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Transcript of The investment potential of sub-Saharan Africa - Deloitte US · PDF fileEmail:...
The investment potential of sub-Saharan Africa
SectionMacroeconomic overview
M&A activity in Africa
Common M&A challenges in Africa
Our African reach and experience
Should you have any questions on this document or require any further information, please do not hesitate to contact any of the following persons:
Karin HodsonPartner South AfricaOffice tel: +27 11 806 5668Mobile tel: +27 83 440 9170Email: [email protected]
Temitope OdukoyaPartner NigeriaOffice tel: +234 19041748Mobile tel: +234 19041748Email: [email protected]
Rodger GeorgeDirector Deloitte East AfricaOffice tel: +254 719 039 180 Mobile tel: +254 73 3330 333Email: [email protected]
Anthony WilsonSenior Manager South AfricaOffice tel: +27 11 209 6156Mobile tel: +27 76 798 3370Email: [email protected]
James DouglasPartner United KingdomOffice tel: +44 20 7007 4380Mobile tel: +44 7775 822423Email: [email protected]
Macroeconomic overview
South Africa
Sub-Saharan Africa is anticipated to lead global economic growth
Sub-Saharan Africa
3.7%
4.8%Latin America
2011 2013
2011 20133.3%2014 2018
2014 20182.9%
North America
2011 2013
2.1%2014 2018
2.6%
Western Europe
2011 2013
0.8%2014 2018
1.6% Transition economies
2011 2013
2.4%2014 2018
2.6%
Asia & Australasia (incl Japan)
2011 2013
3.8%2014 2018
3.9%
Middle East & North Africa
2011 2013
3.1%2014 2018
4.0%
Sub-Saharan Africa is forecast to be the fastest growing region in the world over the next five years as measured by projected GDP growth rates
Historical GDP% Forecast GDP% Source: EIU
Sub-Saharan Africa is considered an attractive investment region fuelled by its strong projected economic growth
Key drivers of economic growth:
Rising household spending and growth in Foreign Direct Investment
Growing opportunity for investments in Africas natural resources
Growth of demand in the domestic markets due to rise in the lower middle-class population
Gradual normalisation of activities in conflict countries
An extension of domestic markets is expected to be driven by large swathes of the population joining the ranks of the lower middle class.
Governments are driving efforts to tackle infrastructure bottlenecks as well as demonstrating commitment to improving the regulatory environment.
These market conditions have the potential to provide high returns for companies, which can overcome the currently complicated political environment and difficult regulatory climate.
Gross Domestic Product (GDP) of the region is expected to grow by 4 to 6% over the next few years, driven by rising household spending and expansion in domestic markets.
East Africa is expected to lead the way in terms of GDP (US$bn) growth until 2015, with West and Central Africa close behind
Morocco
Algeria
Tuni
sia
EgyptLibya
Nigeria
Wes
tern
Saha
ra
Mauritania
Cape Verde Islands
Mali
SenegalThe Gambia
Guinea-Bissau Guinea
Sierra Leone
Liberia
Burkina Faso
Niger
Chad
Sudan
Central African
Republic
Ethiopia
Eritrea
Djibouti
Somalia
Comores
Seychelles
Mauritius
Reunion
Cameroon
Ghana
Cte d'Ivoire To
go
Beni
n
Equatorial Guinea
Cabinda
So Tom
Gabon
DemocraticRepublic of the
Congo
Angola
Namibia
South Africa
Botswana
Zambia
Zimbabwe
Kenya
Tanzania
Uganda
Rwanda
Burundi
Mozam
bique
Mal
awi
Lesotho
Swaziland
Mad
agas
car
Cong
o-Br
azza
ville
Deloitte footprint in Africa
SouthSudan
Population (m)
Population (m)
Population (m)
Population (m)
139.3
274.6
264.0
144.7
139.9
426.8
122.1
526.8
989.9
1 554.3
462.5
3 640.6
151.2
296.5
287.8
153.0
174.3
598.8
173.5
580.6
1 152.8
2 019.6
602.8
3 794.8
1 203.8
2 221.0
667.5
4 298.0
159.5
311.8
305.0
158.4
192.0
692.5
203.6
680.8
2.7%
2.5%
2.9%
2.3%
5.0%
7.5%
8.3%
6.6%
2.2%
4.9%
5.2%
4.2%
GDP (US$bn)
