Transcript Sir Paul Judge`s presentation `Investing in Africa`

Investing in Africa
Sir Paul Judge
20th November 2012
Africa
Africa is a Rich Continent
Sadly many of the people
are still poor
3
2000
2011
Africa by Numbers
•54 sovereign states
•1 billion people
•US$2 trillion GDP
•7 African countries among the 10
fastest growing economies
•5.5% Africa’s share of global FDI
projects
•US$85 billion funding for African
infrastructure in 2010
5
World Population (bn)
World Population
(million)
2010
2030
2050
2010-50
% Change
Asia
4,167
4,917
5,231
26%
Africa
1,033
1,524
1,998
93%
Europe
733
690
729
-1%
Latin America/Caribbean
589
723
691
17%
Northern America
352
410
448
27%
36
45
51
42%
6,909
8,309
9,150
32%
Oceania
World
World Population (bn)
0.8,
13%
2000
0.3, 6%
Europe/ex-USSR
Western Offshoots
3.6, 60%
1.3, 21%
L. Am/Africa
Asia
0.7, 8%
0.4, 5%
2050
Europe/ex-USSR
Western Offshoots
5.2, 58%
2.6, 29%
L. Am/Africa
Asia
Supporting Education
"Education is the
most powerful
weapon you can
use to change the
world“
Nelson Mandela
(1918 - )
African Children Aged 5-14
These countries represent about a third of Africa’s population
Population
Percentage
5-14 Pop.
(m)
Aged 5-14
(m)
Nigeria
131.5
27.3%
35.9
Tanzania
38.3
26.8%
10.3
South Africa
47.4
21.6%
10.2
Kenya
34.3
26.1%
9.0
Uganda
28.8
29.7%
8.6
Ghana
22.1
25.0%
5.5
Malawi
12.9
29.2%
3.8
Zambia
11.7
28.6%
3.3
Sierra Leone
5.5
25.5%
1.4
Gambia
1.5
24.9%
0.4
334.0
26.5%
88.4
Total
DIGITAL DIVIDE- THE
REALITY
UK has 10 million school pupils
Computers per pupil:
Primary schools: one for 7 pupils
Secondary schools: one for 4 pupils
Africa has 250 million school pupils
95% of students in Africa graduate never
having touched a PC
The cost of infrastructure, hardware and
curriculum development is prohibitive for
developing country governments
“The gap between Information ‘Haves’
and ‘Have-nots’ is widening, and there
is a real danger that the world’s poor
will be excluded from the emerging
knowledge-based global economy”
Kofi Annan
Investment Climate
• 35 African countries ahead of China
in the EIU’s Democracy Index
• 35 countries ahead of Russia on
Transparency International’s
Corruption Perception Index
• 17 African countries ahead of India
on the World Bank’s Doing Business
Index
FDI inflows
14
Global and by group of economies, 1995 - 2011
USD billions
World
2000
1800
Developed economies
1600
Developing economies
1400
1200
Transition economies
1000
800
600
400
200
0
1995
1997
Source: UNCTAD
1999
2001
2003
2005
2007
2009
2011
Africa - FDI inflows and outflows
15
As a % of world total
%
%
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2005
Source: UNCTAD
2006
2007
2008
2009
2010
2011
Africa - FDI inflows
16
In USD billions
60
50
40
30
20
10
0
2005
2006
2007
2008
2009
FDI inflow into Africa
Source: UNCTAD
2010
2011
FDI Projects in Africa
17
1000
901
857
800
747
675
600
421
400
200
0
2007
Source: Ernst & Young
2008
2009
2010
2011
FDI flowing in a diverse range of sectors
18
Manufacturing and infrastructure-related activity account for a
significant proportion of FDI
Capital (proportion, 2003 - 2011)
Extracti
on,
27.6%
Service
s, 4.0%
Other,
0.2%
Manuf
acturin
g,
29.9%
Infrastr
ucturerelated,
38.3%
Source: Ernst & Young
New projects (proportion, 2003
- 2011)
Other,
1.5%
Services
, 50.9%
Manufa
cturing,
24.6%
Infrastr
uctureExtracti related,
13.0%
on,
9.9%
Africa - FDI inflows
19
2005 - 2011
USD billions
70
60
50
40
30
20
10
0
2005
2006
2007
2008
Eastern Africa
Central Africa
Southern Africa
Western Africa
Source: UNCTAD
2009
2010
2011
Northern Africa
Top 15 African country destinations
20
Attract 82% of new FDI projects since 2003
1000
924
827
19
16
800
13
563
600
537
10
328
317
307
7
282
207
200
178
141
134
128
119
96
4
80
% share of total
Botswana
Mozambique
Zambia
Tanzania
Uganda
Libya
Ghana
Kenya
angola
Nigeria
Tunisia
Morocco
Egypt
Algeria
New projects
Source: Ernst & Young
SA
0
Other countries…
400
1
Investments in Africa – Consumer
Deli Foods
Vehicle
Aureos Africa Fund
Investment
amount
$10.1m
Country
Nigeria
Transaction type
Strategic minority/
growth capital
Sector
Packaged Food – Biscuit
Manuf.
