Africa: At the Intersection of Impact and Returns

Lauren Ryder

November 11, 2011

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1,692

1,224

India

1,3411,295

China

Europe738

719

North America

446

344

SouthAmerica

488

392

Global Population Growth 1950-2050Africa’s population is expected to double by 2050

Source: UN (Figures in millions), IMF

2,191

1,022

Africa

Population 2010

Population 2050

Population 1950

• Forecast population of 2.1bn by 2050• 29% of global mineral resources• 20% of the world’s land mass• Labour force expected to grow at 4%

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108Japan

Social trends towards domestic growthTwo engines of growth: urbanization and the rise of the middle class consumer

Source: McKinsey Global Institute 3

As Africans move to the cities, replacing farm work with urban jobs, discretionary income is increasing

Leading to a rise in demand for consumer products / durable goods, better housing, energy access, etc.

Fueling growth alongside boom in demand for natural resources, e.g. metals, agriculture

Relative ResilienceAfrica faired well throughout the crisis and continues to do so

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IMF Growth Projections 2011-2012 versus pre-crisis (2000-2007)Percentage point difference in compound annual growth rate

Global Economic GrowthAfrica is poised for tremendous economic growth

Sources: The Economist, IMF World Economic Outlook Database 5

12 African economies are expected to grow close to or faster than the forecasted average of 6.6% per annum for all emerging and developing economies

As a region, SSA’s expected growth is second to East and South Asia and the Pacific, but ahead of all other regions, e.g. Caribbean, South America, Eastern Europe, etc.

The focus then becomes choosing the pockets of growth that are sustainable and driven by favorable demographics and the potential for impact

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Africa and Climate ChangeThe continent with the lowest emissions stands to lose the most

Source: The Lancet Vol 373 May 16, 2009

Comparison of undepleted cumulative CO2 emissions by country for 1950–2000

Regional distribution of four climate-sensitive health consequences (malaria, malnutrition, diarrhoea, and inland flood-related fatalities)

Energy OpportunityElectrification as one piece of the energy puzzle

Source: World Bank Report, World Bank Development Indicators, CIA Factbook 7

= 100-watt light bulb on for 12 hours / day

Opportunity = Benefit

GDP per capita (PPP) vs. Electricity Consumption

+ Solution

Energy OpportunityElectrification as one piece of the energy puzzle

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Impact and ReturnsAchieving impact and generating a financial return are not mutually exclusive

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Trained through GIZ’s Program for Biomass Energy Conservation in 2004 to manufacture ‘rocket’ stoves

Sold 6,600 stoves in the past 6 years, mainly to institutions such as schools, meal programs, prisons

Now diversifying business – building a 40-room hotel financed through profits from his stoves

TBL Report

Economic

Had you provided start-up capital for a minority stake, IRR = 40-50%

Providing revenue stream to government through taxes, import duties

Social

Was at one point largest non-corporate employer in the region – between 32 – 65 employees

30% women on his payroll

Environmental60-80% reduction in firewood vs. open

fires / simple stovesReduction in air pollution

Governance

In 2008, became a representative to the presidential task force to address issues of household energy and deforestation

Measuring ImpactA thoughtful approach to sustainability

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A number is only worth measuring if it is quantifiable and changes management decisions

Sustainable business practices equate to a commercial advantage and long term value creation

Philosophy

E.g. GIIRS, Pulse, Efforts to Outcomes Benefits – updates automatically, compare performance, supporting adoption of

standards / best practices Drawbacks – learning the program, can be costly, customization may be required

Outsourced Platform

E.g. Ariya’s Sustainable Assessment Model and Sustainable Impact Model Benefits – built specifically tailored to your needs, flexibility, best of the best Drawbacks – manual updating, can be time consuming to develop and

operationalize, comparison and standardization more difficult

In-House Model

However you chose to measure impact, be thoughtful in your approach. Achieving impact and generating a financial return are not mutually exclusive in Sub-Saharan

Africa – it’s about finding the opportunities where sustainability is at the heart of the offer.

Contact Details

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For more information, please contact:

Lauren Ryder, Investment Managert: +44 (0)203 170 8065e: lauren@ariyacapital.com www.ariyacapital.com