Why Invest in Africa. Senzo Hlangu. 7 June 2011

Transcription

1 Why Invest in Africa Senzo Hlangu 7 June 2011

2 6 Reasons to Invest in Africa INTERNAL FACTORS Best demographics Large, young & growing population EXTERNAL FACTORS Low penetration rates Reduced debt levels Improving policies Rising FDI Abundance of Resources Connecting Africa to fast growing emerging economies All leading to strong/better/higher economic growth + wealth creation 2

3 Reason 1: Best Demographics in the world Population growth rates WORLD AFRICA ASIA EUROPE LATIN AMERICA AND THE CARIBBEAN NORTHERN AMERICA OCEANIA Africa is the fastest growing region Source: United Nations Population Division

4 Reason 1: Best Demographics in the world AFRICA China India EUROPE LATIN AMERICA AND THE CARIBBEAN NORTHERN AMERICA OCEANIA Only region that has population doubling over the next 40 years 4 Source: United Nations Population Division

5 Reason 1: Best Demographics in the world Median Age 40.0 WORLD 35.0 AFRICA 30.0 ASIA EUROPE LATIN AMERICA AND THE CARIBBEAN NORTHERN AMERICA OCEANIA Source: United Nations Population Division Africa has the youngest population 5 Source: United Nations Population Division

6 6 Africa is almost as urbanized as China and has as many cities of 1 million people as Europe

7 7 By 2020, more than half of African households will have discretionary spending power

8 8 Africa s labour productivity grew for the first time in decades

9 Reason 2: Low Penetration for most goods and services Zambia Cote d'ivoire Ghana Botswana Mexico Nigeria Zimbabwe Kenya Turkey Russian Federation Brazil Namibia Egypt, Arab Rep. Tunisia Morocco Mauritius Greece Estonia Korea, Rep. Italy China Canada South Africa Portugal Japan United Kingdom Ireland United States Domestic Credit to Private Sector (% GDP) Source: Insead Global Innovation Index 9

10 10 Reason 2: Low Penetration for most goods and services

11 Reason 3: Reduced Debt Levels Debt % GDP Asia North America Europe Africa South America Oceania Source: CIA World Fact Book

12 Reason 3: Reduced Debt Levels

13 Reason 3: Reduced Debt Levels 1. Initiative for Heavily Indebted Poor Countries (HIPC Initiative). The HIPC Initiative entailed coordinated action by multilateral organizations and governments to reduce to sustainable levels the external debt burdens of the most heavily indebted poor countries. 2. In 2006, The Multilateral Debt Relief Initiative (MDRI) Cancel all debt from the IMF, the International Development Association (IDA) of the World Bank, and the African Development Fund (AfDF). 3. Better Policies and Economic Management

14 Reason 3: Reduced Debt Levels

15 Reason 4: Improvements in Policies Sub-Saharan Africa: % of countries regarded as Stable

16 16 Reason 4: Improvements in Policies

17 Reason 5: Abundance of natural resources % of world shares of reserves

18 Reason 5: Abundance of natural resources

19 Reason 6: Improving FDI from low base % 70 FDI Inflows (USD Bn) Africa % of Global FDI 5.0% % USD Billions % % of Glo obal FDI % % Africa s share of FDI remains disproportionately low, considering its resources base and market size 0.0%

20 Reason 6: Improving FDI from low base Some large South African companies have already made significant investments and more are now looking North of our borders

21 Leading to Higher Economic Growth World Developed Economies Emerging Economies SSA SA Source: UNCTAD, IMF

22 Leading to Higher Economic Growth 22

23 23 Growth rates were robust across sectors Compound annual growth of real GDP by sector¹,

24 6 Reasons to Invest in Africa INTERNAL FACTORS Best demographics Large, young & growing population EXTERNAL FACTORS Low penetration rates Reduced debt levels Improving policies Rising FDI Abundance of Resources Connecting Africa to fast growing emerging economies All leading to strong/better/higher economic growth + wealth creation 24

25 Test Yourself 1. Asia has the fastest growing population in the world. TRUE/FALSE? 2. FDI into Africa continues to decline, thus leading to deterioration in productivity. TRUE/FALSE? 3. Governance & Economic Policies continue to improve in Africa, thus creating an enabling environment for citizens, businesses and foreigners to take advantage of vast opportunities present in the continent. TRUE/FALSE? 4. Economic growth in Africa has sorely been driven by external demand of her resources. TRUE/FALSE? 5. Africa has one of the highest debt levels in the world, both in absolute terms as well as relative to Gross Domestic Product. TRUE/FALSE? 6. Africa is the least developed region in the world, thus presenting vast and unique opportunities for economic growth from a very low base and significant wealth creation for all stakeholders, particularly global investors. TRUE/FALSE? 25

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