Africa - Economic Outlook

Jean-Christophe Batlle, Managing Director for Africa

Julien Marcilly, Group Chief Economist

/

Low growth, low inflation: The world economy is “Japanazing”

70

75

80

85

90

95

100

105

110

115

01-15 04-15 07-15 10-15 01-16 04-16

Equity markets

Europe

Emerging markets

US

Source: Datastream

100 = Jan. 2015

/

Country risk according to Coface

3

/

Global Country Risk level hits a record high

4

4,4

4,5

4,6

4,7

4,8

4,9

5,0

5,1

2000 2002 2004 2006 2008 2010 2012 2014 2016

Niveau mondial moyen de risque pays

(1 = risque très faible ; 7 = risque très élevé, source : Coface)

/

Coface Country Risk Assessments

5

/

Sub-Saharan Africa: Long-term Strength but

Short-term Turbulence

Sub-Saharan Africa: IMF GDP Growth Forecasts in 2016 and

2020 (%, source: IMF)

0

1

2

3

4

5

6

7

8

SSA Nigeria Angola Ethiopia Ghana Kenya

2016

2020

/

Lower commodity prices are dragging down exports

in the region

Share of fuel in total good

exports (% , 2013, source:

CNUCED)

Share of metals in total

good exports (% , 2013,

source: CNUCED)

Share of agri and food in

total good exports (% ,

2013, source: CNUCED)

7

0%

20%

40%

60%

80%

100%

An

go

la

Eq

. G

uin

ea

Ch

ad

Nig

eri

a

Co

ng

o

Gab

on

Su

da

n

Ca

mero

on

Mo

za

mb

iqu

e

Gu

inea

SS

A 0%

20%

40%

60%

80%

100%

Bo

stw

an

a

DR

Co

ng

o

Za

mb

ia

Ma

uri

tan

ia

Eri

trea

Gu

inea

Mali

Nam

ibia

Rw

an

da

Cen

tra

l A

. R

.

SS

A

0%

20%

40%

60%

80%

100%

Gu

inea

-B.

So

mali

a

Sey

ch

ell

es

Eth

iop

ia

Sao

To

mé

Cab

o V

erd

e

Gam

bia

Bu

run

di

Ug

an

da

Be

nin

SS

A

/

Exposure to commidities is very different from one

country to another

Natural ressources contribution to

GDP, 17 key top markets

(% 2013, source: World Bank)

8

0

10

20

30

40

50

Oil rents (% of GDP)

Natural gas rents (% of GDP)

Coal rents (% of GDP)

Mineral rents (% of GDP)

Forest rents (% of GDP)

Natural ressources contribution to

GDP, Most ressource dependent

countries (% 2013, source: World Bank)

0

10

20

30

40

50

60

70

Oil rents (% of GDP)

Natural gas rents (% of GDP)

Coal rents (% of GDP)

Mineral rents (% of GDP)

Forest rents (% of GDP)

/

Exposure to commidities is very different from one

country to another (2)

9

Sub-Saharan Africa: Exposition to the recent commodity price fall (net

exports, as % of total)

-200

-150

-100

-50

0

50

100

150

Eth

iop

ia

S. T

om

é &

Pri

ncip

e

Ug

an

da

Mala

wi

Cab

o v

erd

e

Ken

ya

Bu

run

di

Seych

elles

CA

R

Mau

riti

us

Tan

zan

ia

Sw

azilan

d

To

go

Cô

te d

'Ivo

ire

Sie

rra L

eo

ne

Th

e G

am

bia

Sen

eg

al

Bu

rkin

a F

aso

Ben

in

Co

mo

ros

Zim

bab

we

Mad

ag

ascar

So

uth

Afr

ica

Lib

eri

a

Mali

Nam

ibia

Rw

an

da

Cam

ero

on

Gh

an

a

Mo

zam

biq

ue

Leso

tho

Zam

bia

Eri

tre

a

Bo

stw

an

a

Nig

er

Gu

inea

Gab

on

Nig

eri

a

Ch

ad

DR

Co

ng

o

Co

ng

o

Eq

uato

rial G

uin

ea

An

go

la

Su

dan

Non-renewable ressources (fuels, ores, metal and precious stones) (2)

Renewable ressources (agricultural raw materials and food items) (1)

(1) - (2)

/

What countries are diversifying through the

manufacturing sector?

10

0

1

2

3

4

5

6

7

0 50 100 150 200 250 300

Mu

ltip

lie

r o

f n

br

of

ex

prt

ed

pro

du

cts

b

etw

ee

n 2

00

0 a

nd

2

01

3

Number of exported products (2013)

EthiopiaRwanda

SeychellesChad

South Africa

Uganda

Tanzania

Equatorial Guinea

Source: UNCTAD

Nigeria Kenya

Angola

/

What countries are betting on services?

