EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial...

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Making choices EY’s attractiveness survey Africa 2015

Transcript of EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial...

Page 1: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

Making choices

EY’s attractiveness survey

Africa 2015

Page 2: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Africa attractiveness surveys Background

EY’s 2015 Africa attractiveness survey

Using these

qualitative and

quantitative inputs,

we continue to

develop insights and

shape viewpoints in

support of increased

investment into Africa

Fifth annual Africa

attractiveness survey

Analysis of greenfield and

brownfield foreign

direct investment

(FDI) project flows

into Africa for various

periods, going back

as far as 2003

Survey of

over 500 business

leaders and

investors from 30

countries to

ascertain the

perceived

attractiveness

of Africa as an

investment

destination

Page 3: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Africa attractiveness surveys 2011-2015

EY’s 2015 Africa attractiveness survey

It’s time

for Africa

Building

bridges

Getting down

to business

Executing

growth

Making

choices

2011 2012 2013 2014 2015

Page 4: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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2014: The headlines Perspective remains important

EY’s 2015 Africa attractiveness survey

► Africa received the second most FDI

capital in the world, registering year-on-

year growth of 136%

► SSA will be the second-fastest-growing region in the world this year, with 22

economies growing at 5%+

► Successful Nigerian elections an

important symbol of the ongoing process

of democratization in Africa

► Established investors remain

overwhelmingly positive about the

continent’s prospects

Glass half full: ‘Africa rising’

narrative remains resilient

Glass half empty: economic

and political headwinds

► The World Bank and International Monetary

Fund revised revised their 2015 GDP growth

forecasts down to its lowest since 2009

► Ebola and terrorist insurgencies have had a negative impact on perceptions

► Deteriorating perceptions of Africa’s

investment attractiveness

► 8.4% year-on-year (YOY) decline in

FDI projects in 2014

Page 5: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Africa’s FDI landscape

EY’s 2015 Africa attractiveness survey

Page 6: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Actual FDI numbers FDI project numbers fall, but capital investment and jobs surge

Africa became the world’s second-largest

destination for FDI capital inflows in 2014.

EY’s 2015 Africa attractiveness survey

FDI projects by world region (% change, 2014 vs. 2013)

-21.3%

-17.7%

-17.5%

-14.8%

-8.4%

14.0%

17.3%

Rest of Europe

Middle East

Latin Americaand the Caribbean

Western Europe

Africa

North America

Asia-PacificCapital

investment

136% YOY growth in FDI

value in 2014

FDI job

creation

68% YOY growth in

FDI jobs in 2014

Source: fDi Markets, February 2015.

Page 7: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Re-emergence of North Africa Value of FDI projects into North Africa grows dramatically

Source: fDi Markets, February 2015.

North Africa sees FDI value grow, while share in job creation also increases

38.8% 40.4% 40.1%

32.1%

23.1% 16.9%

22.5%

61.2% 59.6% 59.9%

67.9%

76.9% 83.1%

77.5%

2004 2006 2008 2010 2012 2013 2014

16.5%

57.3%

34.3%

23.6% 29.5%

19.1%

51.1%

83.5%

42.7%

65.7%

76.4% 70.5%

80.9%

48.9%

2004 2006 2008 2010 2012 2013 2014

FDI projects

(2004-14, %)

FDI amount

(2004-14, %)

Sub-Saharan Africa

(SSA) SSA

North Africa North Africa

EY’s 2015 Africa attractiveness survey

Page 8: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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SSA: more capital, more jobs, fewer projects Southern, East and West Africa see slower FDI projects

EY’s 2015 Africa attractiveness survey

Source: fDi Markets, February 2015.

FDI projects

11% down

Sub-Saharan

Africa (SSA)

15% y-o-y drop in FDI projects

Southern Africa

West Africa

FDI projects

down 23%

East Africa

FDI projects

down 12%

► Some economies –

South Africa, Angola,

Nigeria, Ghana and

Kenya – received fewer

FDI projects.

► But Ethiopia and

Mozambique attracted

growing inflows of

projects.

+42.7% +22.7% increase in FDI capital increase in job creation

Page 9: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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South Africa remains top destination country Top 10 countries by share of FDI projects in 2014

EY’s 2015 Africa attractiveness survey

► Over the past five

years, SA has attracted

twice as many FDI

projects as any other

African country.

► SA is also ranked by far

the most attractive

investment destination

in Africa due to:

1. Diverse economy

2. Solid infrastructure

3. Stable political

environment

Source: fDi Markets, February 2015.

