Africa Economic Outlook - Insights Shaping your Industry in 2014

Africa Economic Outlook

INSIGHTS SHAPING YOUR INDUSTRY IN 2014

20 February 2014

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AFRICA ECONOMIC OUTLOOK:INSIGHTS SHAPING YOUR INDUSTRY IN 2014

AFRICA ECONOMIC OUTLOOK:INSIGHTS SHAPING YOUR INDUSTRY IN 2014

PRESENTERS

Mani James

Operations Manager

Craig Parker

Senior Economic

Consultant

Cornelis Van Der Waal

Business Unit Leader,

Energy and Power Systems

Kholofelo Dzvukamanja

Programme Manager,

Chemicals, Materials and Food

Ian Duvenage

Head of ICT, Africa

WEBINAR

3

Global Overview and Trends

Mani James

Operations Manager

4

African Growth Outlook

Global Mega Trends and its Relevance

What is a Mega Trend?Mega Trends are transformative, global forces that define the future world with their far reaching impact on business, societies, economies, cultures and personal lives.

Urbanisation – City as a CustomerSmart is the New GreenSocial Trends

Connectivity and Convergence

Bricks and Clicks

Innovating to Zero

New Business Models: Value for ManyBeyond BRIC: The Next Game Changers

Future Infrastructure DevelopmentHealth, Wellness and Well BeingFuture of Mobility

5


Mega Trends that will Impact Africa

Low Degree of Certainty

Deg

ree

of

Imp

act

on

Afr

ican

Eco

no

my

Lo

wH

igh

High

Urbanisation

Responsible Revolution

Space Jam

Connecting the Unconnected

Innovation to Zero

Infrastructure Development

“Value for Many” Business Model

M-Health

Devices

E-Governance

Note: The size of the bubble represents the scale of opportunity within each Mega TrendThe Mega Trends have been plotted based on quantitative and qualitative reasoning

Renewable Power

Regional Integration

Invest Africa

The Middle Bulge

Source: Frost & Sullivan.

6


Outlook and Implications for Global Growth

Europ

ean

Union

Centra

l and

Eas

tern

Eur

ope

Develo

ping

Asia

ASEAN-5

Latin

Am

erica

and

the

Caribb

ean

Midd

le Eas

t and

Nor

th A

frica

Sub-S

ahar

an A

frica

United

Sta

tes

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0.0

2.3

6.3

5.0

2.7

2.1

5.0

2.3

1.3

2.7

6.5

5.4

3.1

3.8

6.0

3.1

2013 2014

GD

P G

row

th (

%)

GDP Growth Prospects for 2014

Note: Developing Asia composed of 29 countries including China. ASEAN-5 comprises Indonesia, Malaysia, Philippines, Thailand, and Vietnam. Sources: IMF and Frost & Sullivan

7


African Growth Predictions – Key Sectors

Africa – The Summary

Energy: $450 billion

Electricity infrastructure, renewable energy,

rehabilitation of existing structures

Water: US$250 billionIncludes sanitation,

water infrastructure and chemicals,

renewable water, and water and wastewater

treatment.

Oil & Gas: US$300 billion Infrastructure,

extraction chemicals, and rehabilitation

Agriculture: US$120 billionIncludes fertilisers, crop protection, animal health, feed

and additive products, and plant biotechnology.

Infrastructure Development: >US$500

billionTransport infrastructure and rehabilitation, housing, ICT, building and other materials,

construction and PPE

Manufacturing: $130 billionManufacturing, food packaging and fortification.

http://upload.wikimedia.org/wikipedia/commons/f/f9/BlankMap-Africa.svg

http://science.howstuffworks.com/oil-field-pictures.htm

http://science.howstuffworks.com/oil-field-pictures.htm

8


Global Growth Predictions for 2014

• Virtual Currency

• Big Data gets bigger

• Wearable Devices

• Last Mile Innovation – Shipping Wars

• Circular Economy

• 3D Printing

• “ME” Commerce

• “APPS” Power

• Health-Centric Devices & Digital Health

9

African Economic Outlook

Craig Parker

Senior Economic

Consultant

10


Fixed Investment to Drive Growth in Emerging Economies

FDI Inflow into Africa Is Expected to Double in the Next 7 Years

19.1bn

36.8bn

2006

2013

56.5bn

2001

Sources: World Bank, United Nations and Frost & Sullivan

11


Risk Factors to African Growth in 2014

• Dependence on oil and commodity prices

• Capital flight vulnerability

• Export markets and high dependence on Asia

• Macroeconomic instability

• Political instability

Devel

opin

g Asia

Latin

Am

erica

and

the

Carib

bean

Sub-S

ahar

an A

frica

-20.00

0.00

20.00

40.00

60.00

80.00

100.00

120.00107.256

31.445

9.677

38.457 38.801

-0.113

2012 2013

Ne

t P

ort

folio

Flo

w (

$ B

illio

n)

