Opportunities and Risks in Africa

Opportunities and Risks in Africa

Africa is not a country Note: Graphic layout for visualization only (some countries are cut and rotated) Source: Creative Commons.

Africa at a glance 212 Total GDP: $2.1 trillion Annual GDP growth: 5.7% Population: 1.8 billion Population growth: 2.2% Urban population (211): 4.4% Life expectancy at birth: 56.7 years Net official development assistance (21): 2.5% of GDP Sources: African Development Bank Group, Mapsofworld.

Africa weathered the financial crisis GDP growth (%) 8 7 Sub-Saharan Africa 6 5 4 3 2 World 1-1 -2 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 Source: IMF World Economic Outlook.

Africa s GDP growth may soon surpass that of other developing economies GDP growth (%) 1 8 6 4 2-2 -4-6 Developing economies Sub-SaharanAfrica Advanced economies 2 22 24 26 28 21 212 214 216 Source: IMF World Economic Outlook.

Africa dominates list of world s fastest-growing economies 21 21 211 215f Economy GDP growth (%) Economy GDP growth (%) Angola 11.57 China 8.74 China 1.49 Ghana 8.55 Myanmar 1.35 Zambia 7.67 Chad 9.3 Rwanda 7.44 Nigeria 8.98 Niger 7.4 Ethiopia 8.39 Mozambique 7.34 Kazakhstan 8.31 India 7.33 Cambodia 8.5 Sri Lanka 7.14 Mozambique 8.1 Uzbekistan 6.86 Rwanda 7.82 D. R. Congo 6.85 Note: Statistics exclude countries that have less than 1 million population. Sources: IMF, Standard Chartered.

Africa s inflation and external debt show improvement External debt (% of GDP) 8 7 6 5 4 3 2 1 External debt (left axis) Inflation (right axis) 199 1994 1998 22 26 21 Inflation (%) 5 45 4 35 3 25 2 15 1 5 Source: IMF World Economic Outlook.

Africa is rich in commodities Platinum Coal Nickel Copper Aluminum Oil Tea Gold Palladium Diamond Coltan Cocoa Share of world production (%) 1 2 3 4 5 6 7 8 9 Sources: Standard Chartered Research, World Bank, BP.

Population explosion projected for Africa Share of world population (%) 25 2 23 15 1 198 21 5 Africa China India Latin America Europe North America Source: United Nations.

Africa has a demographic advantage Working age population (% of total) 7 65 Europe 6 U.S. Latin America 55 Asia Sub-Saharan Africa 5 195 196 197 198 199 2 21 22 23 24 25 Sources: U.N. Population Statistics, Standard Chartered Research.

Rising middle class in Africa Millions 35 3 313 25 2 15 1 111 151 196 5 198 199 2 21 Sources: African Development Bank, Standard Chartered.

Savings and investment rising in Africa but still weaker than in developing Asia Percent of GDP 5 45 4 35 3 25 2 Developing Asia savings Developing Asia investment Sub-SaharanAfrican investment 15 Sub-SaharanAfrican savings 1 198 1983 1986 1989 1992 1995 1998 21 24 27 21 213 Sources: IMF World Economic Outlook, Standard Chartered Research.

Education improving but still lower than other regions Secondary school enrollment (% gross) 1 9 8 7 6 5 4 3 2 Latin America East Asia & Pacific North America MENA Sub-Saharan Africa 199 1992 1994 1996 1998 2 22 24 26 28 21 Source: World Bank.

Tech use rising but lags behind Number of Internet users per 1 people Person 5 45 4 Latin America 35 3 East Asia & Pacific 25 2 15 MENA 1 5 Sub-Saharan Africa 1996 1998 2 22 24 26 28 21 212 Source: World Bank.

Favorable business environment in Africa Top rankings of ease of doing business index for Sub-Saharan Africa Top 1: Ease of doing business index Top 1 : Improvement in ranking (211-212) Economy Ranking in 212 Economy Gain in ranking Mauritius 19 Lesotho 17 South Africa 39 Burundi 13 Rwanda 52 Sierra Leone 8 Botswana 59 Liberia 5 Ghana 64 Mauritius 5 Seychelles 74 Togo 5 Namibia 87 Guinea 3 Zambia 94 Angola 2 Uganda 12 Seychelles 2 Kenya 121 South Africa 2 Source: World Bank Doing Business.

Perceived top challenges to doing business in Africa Enforce effective anti-bribery and corruption initiatives Improve transport and logistics infrastructure Increase efficiency of customs procedures Improve access to local finance Improve system for trading across borders 1 2 3 4 5 % of total survey respondents Source: Ernst & Young.

