Transcript Slide 1

NEW MARKETS
Østafrika
Fremtidens Vækstmarked
DI International Business Development
2011
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Tomorrows market?
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DI International Business Development (DIBD)
DIBD is DI's international consultancy unit established in 1996
• 65 people throughout different countries
• Experience from +500 project in developing countries
• Small and medium-sized companies
• Business development
• Focus: BRIC, Asia and Africa
• Offices in Sao Paolo, New York, Shanghai, Moscow and Mumbai
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DI foreign offices
Project experience
DI collaboration with sister organizations
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600+ projects
30 consultants
15 years of experience
40+ countries project experience
20+ collaborations with sister organizations
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$1.6
7/10
trillion
7 of the 10 fastest growing
economies, will be African
between 2011 and 2015
220
52
Number of cities
with a population
over 1 million
million
Number of Africans who
are able to meet only
basic needs but will
become consumers by
2015
Africa’s collective
GDP in 2008, roughly
equal to that of brazil
60%
Africa's share of the
world's total amount of
uncultivated, arable
land
8% vs.
22%
In the 90’s the average rate
of inflation was 22% in the
00’s it was 8%
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Africa 1996
Situation
 19 armed conflicts across the
continent
 Average growth rate of -1.1%
between 1985 and 1995
1.7
1.2
4.4
1.1
-3.2
-7.5
-6.5
-8.9
-4.0
-0.3
3.3
0.6
2.4
0.2
3.3
2.0
6.2
-9.6
-3.1
-3.2
-3.1
-3.3
22.5
3.0
GDP Growth Above 9%
7 to 9%
2.8
-3.1
-1.1
2.6
-10.5
0.6
6.6
1.0
5 to 7%
3 to 5%
-5.8
2.1
0 to 3%
-8.4
8.5
Negative
2.8
1.7
5.3
Armed Conflicts
-2.8
Source: IMF, World bank & Danida
-8.6
1.2
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Africa 2011
What explains the
growth surge?
 Governments ending armed
conflicts
 Improved macroeconomic
conditions
 Better business climate
 More than commodities
 Oil and other natural resources
accounted for just 24% between
2000 and 2008
 Growth sectors include tourism,
banking, telecommunications and
increasingly manufacturing and
agriculture
Source: IMF
5.1
4.4
5.4
3.9
5.4
-2.8
5.2
8.5
6.2
4.0
5.2
5.4
3.9
4.7
4.3
7.4
9.9
9.5
-N/A
4.0
2.9
3.5
GDP Growth Above 9%
7 to 9%
6.1
2.1
3.6
4.9
5.8
8.7
6.9
6.7
5.9
4.5
5 to 7%
3 to 5%
7.1
6.4
0 to 3%
4.5
4.8
Negative
2.8
7.5
2.5
Armed Conflicts
3.5
3.8
2.8
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Overview of economies
Transition
New markets
• Impressive growth rates
and political stability
• Relatively good business
climate
• Increasingly diversified
economies
• Markets remain largely
untouched
Senegal, Ivory Coast, Ghana,
Kenya, Mozambique. Tanzania,
Uganda, Zambia
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Economic
Technology
Environment
• Considerable
improvement of political
stability and corruption
transparency
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122
128
Ease of Doing Business Rank
98
6
137
122
125
Starting a Business:
27
133
179
Dealing with Construction Permits:
35
10
Uganda
46
89
Getting Credit:
Tanzania
6
15
Kenya
Denmark
62
120
Paying Taxes:
162
13
113
32
Enforcing Contracts:
125
30
56
113
Closing a Business:
85
5
0
20
40
60
80
100
120
140
160
180
200
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Consumer goods
Two hundred million new customers
Africa’s consumers by income
Why consumer goods?