16.5%

9.7%

9.1%

8.5%

6.8%

6.7%

5.3%

4.4%

3.1%

2.7%

South Africa

Egypt

Morocco

Kenya

Mozambique

Nigeria

Ghana

Ethiopia

Uganda

Tanzania

Page 10: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Diverse sources ensure ongoing resilience North America and Middle East expand presence

EY’s 2015 Africa attractiveness survey

In 2014, at the source country level, the US regained its title as the largest investor. France,

the United Arab Emirates and China also were particularly active during the year.

Source: fDi Markets, February 2015.

24.6%

14.7% 8.8% 9.1%

17.5% 15.7%

7.9%

19.2%

39.0% 36.8%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Western Europe maintains leading position, investments from North

America and the Middle East on the rise

FDI projects by source regions (in %)

Western Europe

Africa

Asia-Pacific

North America

Middle East

Rest of Europe

Latin America

and the Caribbean

Page 11: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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RHC emerges as key growth sector Now fourth-most-attractive sector in Africa

EY’s 2015 Africa attractiveness survey

Top two sectors by % share Source: fDi Markets, February 2015.

Top 10 sectors by FDI projects (2014)

Top sectors FDI projects

(share in %)

Jobs created

(share in %)

FDI capital

(share in %)

Technology, media and telecommunications (TMT) 19.6% ||||||||||||||||||||||||||||| 6.4% ||||||||| 5.5% ||||||||

Financial services 18.1% ||||||||||||||||||||||||||| 2.0% ||| 1.2% |

Retail and consumer products (RCP) 14.1% ||||||||||||||||||||| 31.5% ||||||||||||||||||||||||||||||||||||||||||||||| 4.4% ||||||

Real estate, hospitality and construction (RHC) 8.0% |||||||||||| 33.6% |||||||||||||||||||||||||||||||||||||||||||||||||| 43.8% |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Business services 7.5% ||||||||||| 1.6% || 0.5%

Transport and logistics 6.3% ||||||||| 3.1% |||| 2.2% |||

Diversified industrial products (DIP) 5.3% ||||||| 1.5% || 0.3%

Automotive 4.1% |||||| 5.7% |||||||| 0.9% |

Coal, oil and natural gas 3.5% ||||| 3.7% ||||| 25.4% ||||||||||||||||||||||||||||||||||||||

Chemicals 3.3% |||| 2.4% ||| 5.2% |||||||

Page 12: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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How foreign investors see Africa

EY’s 2015 Africa attractiveness survey

Page 13: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Investor perceptions Africa’s perceived attractiveness has deteriorated over the past year

EY’s 2015 Africa attractiveness survey

Source: EY’s 2015 Africa attractiveness survey (total respondents: 501).

7% 11%

14% 17% 19%

66% 60%

56% 60%

53%

2011 2012 2013 2014 2015

Deteriorated Improved

When asked about Africa’s future attractiveness, a strong majority (69%) of respondents

remain positive about the continent’s investment appeal over the next three years. However, the

proportion of optimists has fallen four percentage points since our 2014 survey.

Africa’s past attractiveness at lowest level since 2011

Page 14: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Investor perceptions Even Africa’s attractiveness relative to other regions is down a notch

EY’s 2015 Africa attractiveness survey

Source: EY’s 2015 Africa attractiveness survey (total respondents: 501).

Eastern Europe (0)

201 1

Africa

Asia (+31)

North America (+16)

Western Europe (+15)

Middle East (+8)

Oceania (+6)

Latin America (+2)

Central America (-4)

CIS (-19)

201 2 201 3 201 4

10

9

7

8

6

5

4

3

2

1

201 5

Markets more attractive than Africa Markets less attractive than Africa

Numbers in brackets indicate total attractive responses minus total not attractive responses.

Latin America (-1)

Eastern Europe (-3)

Asia (+26)

North America (+13)

Oceania (+5)

Western Europe (+5)

Middle East (-0.3)

Central America (-5)

CIS (-17) 10

9

7

8

6

5

4

3

2

1

Africa

Western Europe (-4)

Middle East (-10)

Asia (+16)

Oceania (+11)

Latin America (+8)

North America (+5)

Central America (-1)

Eastern Europe (-12)

CIS (-14) 10

9

7

8

6

5

4

3

2

1

Africa

Middle East (-15)

CIS (-17)

North America (+4)

Asia

Oceania (-2)

Latin America (-14)

Eastern Europe (-17)

Central America (-19) 10

9

7

8

6

5

4

3

2

1

Africa

Western Europe (-3)

CIS (-16)

Oceania (+3)

Asia (+1)

Latin America (-2)

10

9

7

8

6

5

4

3

2

1

Africa

North America (+1)

Western Europe (-1)

Central America (-8)

Eastern Europe (-10)

Middle East (-15)

Page 15: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

Page 15

Perception gap persists Those with an established presence remain overwhelmingly positive

