Fund
Algeria
US$ 209bn
Angola
US$ 115bn
DRC
US$ 17bn
Egypt
US$ 257bn
Ghana
US$ 40bn
Kenya
US$ 41bn
Mozambique
US$ 14bn
Nigeria
US$ 270bn
South Africa
US$ 384bn
Tanzania
US$ 28bn
0
20
40
60
80
100
120
140
160
180
200
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
GDP annual growth estimates for the period 2012-2017 shown as a % for each country
EstimatedpopulationasatmidOctober2013(Millions)
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Namibia US$ 16.8

5. PwC
Basis of the study
Use of leading independent economic consultants: Econometrix
The 5 –Pillar approach
1. Demographics & resources
2. Economics
3. Business environment
4. Trade & logistics
5. Transport infrastructure
Interviews with executives operating in Africa & industry specialists
Investment potential assessments
5
lAttractive
lAverage
lUnattractive

Strong Improvement Expected
Some Improvement Expected Stagnation / marginal change expected


6. PwC
Current state
Demographic
& Resources
Economics Business
Environment
Trade &
Logistics
Transport
Infrastructure
Algeria
Angola
DRC
Egypt
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
l l lAttractive Average Unattractive
l
l l ll l
l l l l
l
l l ll
6
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l

7. PwC
5 Years forward
Demographic
& Resources
Economics Business
Environment
Trade &
Logistics
Transport
Infrastructure
Expected
Growth
(GDP 2012-2017)
Algeria 3,6%
Angola 5,7%
DRC 8,6%
Egypt 3,4%
Ghana 5,9%
Kenya 6,2%
Mozambique 8,0%
Nigeria 6,8%
South Africa 3,0%
Tanzania 7,0%

Strong Improvement Expected
Stagnation / marginal change expected
l l lAttractive Average Unattractive





 


   
   

  
7Some Improvement Expected


8. PwC
Business Environment
• 3rd largest African economy. Oil accounts for 98%
of revenue and a current account surplus,
• Business environment rated weakest in SADC,
Trade and Logistics
• Improvement in customs, although logistics
performance remains weak,
• Waiting times at Port of Luanda average 144
hours, and traffic frequently diverted to Walvis
Bay. There are however considerable port
expansion plans,
Infrastructure
• Rail rehabilitation has been ongoing since 2005,
reconstructing 2,700 km of railway at a total cost
of US$ 3.3 Bill.
• Road infrastructure dilapidated in the east, yet one
of Africa’s largest investors in road infrastructure,
Country Highlights - Angola
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9. PwC
Business Environment
• 3rd poorest country in the world,
• Limited by bribery, corruption and red tape,
• Government decision making takes long.
Trade and Logistics
• Represents a natural entry point for its
landlocked neighbors to the west but is
frequently by-passed,
• Narrow export base dominated by aluminum.
Infrastructure
• Transport infrastructure investment of US$17
planned, mostly connecting mining and
agricultural clusters to export ports. Projects
hampered by implementation delays,
• Significant need to upgrade and improve the rail
network and connected ports.
• Maputo development corridor a success case.
Country Highlights – Mozambique
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10. PwC
Business Environment
• Considered to have the largest endowments of
minerals in Africa,
• Weak business environment and characterised by
political turmoil.
Trade and Logistics
• Logistics potential limited by lack of infrastructure,
• Regulations and corruption in customs negatively
impact trade and result in considerable delay,
Infrastructure
• Port infrastructure is poor and goods often diverted
to Point Noire in Congo.
• Due to poor transport infrastructure country is
poorly connected with much of the south focused on
linkages to Zambia,
• Road network and inland waterway improvements
would have a profound economic impact.
Country Highlights – Democratic
Republic of Congo (DRC)
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11. PwC
Nigeria, Nigeria, Nigeria…..
10 out of 16 executives interviewed rate Nigeria
50% of population urbanised –
attractive for retail/consumer sectors
Ranks world’s 4th fastest growing
economy - oil exports & government
stability
Already diversifying into agriculture
(42% of GDP)
Ambitious plans by gov’t to expand
infrastructure:
• Roads carry more than 90% of
passengers & freight
• New deep sea port at Lekki planned to
ease congestion
• $2bn Rail rehabilitation to reconstruct
2000km
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Africa gearing up

12. PwC
Ghana – the rising star of Africa
The safe gateway to West Africa?
Investor attractiveness buoyed by political stability
Strong economic outlook in broader economy
(GDP to grow by 6% pa over the next 5 years)
Ghana to become a net oil exporter by 2019
Gold is the top export earner
Expected big increase in per capita GDP will result in
opportunities in retail & consumer market
Agriculture an important sector in a diversified
economy (accounts for half of employment)
Strong cocoa and forestry industry
Manufacturing accounts for only 7% of GDP
Government focus on transforming Ghana
into an industry and service-based economy
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13. PwC
Kenya - Preferred entry point to East Africa
Rising consumption and oil discoveries increase
demand
Entry point to East African Community:
• Port of Mombasa faces congestions due to
high demand
• Port of Lamu is one of the largest
African port projects
Diversified economy:
• Large agricultural sector – largest tea
producer in Africa, largest exporter of
flowers
• Significant opportunity for growth in light
manufacturing
• Developed oil fields will change Kenya
from a net oil importer to a net exporter
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Africa gearing up