GDP (US$bn)
GDP (US$bn)
GDP (US$bn)
GDP per head (US$)
GDP per head (US$)
GDP per head (US$)
GDP per head (US$)
* Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo (Brazzaville), Cte dIvoire, Equatorial Guinea, Gabon, Guinea-Bissau, Mali, Niger, Senegal, Togo
* Cape Verde, Democratic Republic of the Congo, The Gambia, Ghana, Guinea, Liberia, Mauritania, Nigeria, So Tom and Prncipe, Sierra Leone
* Burundi, Comores, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Rwanda, Seychelles, Somalia, Tanzania, Uganda
* Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Zambia, Zimbabwe
2010
2010
2010
2010
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2013
2013
2013
2013
2015
2015
2015
2015
forecast
forecast
forecast
forecast
CAGR
CAGR
CAGR
CAGR
2013 2015
2013 2015
2013 2015
2013 2015
Fran
c zo
ne*
Cen
tral
& W
est
Afr
ica
East
Afr
ica
Sout
hern
Afr
ica
Source: EIU
2050
55%45%
37% 36% 36% 35% 35% 34%
2030 2013 2012 2011 2010 2009 2008
Increases in population size, urbanisation trends and technology usage will drive economic growth in sub-Saharan Africa
Sub-Saharan Africa population growth between 2013 and 2015 is forecast at 2.6% compared to global population growth of 0.8%.Source: EIU
Six of the ten countries with the highest urbanisation rates in the world are in sub-Saharan Africa (2013).
Source: World Bank, United Nations, Department of Economic and Social Affairs, Population Division
Nigeria has the ninth-largest urban population in the world, surpassing 80 million in 2013. It also ranks as the country with the most urban dwellers in all of Africa.
0.8% 2.6%
Sub-Saharan Africa urbanisation trends (% of population) Internet and cellular users sub-Saharan Africa
www
48 6188 113
134 159
Total Internet Users (million)
2008 2009 2010 2011 2012 2013
2008 2009 2010 2011 2012 2013
261317
388
470
545
618
Total Cellular Users (million)
M&A activity in Africa
Tanzania
The rise in middle-class population and abundant natural resources are key drivers for investments in the region
Demand for high-quality financial services
A lack of financial products and services is likely to drive opportunities for investors to set up FSI infrastructure to cater for a rise in middle-class population.
Improved macroeconomic policies and well-regulated markets
Countries implementing better macroeconomic policies and well-regulated markets would increase investors interest in the region.
Undervalued targets
Investors are looking for undervalued companies that would provide high returns with attractive prices.
Abundant natural resources
In addition to known natural resources, new energy and resource (E&R) discoveries are being made in resource-rich countries, including Kenya, Sierra Leone and the Democratic Republic of the Congo.
Surge in the middle class driving strong household spending
The recent surge in the middle-class population segment and the increase in household spending are key drivers for investment in sectors such as consumer business.
Cash-rich acquirers in Africa expanding into other parts of the region
Countries, such as South Africa, have numerous cash-rich corporate acquirers who are likely to drive domestic deal activity with companies looking to increase their topline and profitability.
Deal activity in sub-Saharan Africa has been increasing due to the potential of high investment returns, stabilising economies and untapped resources
Source: Capital IQ Source: UNCTAD
2009
0
200
400
600
800
1 000
1 200
2010 2011 2012 2013
Number of deals in Africa Total (20092013)
Disclosed Undisclosed
Deal value Total and average deal size (US$m, 20092013)
Deal Value Average Deal Size
00
5 000
10 000
15 000
20 00025 000
30 000
35 00040 00045 000
50 000
10
20
30
40
50
60
2009 2010 2011 2012 2013
2013 474 321
2012 457 094
2011 423 414 5.8%
FDI Investment Stock (US$m): FDI s