Share of communication and

transport services in GDP Share of financial services in GDP

11

0% 5% 10% 15% 20% 25%

Tanzania

Côte d'Ivoire

Mozambique

Kenya

Eritrea

Mauritius

Uganda

Gambia

Sao Tome

Ghana

Cabo Verde

Madagascar

Nigeria

2005

2010

2013

Source: UNCTAD0 5 10 15

Ghana

Kenya

Namibia

Malawi

Lesotho

South Af.

Mauritius

Botswana

2005

2010

2013

Source : BMI

/

And the winners are… Kenya, Ethiopia and Uganda

13 countries are not affected by the fall

in commodity prices

Ethiopia – Sao Tome Uganda – Malawi

Cabo Verde – Kenya Burundi – Seychelles

Centrafrique – Maurice Tanzania – Swaziland

Togo

Diversification strategy via the manufacturing

sector

Ethiopia - Uganda- Rwanda

Diversification strategy via

services

Kenya

Winners: Diversified economies

and not impacted by the fall in non

renewable commodity prices

Losers: Poorly diversified

economies and much exposed to

the recent fall in commodity prices

12

: -

Ethiopia

Chad

Niger

Uganda

DRC

Guinea

Kenya

Angola

Congo Gabon

:

-

G. équat.

/

Twin deficits are a growing concern…

13

-6%

-4%

-2%

0%

2%

4%

6%

200

0

200

4

200

8

201

2

Twin deficits in Africa (% of GDP, source: IMF)

Budget balance Current account

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

-35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25%

Bu

dg

et

bala

nce

Current account

Twin deficits in Africa (% of GDP, source : IMF)

2014 2007

Angola (2007)

Cameroon(2014)

Cameroon (2007)

Angola (2014)

/

…especially when public debt is denominated in

foreign currency.

14

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%T

an

zan

ia

So

uth

Afr

ica

Nig

eri

a

Ke

ny

a

Za

mb

ia

Ug

an

da

Gh

an

a

An

go

la

Ca

bo

Verd

e

Rw

an

da

Mo

za

mb

iqu

e

Foreign currency public debt, as a % of total (2014, source: IMF)

/

Coface Country Risk Assessments

15

2013

January January January March June October January March

South Africa A3 A4 A4 A4 A4 A4 B B A4

Kenya C C B B B B B B C

Senegal B B B B B B B B B

Ivory Coast D C C C C C C C C

Angola C C C C C C C C D

Cameroon C C C C C C C C C

Ethiopia C C C C C C C C D

Gabon B B B B B B C C C

Ghana B B C C C C C C B

Mozambique C C C C C C C C C

Nigeria D D C C C C C C D

Rwanda D D C C C C C C C

Tanzania B B B B B B C C C

DRC D D D D D D D D D

2016Country Risk

Assessment

2014 2015Business

Climate

/ 16

Main points

1. Attractiveness of Africa in the

TOP 5 regions

2. Investors perception is positive for the next

3 Years

Africa…A remained attractiveness

Principaux points

1. 52 African cities over one million

inhabitants in 2010 and potentially 65 city end of

2016

2. Intensive Urbanization . 40% of the

population is Urban. Proportion could reach 50%

in 2030

/

Main points

17

Main points

An emerging Middle class

1. A population of 1.2 B. inhabitants, comparable to india

( Pop .1,3 B)

2. Middle Class of 355 millions : 34% of the African

population in 2010 and 1,1 B in 2060.

SOURCE BAD

- EY

1. Changing in consumption habits : Transformed

products

2. Changing in term of food safety and basic

services : Water and sanitation

3. Emerging needs in term of services : transport,

urbanism, education, healthcare, telecoms….

/ Date 11/06/2014

18

1. A GDP of 34 B USD, most

important in the region

2. High power purchase

3. A regular GDP Growth after

a period of crisis between

2005 and 2011

4. A business climate

assessment relatively

positive in comparison with

the other African countries.

5. In addition to the domestic

market size, importance of

regional exchanges.

6. Integrated in the l’UEMOA

(95 M inHabts) and other

regional organisations

CEDEAO – OHADA

/ 19

IVORY COAST

/ Date 11/06/2014

20 20

1. A GDP of 60,94 B USD,

Most important in the

region

2. A purchase power over

African average

3. Positive prospective.

Political stability

4. Central point in West Africa

5. Economic diversification –

resilience to external

shocks (Currency – raw

material exportations)

/ 21

KENYA

Source EY

/ Date 22

1. Economy still driven by

agriculture and

construction

2. A slow GDP growth

expected for 2016

3. Hub to French speaking

africa

4. Elections in 2016

5. Positive impact of low

commodity prices

/ Date 23

MOROCCO

/ Date 24

1. A remained low GDP

growth in 2016 mostly due

to low investments, power

supply problems and

droughts

2. A low private consumption

(main GDP driver)

3. Africa is the second export

destination

4. An increasing trend in

insolvencies in most of the

sectors

/ Date 25

SOUTH AFRICA