14. PwC
Business Environment
• 7% average annual growth rate over last decade,
• Initiatives to improve trade integration,
• Corruption remains a concern.
Trade and Logistics
• Diverse natural resource basis for attracting
investment,
• Logistics Performance Index shows significant
improvement over last few years,
• Port of Dar es Salaam remains a bottleneck,
Infrastructure
• Infrastructure performs better than other African
country’s but rail requires significant investment,
• Transport infrastructure investment of US$19
planned, some funded by China and focused on export
corridors to Dar es Salaam and Mombasa in Kenya.
Country Highlights - Tanzania
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15. PwC
Port and Airport – Gateways to the Continent
Ports
African ports are constrained by lack
of capacity and low inefficiency.
Congestion and poor linkages to
hinterland markets constrain
efficient logistics.
Airports
Clear airport hubs have yet to
emerge in the East and West African
market. Air freight efficiency is
constrained by overly complex
administration and lack of
supporting cold chains.
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16. PwC
Road
Roads carry almost all freight, even although
many roads are still unpaved and many paved
roads are in poor condition. Where roads are
currently adequate, road maintenance is
looming as a potential problem as truck traffic
is growing rapidly and is often moving heavy
bulk goods more suited to rail transport.
Rail
Africa’s rail networks are generally in worse
shape than its roads. In many countries, rail is
in poor repair and out of date. Rail investments
are set to increase in the coming years, but only
South Africa has implemented a comprehensive
rail investment strategy.
Getting Around Africa’s Markets
Regional integration with
new rail lines … has started
in southern and eastern
Africa. South Africa is
collaborating with
Swaziland. In the East,
Tanzania is working with
neighbours Rwanda and
Burundi on plans to link the
gateway city of Dar es
Salaam with Kigali in
Rwanda and Musongati in
Burundi. And Kenya is
already connected to
neighbouring Uganda via
rail. But rail integration in
the west is nearly
nonexistent.
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17. PwC
The intra-Africa trade lag
Only 11% of Africa’s trade is with African trading partners
Compared to Asia where ½ is between countries
Ports by far the most important entry point
Viable corridors being developed:
• Lagos-Abidjan highway through West Africa
• Beira-Lobito corridor – major upgrade required
• South Africa & Swaziland rail collaboration
• Tanzania connecting with Rwanda & Burundi
• Kenya already linked by rail to Uganda
Rail integration in the West non-existent
Land-locked country restraints
Trade agreements an imperative – African Free
Trade Zone & removal of tariff barriers key
Africa’s trans-
continental
highway
networks look
better on paper
than on the
ground. It’s a
real constraint
for T&L
companies
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18. PwC
Lions & dragons: The China factor
China lacks hydrocarbons & some raw materials –secured
by building massive infrastructure in return:
• Angola’s ‘infrastructure for oil’ agreement
• DRC’s state copper company signed contract worth
more than state budget
• Kenya’s $5bn rail agreement linking Port of
Mombasa with Uganda
• Similar infrastructure projects in South Africa,
Tanzania, Ghana & Mozambique
Comparative advantage in Africa as wages rise in China
By 2035 Africa’s labour force will be bigger than China’s
South Africa scores better in roads, ports & air,
except for rail
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19. PwC
Threats to the African business environment
• Bribery & corruption remains one of the biggest threats
to Africa investment and growth
• Industrial strike action in South Africa across, mining &
transport sectors
• Arab spring
• Piracy on the west and east coasts of Africa (Horn of
Africa & Gulf of Guinea)
• Floods in Angola & Mozambique
• Lack of political will for collaboration
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20. PwC
The way Africa rolls
Future growth & development will rely on quality &
efficiency of its transport networks
Mining,
oil & gas
Retail &
Consumer
Agriculture
Manufacture
Improvement in rail
and port
infrastructure
Efficient, secure
logistics &
improvement in
road, ports and air
infrastructure and
cold storage
Efficient low-cost
logistics supporting
fresh produce and
rapid export
Efficient low-cost
cross-border logistics
aligned to growth in
broader African
economy
Logistics
Requirements
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21. PwC
Conclusion
Improving entrepreneurship is key to success
There will be no sustainable entrepreneurship without adequate
infrastructure
While infrastructure is a requirement it is not key to success without:
• skilled people
• sustainable regulation
• decrease of bribery and corruption
• increase of security
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22. Questions...
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