34
• Consumers are moving from the destitute of income level to
the basic needs
52
Basic needs
($1-5K)
• Urbanisation, rising income and population growth creates
incredible growth in number of consumers
• Not a market share game instead market development
55
39
• Estimate that 221 million new consumers will enter the
market by 2015
Opportunities
• S-curve growth: When a country achieves a basic level of income
purchase of consumers goods accelerates three or fourfold
• Sectors: Amongst other fast-moving consumer goods, banks,
and telecommunications
• BOP business: 71% of income remain at the Base of the Pyramid
requiring companies to reinvent their business model
Source: McKinsey Global Institute
Desitutue
(Below $1K)
Middle
income ($525K)
Global
(+$25K)
2005
2015
Where are the opportunities?
South Africa,
Nigeria, Angola,
Uganda, Ghana,
Kenya, Tanzania,
Ethiopia, Rwanda,
Zambia,
Zimbabwe,
Mozambique
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Agriculture
The green revolution
Why agriculture?
• Largest economic sector, representing 15% of total GDP
• 25% of the worlds arable land lies in Africa
• The top 10 countries producing 75% of total output and 85%
of all farms are smaller than 2 hectars
• Only 10% of the worlds output is African, creating massive
unexplored opportunities
Opportunities
• Agricultural innovation: Developing technological
breakthroughs as drought-tolerant crops
• New value chain approaches: Improve access to markets and
brand African quality products
• New land: Development of large tracts of high potential
agricultural land
• Bio-fuel: Using drought resistant plants for local energy
consumption replacing fossil fuels and trees
Source: McKinsey Global Institute
Where are the opportunities?
South Africa,
Nigeria, Uganda,
Ghana, Ivory
Coast, Ethiopia,
Kenya, Tanzania,
Rwanda, Zambia,
Zimbabwe,
Mozambique
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Infrastructure, Energy & Cleantech
Building the future
Growth of African cities
% increase, 2010-2025 forecast
Why construction & infrastructure?
• A third of Africa's 1 billion inhabitants currently live in urban
areas, but by 2030 that proportion will have risen to a half.
• Combined with an increasing level of income the demand for
housing is dramatically increasing
• Between 1998 and 2007 spending on infrastructure increased
at a rate of 17% per year
Opportunities
• Real estate & commercial: The growing middle class creates
opportunities for real estate development in suburbs to major
cities. Further offices, hotels, shopping malls, schools, etc.
• Low income housing: The vast majority of behind the explosive
urban population growth are low income consumers living at the
BOP
• Major infrastructure: Several countries have announced major
infrastructure programmes looking at transport, energy & airports
Source: The Economist, McKinsey Global Institute
Where are the opportunities?
Ghana, Nigeria,
Angola, South
Africa,
Mozambique,
Zambia,
Zimbabwe,
Tanzania, Kenya,
Uganda, Rwanda,
Ethiopia
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Challenges
Market are growing rapidly, but remain challenging
Challenges in Africa varies from country to country
and must be assed on a individual basis. However,
there are general challenges:
• Talent shortage: Companies struggle to find competent
local partners and employees, but local know-how and
talent is required to develop a competitive business
• Cultural differences: The importance of cultural
management must not be neglected
• Lack of information: Data about markets, consumers’
needs and behavior are scarce, making it harder to
develop specific consumer insights
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Services
• Business plans, market study and research, strategic consultancy,
etc.
• Financing: Applications B2B program, B2B Environment, IPD,
NOPEF, Nordic Development Fund, etc.
• Implementation: Partner selection and training, project management,
strategic implementation, CSR assistance, training plans, etc
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Financial ROI
Sources of Capital
Traditional
sources
Emerging
markets
"hard money"
Medium-hard
money
Blended
values
sources
Aid money no financial
return
Social & Environmental ROI
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Project experience
DIBD has assisted numerous companies throughout Africa
West Africa
East Africa
Southern Africa
185 companies
178 companies
61 companies
Project Experience: Ghana, Nigeria,
Benin, Liberia, Burkina Faso, Mali
Project Experience: Uganda,
Tanzania, Kenya, Mozambique,
Zambia, Zimbabwe
Project Experience: South Africa
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Thank you!
Andreas Flensborg
[email protected]
+45 3377 4625
dibd.dk & boplearninglab.dk