Investment date November 2008
•Deli Foods Limited is a biscuit manufacturing company. It produces over
10 varieties of biscuits including McVities biscuits, which it produces
under a contract-manufacturing arrangement with United Biscuits (UB)
of the U.K .
•Deli is a well run, profitable company operating in a growing industry
that is driven by strong demand for affordable packaged foods which
are locally manufactured.
•Company's own-brands account for circa 85% of the total annual
turnover with strong brand in the mass-market segment.
2.1x MoC / 42% IRR
Investments in Africa – Consumer
Brookside Dairy
Vehicle
Aureos Africa Fund
Investment
amount
$18.5m
Country
Kenya
Transaction type
Strategic minority/
growth capital
Consumer Staples - Diary
Description/Investment Rationale
Sector
products
Investment date February 2009
•Brookside is the largest privately owned dairy in East Africa
with operations in Kenya, Uganda and Tanzania. It also
exports products to Rwanda, Burundi, Egypt and the Middle
East, as well as to the Indian Ocean islands.
•Aureos invested in Brookside as a part of an acquisition of a
complementary dairy business, which increased both the
capacity and the number of brands managed by the
Company.
21% revenue growth
2009-2011
27% EBITDA growth
2009-2011
Multi year data not available yet for comparison 22
performance analysis
Investments in Africa – Materials (Cement)
Ciments Du Sahel (CDS)
Vehicle
Aureos Africa Fund
Country
Senegal
Sector
Materials- Cement
Investment
amount
Transaction
type
$13.7m
Strategic minority/
Growth Capital
Investment date February 2009
•CDS is the second largest cement producer in Senegal which operates a
plant that has an annual capacity of 2.5 MT of cement.
•The Fund's investment was used to support the company's capacity
expansion in order to take advantage of the huge market opportunities
in the region.
•The company has strong fundamentals; high potential for attractive
returns to investors and has cross border potential.
28% revenue growth
2009-2011
29% EBITDA growth
2009-2011
23
Investments in Africa – Industrials
Southey
Transaction Summary
Vehicle
Country
Aureos Africa Fund
South Africa
Industrials - Industrial
Sector
Congl.Rationale
Description/Investment
Investment amount
Transaction type
$12.8m
Change of Control
Investment date
July 2009
•Southey was established in 1939 to offer industrial painting
and contracting services to mines and heavy industry.
•The Group has grown into South Africa’s largest industrial
painting, blast cleaning and contracting services company
servicing major industrial, infrastructural installations and
mining operations.
•The investment offers Aureos the opportunity to invest in a
diversified portfolio of assets which are able to generate
stable earnings and provides significant growth prospects.
27% revenue growth
2009-2011
19% EBITDA growth
2009-2011
24
Project Vision
Togo
The Jewel of West Africa
13th July 2012
Total Population (Millions)
Year
Low
Medium
High
2010
6.0
6.0
6.0
2011
6.1
6.2
6.2
2013
6.4
6.4
6.4
2015
6.6
6.7
6.7
2020
7.2
7.3
7.5
2025
7.7
8.0
8.3
2030
8.2
8.7
9.2
Population By Age Group (000)
Age:
0-4
5-19
20-64
65+
Total
2000
0.8
1.8
2.0
0.2
4.8
2005
0.8
2.0
2.4
0.2
5.4
2010
0.9
2.2
2.8
0.2
6.0
2015
0.9
2.3
3.2
0.2
6.7
2020
0.9
2.5
3.7
0.3
7.3
2025
1.0
2.6
4.2
0.3
8.0
2030
1.0
2.7
4.6
0.4
8.7
2030/10
112%
123%
168%
191%
144%
Annual Real GDP/Capita Growth Forecasts ($)
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
5%
6%
7%
535
550
578
606
637
669
702
737
774
813
853
896
941
988
1,037
1,089
1,143
1,201
1,261
1,324
1,390
535
550
583
618
655
694
736
780
827
877
929
985
1,044
1,107
1,173
1,243
1,318
1,397
1,481
1,570
1,664
535
550
589
630
674
721
771
825
883
945
1,011
1,082
1,158
1,239
1,325
1,418
1,517
1,624
