RENAISSANCE CAPITAL FRONTIER, EMERGING AND CONVERGING MARKETS. The emerging markets investment firm

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1 RENAISSANCE CAPITAL FRONTIER, EMERGING AND CONVERGING MARKETS The emerging markets investment firm

2 GDP GROWTH KNOWS NO RELIGIOUS, ETHNIC, CLIMATE OR CONTINENTAL BARRIERS 30,000 Catching up is a global phenomenon - per capita GDP since ,000 United Kingdom France 20,000 Germany United States 15,000 Argentina Chile 10,000 Japan 5,000 South Korea Thailand Singapore India 2

3 YET 10 AFRICAN COUNTRIES ACHIEVED AT LEAST 7% GROWTH SINCE 2000 (ENOUGH TO DOUBLE GDP IN A DECADE) 16.0 Over each of these grew by an average 7.0% The emerging markets investment firm 3

4 WHY NOW? The emerging markets investment firm 4

5 CUTTING AFRICAN DEBT IN HALF SSA G-7 Public debt as % of GDP F The emerging markets investment firm 5

6 BANKING STILL HAS ROOM TO BOOM Private sector debt in 2011 (household and corporate) as % of GDP (Source, IMF) High debt in rich countries and... China (% of GDP) African countries have low debt levels The emerging markets investment firm 6

7 THE RISE OF FOREIGN DIRECT INVESTMENT BEGAN BEFORE CHINA 4.0 FDI into Africa (% GDP) Africa (LHS) 7

8 ACTUALLY MOST GROWTH HAS COME FROM SERVICES Sector share of change in real GDP, Services 53 Agriculture 16 Mining and quarrying 14 Construction 8 Manufacturing 7 Gas, electricity and water 1 The emerging markets investment firm 8

9 EASE OF DOING BUSINESS REFORMS DAYS TO START A BUSINESS (WB, 2014) Venezuela Eq Guinea Brazil Congo, Rep Zimbabwe Eritrea Angola Namibia Chad Botswana Gabon Malawi Swaziland Sudan China Kenya Uganda DRC Lesotho Nigeria Gambia, The India Tanzania Algeria CAR Pakistan SA Djibouti Guinea Cameroon Ethiopia Russia Germany Ghana Greece Mozambique Sierra Leone UK Mali Morocco Tunisia Bangladesh Cape Verde Guinea-Bissau Côte d'ivoire Egypt Madagascar Zambia Mauritius Senegal Burundi USA Rwanda The emerging markets investment firm 9

10 PERHAPS IT IS DEMOGRAPHICS 400,000, years olds (source UN) 350,000, ,000, ,000, ,000, ,000,000 Eastern Europe Eastern Asia South Asia SE Asia SSA Latam + Caribbean Northern Africa 100,000,000 50,000, The emerging markets investment firm 10

11 EDUCATION IS A CRUCIAL FACTOR Secondary school enrolment (UN) Around 1975 Around 1990 Around 2005 The emerging markets investment firm 11

12 AFRICA GDP IN 2012 Morocco Tunisia Algeria Libya Egypt W.S Niger C.V Mauritania Mali Chad Sudan GambiaSenegal G-B Guinea Burkina Faso Nigeria South Sudan Eritrea Djib. S-L Ghana Ethiopia Benin Lib. Togo Uganda Cote D'Ivoire Somalia CAR Kenya Rw. B. Cameroon 1 box = US$1bn Tanzania 1 box = total GDP less than US$0.5bn STP Eq Guinea Blank box = No available GDP data Gabon Nigeria - as per Renaissance assumptions post the 2012 GDP revision DRC LEGEND Strong autocracy Strong democracy Weak autocracy Weak democracy Congo Zambia Malawi Moz. Seychelles Madagascar Mauritius Angola Zimbabwe Swazil. Botswana Namibia South Africa $419bn and Nigeria $370bn we assume after the GDP revision, compared with Thailand ($377bn), Colombia $378bn and Venezuela $337bn Egypt at $257bn and Nigeria at $273bn before the GDP revision, compre with Singapore at $270bn and Geece at $271bn Angola at $121bn or Morocco at $100bn compare with Bangladesh at $118bn, Hungary at $129bn or Vietnam at $135bnSouth Africa Les. The emerging markets investment firm 12