Net Portfolio Investment Flows, Developing Asia, Latin America and Sub-Saharan Africa, 2012 and 2013

Sources: International Monetary Fund and Frost & Sullivan

12


Drivers of Growth in 2014

• Expansion of construction and infrastructure investment

• Agri-processing

• Retail and investment into new malls

• Policy certainty

Nigeria

Zambia

Ethiopia

DRC

Ghana

Countries with High Growth and Investment Potential in Sub-Saharan Africa, 2013-2015

Africa to Average 4.8% GDP Growth in

2013

South Africa

Gabon

Note: Countries based on score determined from weighted average of per capita GDP and potential growth, GDP & GDP potential growth, FDI stock and growth, political stability, export and import growth potential, and population size and population growth potential

Mozambique

Kenya

Source: Frost & Sullivan

13

Energy & Power

Cornelis Van Der Waal

Business Unit Leader,

Energy and Power

Systems

14


Energy and Power - Growth Drivers in 2014

• Signing of Oil & Gas agreements

• Public-Private Partnerships

• Commissioning of Mega-Projects

• Regional ProjectsPPP Activity

Oil & Gas Chase / Agreements

Mega Projects

Key Growth Drivers

15


Energy and Power – Investments are Happening

68 GW

Installed Capacity

90 GW +

Confirmed Oil and Gas Reserves

719

2014 2020

2000 2014

16


Energy and Power – Predictions for 2014

• Increased competition

• Partnership opportunities

• Project and products diversification

• Sustainable green projects

Key Countries to Watch in 2014

Opportunity Map

Key Countries to Watch till 2024

17

Chemicals

Kholofelo Dzvukamanja

Programme Manager,

Chemicals, Materials and

Food

18

Sources: IMF and Frost & Sullivan

• Mature South African market?

• Economic diversification?

• Sectors driving demand growth for chemicals

• Oil and Gas Development and Mining

• Construction and Infrastructure Projects

• Other Growth Areas

• Agriculture

• Consumer Products

DRC

Note: Countries based on score determined from weighted average of per capita GDP and potential growth, GDP & GDP potential growth, FDI stock and growth, political stability, export and import growth potential, and population size and population growth potential

Increasing Urbanisation Infrastructure Development

Countries with High Growth and Investment Potential in Sub-Saharan Africa for Selected Chemicals Markets, 2013-2015


Increasing Urbanisation and Infrastructure Development

19

Sector Sector developmentsOverall

Attractiveness

Oil and Gas

• Development of new gas deposits in Mozambique,- largest discovery globally in the last decade

• Key countries: Nigeria, Libya, Algeria, Angola , Sudan , Egypt • New discoveries: Mozambique, Ghana, Tanzania, Kenya• Angola new refinery by 2018 – planned output 200 thousand barrels per day

Mining• South African outlook still unstable in the short to medium term• New technologies to extend mine lifespan, increase operation efficiencies• Recovering global economy supports commodity prices

Construction and Infrastructure

• Providing products and expertise to key projects across the continents• Slowed growth in South Africa• Increased investment into local manufacturing of inputs

Agriculture

• Accounts for 15 % of the continent’s total GDP• Largest cocoa producer Cote d’Ivoire; Ghana and Ethiopia amongst key growth

countries• Highly fragmented production, Low penetration of crop protection and fertiliser

products

Consumer Products • Relatively small manufacturing base • Fast growing middle income population group


Long Term Outlook is Positive For 2014

Low HighMedium

20


New Market Expansion by Sector


• New market focus

• Selection of industry specific new growth markets

• Innovation – products, services, operating models

• Strategic customer focus

• Leverage technology

DRC

Summary of Key Market Growth Opportunities across Sectors, SSA, 2014

Crop Protection> US$2 billion

Fertilisers

>US$5 billion

Oil & GasUS$130 billion

investment opportunity in infrastructure

Paints and Coatings

>US $2 billion

InfrastructureUS$ 500 billion

ManufacturingUS$130 billion

Water Infrastructure &

TreatmentUS$22 billion

required to upgrade Africa’s water infrastructure

21

Information and Communication Technologies

Ian Duvenage

Head of ICT, Africa

22


ICT - Nexus of Cloud Computing, Big Data, Mobility and the Internet of Things

Rise of Apps

Internet of Things

Rise of Cloud and Big Data

Ubiquitous Wireless

Cloud allowing access to content on any device in any location. Big data enables value to be extracted out of exponential increase in data.