1,737
1,859
1,989
Total Real GDP ($bn)
Population (000)
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
6,028
6,155
6,283
6,413
6,543
6,674
6,807
6,940
7,074
7,208
7,343
7,477
7,612
7,747
7,881
8,016
8,150
8,284
8,418
8,551
8,684
5%
6%
7%
3.22
3.39
3.63
3.89
4.17
4.46
4.78
5.12
5.47
5.86
6.26
6.70
7.16
7.65
8.17
8.73
9.32
9.95
10.61
11.32
12.07
3.22
3.39
3.66
3.96
4.29
4.63
5.01
5.41
5.85
6.32
6.82
7.36
7.95
8.57
9.25
9.97
10.74
11.57
12.47
13.42
14.45
3.22
3.39
3.70
4.04
4.41
4.81
5.25
5.73
6.25
6.81
7.42
8.09
8.81
9.60
10.45
11.37
12.37
13.45
14.63
15.90
17.27
Project Sectors
Governance
Business Development
Agriculture
Mining
Tourism
Transport
Energy
Telecomms
Education
Health
Governance Vision
• By 2020 the most respected country in coastal
West Africa
– Constitutional stability
– Rule of law
– Government management
– Government effectiveness
• People are content with the government
• Overseas investors see Togo as a country
which provides predictable returns
Political Stability
• Ensure Election Commission is seen to be
independent
• Ensure free and fair Parliamentary elections in
the autumn with external African Union,
European Union and United Nations observers
certifying them
• Free and fair Presidential election in 2015
Rule of Law
• Set up Independent Commission Against
Corruption (ICAC) with international board
• Ensure Supreme Court for all criminal and civil
cases is seen to be independent using
Togolese lawyers returning from overseas as
necessary
• Increase number of local courts with trained
magistrates
• Improve police training and conditions
Attracting Foreign Direct Investment
“Q: What is your strategy to attract foreign investors?
A: Togo has an image problem today. It is the result of the long years of
crisis in this country. It is imperative that we rid ourselves of the bad image
of the past, in order to win the confidence of foreign investors, to make them
look at Togo with fresh eyes and to understand the extent of the positive
changes that have happened in this country in recent years…”
Faure Essozimna Gnassingbe
FDI flows into Africa from 2003-2011




No1: South Africa $827bn (16% of total, $ per capita)
No6: Nigeria $307bn (5.9% of total)
No9: Ghana $178bn (3.4% of total)
No49: Togo $5bn (0.1% of total)
Source: Quote from New Togo, new governance, new business climate. African Business. May 2011, Issue 375, p3535; FDI Data from E&Y Africa Attractiveness Report 2012 and World Bank Group FDI
41
Attracting Foreign Direct Investment
Summary Action Plan
1. Finalise the New Investment Code
2. Set-up an Investment Promotion Agency (IPA):

A One-Stop Window

Portals for the various priority sectors / market opportunities

Use current Centre for Business Formalities
3. Define a strategy for resource mobilisation
4. Ensure adequate local skillset
5. Do not overlook Intra-Africa FDI
 Targets for FDI : have a % of GDP and % job creation as targets
 Approach: brand and market Togo: market opportunities, priority sectors,
business environment, websites, marketing, public relations…
 Key issues to address: ensuring FDI benefits the country and its people
 Timing: 2012-2030
 Potential source of funding: UNCTAD
42
AGRICULTURE
The Roots of Togo
Olivier du Lac
National Priority
• 75 % of working population,
around 40 % of GDP
• Average farm < 2 ha, 90 % of the poor are subsistence
farmers
• Only 10 % of farmers use animal assisted ploughs
• Very low mechanisation: 1 Tractor for every 30 K Ha
• 84 % of cultivated land receives no fertiliser
• Insufficient national integration and coordination
• 1 million
Ha of free arable land
• Blessed with diverse landscapes and fertile soils
Project Vision:
(2012-2030)
A smallholder revolution will take root in
Togo, and ‘trickle-up’ through the economy.
