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Africa open for business: Potential, challenges and risks
Pratibha ThakerEditorial Director, Africa and the Middle East
April 4, 2012
About the Economist Intelligence Unit (EIU)
Research arm of The Economist Group for business executives380 analysts and industry specialists worldwide covering
• Analysis and forecasting for over 200 countries and territories
• Risk assessment
• Industry data and trends: automotive, consumer goods, energy, financial services, healthcare, technology
• Market sizing
• Custom client research
Visit www.eiu.com to register for free macroeconomic information on 187 countries
Today’s Presenter
Pat ThakerRegional Director,
Africa
The state of Africa: mapping growth
Data: Economist Intelligence Unit
• How is this possible?
China & IndiaOil & mineralsDomestic demand
Real GDP growth 2012 (forecast)
• Angola is expected to grow at 10.3%
• And all other countries to grow faster than the long term global average …
• … except for Zimbabwe and Swaziland
Above 98 to 97 to 86 to 75 to 64 to 53 to 4-1 to 3
The engines of growth
• Rising external demand – especially from China and India – also good for commodity prices
• Rising internal demand – driven by urbanisation and “consumerisation”
A Consumer boom
• Urban living and rising disposable incomes will boost demand for modern goods and services
• The rise in supermarkets and other modern outlets
• Many competing demands for available income – consumers are price sensitive
• Small market for top-end products – at least for now
FDI slips but will recover
• Key deals in 2010-11
• Bharti Airtel (India) buys Zain’sAfrican assets for US$10.7bn
• NTT (Japan) completes takeover of South Africa’s Dimension Data for US$3.2bn
• Walmart (US) buys 51% of SA retailer Massmart for US$2.4bn - after winning belated approval from the competition authorities
• South Africa is one of the key gateways to the rest of Africa.
FDI
0102030405060708090
2004 2006 2008 2010
US$
bn
SSA North Africa
The impact of regional integration
• Larger markets & fewer barriers• The SADC, Comesa, the EAC & Ecowas – the main ones• Key problems are non-tariff barriers and weak infrastructure links between members• The EAC introduced a common market in July 2010 but key laws still need to be harmonised• Proposals for a single African trade zone are advancing will be hard to realise• Egypt linked to Africa via Comesa – and via the Nile
The business climate
• Although improving, Africa is still the worst region in the world to do business. African countries dominate the lower reaches of the World Bank’s Doing Business In rankings
• Key obstacles include:1. Cost and difficulty of setting up a business2. Skills shortages and labour market restrictions3. High taxes – and complex tax systems4. Dealing with licenses – and registering property5. Enforcing contracts
An African Spring?
• Some similar underlying conditions:• Authoritarian governments & geriatric
rulers• High unemployment & widespread poverty• Corruption & excessive regulations
• But also key differences:• Larger rural populations in SSA• Less extensive use of the Internet & social
networking• A slightly better democratic record
• But some countries are more at risk than others
Questions and Answers
Africa: Open for business REPORT
Download full report from www.eiu.com
Thank you.
Contact for more information:
Holly DonahueSenior Marketing ManagerEconomist Intelligence [email protected]+44 (0)20 7576 8379