EY’s 2015 Africa attractiveness survey

Source: EY’s 2015 Africa attractiveness survey (total respondents: 501).

believe attractiveness

will improve over the next

three years

Africa is the second least

attractive investment

destination in the world

30% believe attractiveness has

improved over the past year

50%

Respondents who are

not established in Africa

believe attractiveness will

improve over next three years

Africa is the most

attractive investment

destination in the world

believe attractiveness has

improved over past year 66%

81%

#1

Respondents who are

already established in Africa

Page 16: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Roadblocks to investment The top five perceived barriers to investing in Africa remain consistent

EY’s 2015 Africa attractiveness survey

► Despite the “Africa rising” narrative and

steady growth in FDI inflows, there has been

no quantum leap in FDI into Africa.

► Respondents have highlighted political risk

factors, such as instability and corruption, as

the top barriers that discourage investment

on the continent. Source: EY’s 2015 Africa attractiveness survey (total respondents: 501).

Unstable

political

environment 55%

Poor basic

infrastructure 14%

Corruption 26%

22% Weak

security

Lack of highly

skilled labor 13%

Page 17: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Making choices: Inclusive, sustainable growth

EY’s 2015 Africa attractiveness survey

Page 18: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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Strong fundamentals remain intact We believe that the African growth story is real and sustainable

EY’s 2015 Africa attractiveness survey

The African growth story is real

1988–2000 2001–12 2013–30

Above 5%

Between 0% and 5%

Less than 0% (negative)

Gross Domestic

Product (GDP) and

Compound Annual

Growth Rate (CAGR)

Number of economies growing faster than 5% a year

Sources: Oxford Economics database estimates; EY analysis, accessed in August 2014.

11

1 2 3

8 11

6

1

6

21

7 3

1 4

24

Asia Pacific CIS Central and SoutheastEurope

Middle East SSA

1988-2000 2001-2012 2013-2030

As a region, SSA

has by far the

most economies

growing at

sustained rates of

5% over the past

15 years and the

next 15 years.

Page 19: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

Page 19

Economic resilience Many African countries have shown resilience during global downturns

EY’s 2015 Africa attractiveness survey

Structural reforms in the 1990s, strong

macroeconomic policies and early

adoption of counter-cyclical monetary

and fiscal policies enabled SSA to

weather the most recent crisis relatively

well in comparison to previous global

downturns.

GDP growth in SSA during global downturns

0

1

2

3

4

5

6

7

8

t-4 t-3 t-2 t-1 t t+1 t+2 t+3 t+4

GD

P g

row

th r

ate

(%

)

“V” shaped recovery

“L” shaped recovery

2009

Average: 1975,1982 and 1991

Recession cycles

Current cycle (t= 2009)

Average three cycles

1975,1982 and 1991 Sources: World Bank, EY analysis

Page 20: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

Page 20

Addressing structural transformation African countries still underperform on key competitiveness measures

EY’s 2015 Africa attractiveness survey

Institutions

Infrastructure

Macroeconomic

environment

Health and

primary

education

Higher

education

and training

Goods

market

efficiency Labor market

efficiency

Financial market

development

Technological

readiness

Market size

Business

sophistication

Innovation

Africa Southeast Asia Latin America and the Caribbean

Africa’s competitiveness performance relative to other regions

Source: Africa Competitiveness Report 2013, World Economic Forum, 2013.

Page 21: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

Page 21

Toward inclusive, sustainable growth EY’s point of view: five priorities for action

EY’s 2015 Africa attractiveness survey

Realizing the possibilities: 5 priorities for action

Africa Shared value Entrepreneurship Regional

integration

Infrastructure

development

Partnerships

Page 22: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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EY Strategic Growth Forum™ Africa 2015 3-4 November 2015, Johannesburg, South Africa

EY’s 2015 Africa attractiveness survey

EY hosts the Strategic Growth Forum in several locations around the world.

EY in Africa ► Fourth Forum hosted in Africa

► Focus on the strategic growth

opportunities that Africa

offers and the challenges that

need to be addressed to

realize these opportunities

► Unparalleled opportunity to

network, share ideas and

learn from those doing

business in and implementing

government policies across

Africa

► EY World Entrepreneur

Award™ — Southern Africa

during gala dinner on 3

November 2015 Visit ey.com/sgfafrica 2015

Page 23: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

Page 23

Making choices EY’s 2015 Africa attractiveness survey

EY’s 2015 Africa attractiveness survey

Download the full report at:

emergingmarkets.ey.com

Follow us on Twitter:

@EY_EmergingMkts

@EY_Africa

Page 24: EY regular presentation · 2015. 6. 2. · market efficiency Labor market efficiency Financial market development Technological readiness Market size Business Innovation Africa Southeast

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