13 AFRICA IN 2010 BY POPULATION Morocco Algeria Tunisia Libya Egypt W.S Niger Mauritania Chad C.V Mali Eritrea Senegal Burkina Faso Gambia Sudan G-B Guinea Djib. Cote D'Ivoire Ethiopia Sierra Leone Ghana Cen. A R South Sudan Som. Liberia Benin Nigeria Togo Cameroon Uganda Kenya Eq G. STP LEGEND Gab. Congo Strong autocracy Strong democracy Weak autocracy Weak democracy Rwanda Dem Rep oburundi Tanzania Seychelles Angola Zambia Malawi Madagascar Nmb. Bts. Mozambique Zimbabwe Mrt. Swz. Lesotho South Africa The emerging markets investment firm 13

14 CORRUPTION LINKED TO PER CAPITA GDP 10.0 Corruption index Per capita GDP 50, , ,000 35,000 30,000 25,000 20,000 15,000 10, , Qatar Singapore United States Austria Belgium Ireland Japan Taiwan Spain Korea (South) Czech Republic Oman Libya Poland Russia Belarus Argentina Cuba Uruguay Gabon Romania Brazil Jamaica FYR Macedonia China Turkmenistan Ukraine Guatemala Armenia Angola Jordan Indonesia Bolivia Honduras India Philippines Moldova Pakistan Nicaragua Nigeria Cameroon Mauritania Haiti Chad Kenya Uganda Mali Sierra Leone Mozambique Ethiopia Eritrea Liberia Zimbabwe 0 The emerging markets investment firm 14

15 WHAT HAPPENS NEXT? The emerging markets investment firm 15

A TYPICAL FORECAST WOULD BE THIS 8 7 Real GDP % change and 10-year moving average (IMF) 6 5 4 3 2 SSA GDP SSA 10 year rolling average GDP 1 0-1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

16 A TYPICAL FORECAST WOULD BE THIS 8 7 Real GDP % change and 10-year moving average (IMF) SSA GDP SSA 10 year rolling average GDP The emerging markets investment firm 16

17 AFRICA AS INDIA AS ASIA Real GDP % change (IMF, Renaissance, Reserve Bank of India) India SSA Developing Asia Linear (India ) Linear (SSA ) The emerging markets investment firm 17

18 FASTEST BILLION - NIGERIA 7,000 Nigeria GDP in $bn (2012 dollars) 6,000 5,000 When will Nigeria overtake the 2012 GDP of the following? Japan 4,000 3,000 Russia / Italy Brazil / UK Germany 2,000 1,000 SA Indonesia Saudi Arabia Spain India The emerging markets investment firm 18

19 CONCLUSIONS SSA has been following the Indian growth trajectory for 30 years, with a 20 year lag. This tells us that the next 20 years will be even better for SSA. Moreover India has itself been following Developing Asia with a ten year lag, implying good African growth out until the 2040s. In constant prices, and assuming Africa does no better than India/Developing Asia, this means the continent should grow from $2 trillion in 2012 to $29 trillion by With higher growth should come a deepening and widening of democracy across the continent. Corruption will decrease as per capita incomes grow. Africa will move up the value-added curve, from resources and services which help drive growth today, to service exports, textiles and increasingly heavy industry from the 2020s. Assuming a rise in private sector debt/gdp to 100% by 2050 implies a fold rise in the stock of bank credit in constant 2012 dollars. An agriculture productivity boom is possible if Cerrado techniques are adopted across the Guinea Savannah. Infrastructure needs are affordable SSA oil production revenues of over $220bn easily exceed the annual $90-100bn estimated infrastructure needs. India tells us that however much is invested, still it may not fully meet demand. But in addition, governments will want to boost domestic savings, widen and improve education systems, yet try to ensure budget and external deficits do not widen so much that there is risk of a 1980s debt crash. There is a great opportunity to deliver a better performance in the coming 40 years than Asia achieved over the last 40 years. The emerging markets investment firm 19