WiFi, 3G & LTE becoming standard connectivity modes.

Cloud and mobility driving the emergence of apps which can be used on any IP enabled device.

IPv6 driving proliferation of IT enabled sensors/devices across industry-specific activities.

2

3

4

1

Industry Verticals

23


ICT – Big Data Gets Bigger

Computing Power Vendors

End Users

Storage Vendors

Acquisition Management Processing

Analytics Application Developers

Application

Communications Providers

Integrated Platform

The Big Data value chain begins with initial data collection, continues through data management and processing, and then proceeds to end-user application.


24


ICT - Emerging Healthcare Opportunities & M-Health

Time

Gro

wth

Molecular diagnostics

Silver industryequipment (home care)

Mobile healthcare

Biosimilarsvaccines

MIS

EMR/EHR

Traditional pharmaceuticals

Innovation Trigger

Super Growth

Normalisation Leadership

Source: Frost & Sullivan analysis.

Hospital services

Digital imaging

Telemedicine

Robotic surgery

Preventive healthcare and wellness monitoring

Total Healthcare Market: Emerging Healthcare Opportunities, 2012–2015

• Analysis & Content Management

• Stock Management

• Demand Generation

• Mobile Monitoring

• Partnership opportunities in Mobile Healthcare

• Wireless Health Broker & Service Provider

25

Key Success Factors for Africa & Strategic

Questions

Mani James

Operations Manager

26


Key Success Factors for Africa – What has Worked ?

Focus on maintaining key cash cow products in

the broad range

Focus on maintaining key cash cow products in

the broad range

Position the global quality brand in the

market

Position the global quality brand in the

market

Affordable Pricing and Promotion targeting the

middle class

Affordable Pricing and Promotion targeting the

middle classStrong local partnershipsStrong local partnerships

Direct Consumer approach is key –

absolute must have

Direct Consumer approach is key –

absolute must have

Trusted brand & loyalty - Strong local presence

Trusted brand & loyalty - Strong local presence

Robust country and regional strategy

Robust country and regional strategy

Key Success Factors

Strengthen the e-commerce platforms

Strengthen the e-commerce platforms

27


Case Study of GSK’s Story in Africa

`

Brief description: Headquartered in the UK, GSK are a global pharmaceutical organisation

Markets served: Public and Private pharmaceutical markets, NGO’s

Geographical footprint in Africa: Offices in Algeria, Morocco, Kenya, Ghana, Nigeria, South Africa

Product range (Pharmaceuticals): Prescription medicines, vaccines, and consumer healthcare

Success factors:• Physical presence in key geographies• Charitable grants and low margin product

strategy• Extensive product portfolio• Affordable pricing• Robust brand equity• GSK ASPEN distribution agreements

28


What Are the Strategic Questions You Need to Consider?

Distribution Strategy – How strong are your

partnerships ?

Distribution Strategy – How strong are your

partnerships ?

Physical Proximity – Are to your customer ?

Physical Proximity – Are to your customer ?

Product Porfolio differentiation – How do

you differentiate ?

Product Porfolio differentiation – How do

you differentiate ?

Consumer focus – Customer‘s customer – Do you know the need ?

Consumer focus – Customer‘s customer – Do you know the need ?

Tough infrastrucure and regulatory framework – How do you navigate ?

Tough infrastrucure and regulatory framework – How do you navigate ?

Customised solutions – Are you ready and

capable ?

Customised solutions – Are you ready and

capable ?

More global companies locating to Africa – How

do you defend your turf ?

More global companies locating to Africa – How

do you defend your turf ?

Regional and country strategies – What is your

strategy & why ?

Regional and country strategies – What is your

strategy & why ?

Strategic Questions for Africa

29

Next Steps

Develop Your Visionary and Innovative SkillsGrowth Partnership Service Share your growth thought leadership and ideas or

join our GIL Global Community

Join our GIL Community Newsletter Keep abreast of innovative growth opportunities

30

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Emerging Trends?

Strategic Recommendations?

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For Additional Information

Mani JamesRegional Director for Africa+27 (0)21 680 [email protected]

Cornelis van der WaalBusiness Unit Leader for Energy & Environment+27 (0)21 680 [email protected]

Vassilissa KozoulinaSales Director for Africa+27 (0)21 680 [email protected]

Samantha JamesCorporate Communications+27 (0)21 680 [email protected]

Africa Economic Outlook - Insights Shaping your Industry in 2014

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Transcript of Africa Economic Outlook - Insights Shaping your Industry in 2014