Business environment in selected African economies Ranking in ease of doing business (total of 185) Economy Ease of doing business rank Starting a business Dealing with construction Permits Registering property Getting credit Protecting investors Paying taxes Enforcing contracts Resolving insolvency Mauritius 19 14 62 6 53 13 12 58 64 South Africa 39 53 39 79 1 1 32 82 84 Equatorial Guinea 162 182 17 13 14 15 173 61 185 Gabon 17 157 11 17 14 158 146 153 145 Chad 184 181 127 14 14 158 184 167 185 Central African Republic 185 17 147 132 14 139 181 177 185 Source: World Bank Doing Business.

Africa s share of global trade is small Trade flow as percentage of global trade Trade (% of world total) 2.5 2 Exports Imports 1.5 1.5 199 1994 1998 22 26 21 Source: IMF World Economic Outlook.

But South-South trade flows are increasing Africa s total trade with other economies Trade (% of Africa total) 8 7 6 5 4 3 2 1 Developed economies Developing economies 1995 1997 1999 21 23 25 27 29 211 Source: IMF Direction of Trade Statistics.

Asia gets increasing share of Africa s exports Africa s exports to other countries Exports (% of Africa total) 8 MENA 7 6 5 U.S. 4 3 Euro zone 2 1 Developing Asia 1995 1997 1999 21 23 25 27 29 211 Source: IMF Direction of Trade Statistics..

FDI inflows have almost quadrupled in ten years US$ billions 45 4 35 Inward 3 25 2 15 1 Outward 5-5 -1 199 1992 1994 1996 1998 2 22 24 26 28 21 212 Note: FDI outward flow in 2 is not publishable. Source: United Nations Conference on Trade and Development (UNCTAD).

But FDI inflows are low compared to other regions US$ billions 6 5 4 3 2 Euro area Developing Asia 1 Sub-Saharan Africa Developing America 199 1992 1994 1996 1998 2 22 24 26 28 21 212 Source: United Nations Conference on Trade and Development (UNCTAD).

South-South investment in Africa Top 1 FDI new projects source countries investing in Africa (23-212) New projects, % of total 14 12 1 8 6 4 2 United States United Kingdom France India South Africa UAE Spain Germany China Canada Sources: fdi Markets, Ernst & Young.

South Africa and Egypt are top FDI destinations Top 1 African FDI destinations for new projects (23-212) New projects, % of total 18 16 14 12 1 8 6 4 2 South Africa Sources: fdi Markets, Ernst & Young. Egypt Morocco Nigeria Tunisia Algeria Angola Kenya Ghana Tanzania

Africa s bond market improves but sees small dip in 213 EMBI global index 1,2 1, 8 Europe Africa 6 4 2 Latin America Asia 25 26 27 28 29 21 211 212 213 Source: Bloomberg.

Comparison of GDP among African countries 212 GDP share of world total (%).8.7.6.5.4.3.2.1.7.15.1.6.4.3.3.2 South Africa Angola Ghana Cameroon Botswana Mozambique Chad Rwanda Source: IMF World Economic Outlook.

Kenya vs. the rest of the East African Community (EAC) 7 6 5 4 3 2 1 US$ billions GDP Total of other EAC countries Kenya 2 22 24 26 28 21 212 Population Millions 12 Total of other EAC countries 1 8 6 4 2 Kenya 2 22 24 26 28 21 212 Source: IMF World Economic Outlook.

Rwanda vs. the rest of the East African Community (EAC) US$ billions 1 9 8 7 6 5 4 3 2 1 GDP Totalof other EAC countries Rwanda 2 22 24 26 28 21 212 Population Millions 16 14 Total of other EAC countries 12 1 8 6 4 Rwanda 2 2 22 24 26 28 21 212 Source: IMF World Economic Outlook.

Ghana vs. the rest of the Economic Community of West African States (ECOWAS) US$ billions 4 35 3 25 2 15 1 5 GDP Totalof other ECOWAS countries Ghana 2 22 24 26 28 21 212 Population Millions 35 3 Total of other ECOWAS countries 25 2 15 1 Ghana 5 2 22 24 26 28 21 212 Source: IMF World Economic Outlook.

Zambia vs. the rest of the Southern African Development Community (SADC) US$ billions 7 6 5 4 3 2 1 GDP Totalof other SADC countries Zambia 2 22 24 26 28 21 212 Population Millions 3 25 2 Totalof other SADC countries 15 1 Zambia 5 2 22 24 26 28 21 212 Source: IMF World Economic Outlook.