Africa: A New Frontier or False Dawn for

Sustainable Private Equity?

Presented by Herta von Stiegel

November 11, 2010

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Ariya Sustainability ModelA holistic approach to sustainable investment

* Bottom-of-the-Pyramid Consumer; typically earning ~<US$2 per day

Accountability • Measurement of social and

environmental impact • External monitoring

Investment analysis• ESG evaluation• Qualitative and quantitative

assessment

Sector• Poverty alleviation• Service enabler• Environmental sustainability

Geography • Defined by need and demand• Leapfrogging technology gaps• Preserve environmental capital

Economic impact

• Profitable, competitive and efficient business operations

• Demand-driven businesses for growing middle class and BOP* consumers

• SME development

• Increase tax revenue to governments

• Reduce gap in value of imports versus value of exports

Environmental impact

• Sustainable use of natural resources

• Promotion of environmentally sound products and services

• Resource stewardship

• Pollution prevention

• Investment in companies addressing climate change

• Carbon credits

Governance

• Management and structures

• Business ethics

• Management structures and ESG

• Compliance with local law and international standards

• Responsible corporate citizenship

• Certified environmental management systems

• Transparency

• Support of PRI, Equator Principles

Social impact

• Stakeholder engagement

• Community collaboration

• Job creation

• Skills development

• Human health and safety

• Economic inclusion and wealth creation at the BOP

• Introduction of new technologies

• Local ownership schemes

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1,658

1,169

India

1,409

1,329China

2,199

1,532

Asia

Europe

731

664

North America

445

339

SouthAmerica

769

572

Global Population Growth 1950-2050Africa’s population is expected to double by 2050

Source: UN (Figures in millions)

1,998

965

Africa

Population 2007

Population 2050

Population 1950

• Forecast population of 2bn by 2050• 33% of global mineral resources• 20% of the world’s land mass• 3% of global FDI• Labour force expected to grow at 4%

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Africa and Climate ChangeThe continent with the lowest emissions stands to lose the most

Source: The Lancet Vol 373 May 16, 2009

Comparison of undepleted cumulative CO2 emissions by country for 1950–2000

Regional distribution of four climate-sensitive health consequences (malaria, malnutrition, diarrhoea, and inland flood-related fatalities)

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Renewable energy & clean technology• Essential for sustainable economic growth• Unreliable energy supply can stunt growth by 4% in SSA• Consumption of energy shows strong links to income per capita

Key Sectors for Growth and ImpactEnabling sectors that are key to poverty alleviation and economic growth

Source: How Exciting is Africa’s Potential, Goldman Sachs Strategy Series, Oct 2010; The Economics of Renewable Energy Expansion in Rural Sub-Saharan Africa, The World Bank, Jan 2010

Microfinance• Key to tackling poverty and fostering entrepreneurship• SME sector contributes more than 50% to gross GDP

Telecommunications• Driver of knowledge based activities • The mobile market has seen a cumulative 50% annual growth rate

over the last 5 years- Mobile phone usage increased by almost 20x between 2000 and 2008 in

the 11 largest African countries (‘African 11’)

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Opportunities for InvestmentRecognizing Africa’s potential and contributing to its positive growth

Source: IMF Data Mapper 2009; How Exciting is Africa’s Potential, Goldman Sachs Strategy Series, Oct 2010

Macro stability

Macro conditions

Human capital

Political conditions

Technology

0 1 2 3 4 5 6 7

2009 Average for 'African 11' Countries

1997 Average for 'African 11' Countries

Growth Environment Score(GES)

Current International Presence Africa’s Growth Conditions

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Africa 1994/95Africa 2009

Rule of Law and Good Corporate GovernancePrerequisites to attracting foreign investment

Source: Freedom House Countries are scored on a scale of 1-7. Combined average rating for civil liberties and political freedom are 3-5 for ‘partly free’ and 5-5-7 ‘not free’

.

• Cote D’Ivoire held its first round of presidential elections, which had been postponed 6 times since 2005, last month

• Elections are scheduled for 2011 in the DRC

• Zimbabwe and the Rep. of the Congo are the only two countries to have regressed since 1995

• In 2009 successful elections have been held in Malawi, South Africa and Zambia

Partly Free

Free

Not Free

African Private Equity MarketAfrica is a growth area with historic IRRs* of 43.5% for private equity investments

* Ariya Capital research: sample of 40 mid-to-large sized deals in Africa between 2000 - 2007

African Private Equity Investments – 2000-2007 mid to large sized deals*

There is a significant opportunity to achieve superior financial returns AND positive social and environmental impact by investing in Africa