20 AFRICA GDP IN 2050 GDP of AFRICA in 2050 (US$bn, in 2012 dollars) with each box representing $20bn of GDP - as forecast by Renaissance Capital, with colours reflecting Renaissance Capital forecasts of political change Morocco Tunisia Egypt Algeria Libya Chad WS Niger Eritrea Sudan Mauritania Djib. C.V Mali Somalia Senegal Gambia Ethiopia Burkina Faso South Sudan Benin Nigeria CAR G-B S-L Guinea Cote D'Ivoire Ghana Togo Liberia Uganda Kenya STP Rwanda Cameroon LEGEND ST&P Burundi Eq Guinea Strong autocracy Strong democracy Weak autocracy Weak democracy Gabon DRC Tanzania Congo Seychelles Angola Zambia Zimbabwe Malawi Moz. Mad. Mauritiu 1 box = US$20bn Namibia Botswana Swazil. SA Les. The emerging markets investment firm 20

THE FASTEST BILLION PRIVATE & CONFIDENTIAL www.fastestbillion.

21 THE FASTEST BILLION PRIVATE & CONFIDENTIAL Available also on Amazon November @YvonneMhango Charles Robertson Global chief economist crobertson@rencap.com The emerging markets investment firm

22 This Communication is for information purposes only. The Communication does not form a fiduciary relationship or constitute advice and is not and should not be construed as a recommendation or an offer or a solicitation of an offer of securities or related financial instruments, or an invitation or inducement to engage in investment activity, and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated price. The Communication is not an advertisement of securities nor independent investment research, and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Opinions expressed therein may differ or be contrary to opinions expressed by other business areas or groups of the Renaissance Capital as a result of using different assumptions and criteria. All such information is subject to change without notice, and neither Renaissance Capital nor any of its subsidiaries or affiliates is under any obligation to update or keep current the information contained in the Communication or in any other medium. Descriptions of any company or issuer or their securities or the markets or developments mentioned in the Communication are not intended to be complete. The Communication should not be regarded by recipients as a substitute for the exercise of their own judgment as the Communication has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. The application of taxation laws depends on an investor s individual circumstances and, accordingly, each investor should seek independent professional advice on taxation implications before making any investment decision. The Communication has been compiled or arrived at based on information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified, is provided on an as is basis and no representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness, reliability, merchantability or fitness for a particular purpose of such information, except with respect to information concerning Renaissance Capital, its subsidiaries and affiliates. All statements of opinion and all projections, forecasts, or statements relating to expectations regarding future events or the possible future performance of investments represent Renaissance Capital s own assessment and interpretation of information available to them currently. The Communication is not intended for distribution to the public and may be confidential. It may not be reproduced, redistributed or published, in whole or in part, for any purpose without the written permission of Renaissance Capital, and neither Renaissance Capital nor any of its affiliates accepts any liability whatsoever for the actions of third parties in this respect. The information may not be used to create any financial instruments or products or any indices. Neither Renaissance Capital and its affiliates, nor their directors, representatives, or employees accept any liability for any direct or consequential loss or damage arising out of the use of all or any part of the Communication Renaissance Securities (Cyprus) Limited. All rights reserved. Regulated by the Cyprus Securities and Exchange Commission (Licence No: KEPEY 053/04). The emerging markets investment firm

23 EUROPEAN INVESTMENT CONFERENCE Beyond Austerity: Opportunities for European Investors in the Global Market November 2013 London, United Kingdom

24 EUROPEAN INVESTMENT CONFERENCE Beyond Austerity: Opportunities for European Investors in the Global Market November 2013 London, United Kingdom

21st ACI AFRICA REGION ANNUAL ASSEMBLY CONFERENCE AND EXHIBITION

21st ACI AFRICA REGION ANNUAL ASSEMBLY CONFERENCE AND EXHIBITION LIVINGSTONE, ZAMBIA 28 AUGUST 2012 Angela Gittens Director General ACI World 1 Airports Council International ACI AFRICA ACI World 577 members