1. Staple foods, ensuring food security
2. Efficient decentralisation
3. Livestock, reduction of imports and nascent exports
4. Tree crops, capitalising on quality
Important Known Mineral Potential
 Phosphates
– Unconsolidated phosphate: 70m t, P2O5 36 % content;
– Carbonate phosphate: > 2,000m t, P2O5 20 % content;
 Marble
– Important reserves, good quality: some deposits > 800m t
 Limestone
– Substantial good-quality limestone reserves (> 200m t)
 Iron ore
– 500m t grading 30-40 %
 Manganese
– 6.3m t grading 14.1 %
 Identified sites for Chromite, Bauxite, Nickel…
46
Fair Revenues for the Country
and for Companies
 Auctioning or bidding for tender with supervision by
the International Advisory Board
 Appropriate fiscal framework
– State equity participation (20%) + buy additional shares at
market price
– Corporate tax on profits,
– Progressive Royalties
 e.g. 3% on business planned commodity market price,
progressively up to 15% if price rises
 Royalties to be used
– By the Government
– Local Communities Development Fund
– Mineral Development and Liability Fund
47
Why Tourism
Local
• Consumed at the point of production
• Promoting Cross-cultural
Awareness
Global
• Developing communities poor in
resource but rich in culture
Special
• Upgrading the economy to a higher
value chain with a service
Add Value
orientation
Build New Hotels (2012-2030)
5 Star Hotel
4 Star Hotel
COST
(100 rooms/hotel)
5 Star Hotel
4 Star Hotel
Total Cost
5 Star Hotel
4 Star Hotel
Country Brand Star
Uganda Hilton 5
Rwanda Hilton 4
2011
0
0
2015
1
2
2020
2
4
2025
4
8
2030
6
15
2011
42
22
2015
45
25
2020
52
29
2025
60
34
2030
70
39
2015
45
50
2020
52
58
2025
121
134
2030
140
273
2011
Cost ($m) Time Room Developer
150
Feb-12 300 Aya Foundation
30
Feb-11 160 Opulent
Fund
Aya Invsetment
Hilton
Rural & Urban Availability
% of Population
with Access to
Electricity
Targeted Growth Rates – Electricity Penetration
• Target = 100% of the population to have access to
electricity
• Rural
• Mainly decentralised energy systems
• Urban
• Mainly centralised energy systems
Kerosene Lamps
• Low level of light
• Solar lamp is 10x – 20x
stronger
• Air pollution
• High oil costs
• Dangerous for children
• Strains their eyes
studying by weak light
at night
Sources: Niama’s report
• Cause major burn
accidents every day
Micro Solar Kits
• “Whole villages can become self-sufficient once
someone has a home solar system."
• Allow children to study in the evening
• Access to information through radio and television
• Charge mobile phones, laptops, possibly small refrigerators
Sources, CNN, Rural Energy Foundation3
Vision for Telecoms
Inclusive Society
Telecom’s
Role
Implied
Priorities
Growing Economy
Jewel Of The Crown
Telecom as a
social tool
Telecom as a
business
tool
Platform for
new
business
Affordability
of services
Reliable
business
grade
services
Full suite of
services
available
universally
3 Year
8 Year
18 Year
Business Development: M-Pesa
Coastal Cables
Developing Togo’s Transport
“Insufficient infrastructure is one of
Togo’s biggest obstacles to
stronger growth”
US Treasury Official Neal Wolin, 9th May 2012.
Road
Air
Marine
Rail
Air Transport And Tourism
 Promote Lome airport together with tourist business
(Thomas Cook & Monarch in The Gambia) + VISA on arrival
 Develop the Niamtougou, Kara airport with the local tourist
trade as a destination, plus serve local communities
including Benin.
 Progressively pave other runways with tourism trends
Private financed
 Development of nature reserves
 Tour operators
Rail Transport - Delivery
 Commission detailed investigation into
rail viability, route & gauge
 Phase 1: Lome – Blitta (340km)
(rehabilitation), linking mines
 Phase 1.2 Lome – Kpalime (120km)
optional for mine access
 Phase 2: Blitta – Niamtougou
(190km), linking major towns
 Phase 3: Niamtougou – Dapaong
(190km) (North Togo border)
 Phase 4.1 Burkina Faso,
Ouagadougou (300km)
 Phase 4.2 Niger, Niamey (400km)
(4.2)
(4.1)
(3)
(2)
(1)
 Total Togo rail: 720km + 120km
 Burkina Faso & Niger: 700km
Note: Indicative route shown on the map – detailed route planning would be required, considering relief, ground conditions,
centres of population, mineral reserves etc.
Education Overview
• Enrolment rates
– Primary (net) 91.8%
– Secondary (net) 24.7%
– Technical and Vocational training 7.8%
• Low completion rates and high repetition
rates
– Primary completion 73.7%
– Progression to secondary school 70.5%
– Primary repeaters 22.1%
– Secondary repeaters 22.9%
School Investment
By 2030:
• Primary education:
– 16,000 teachers to be trained
– 2487 new schools, $60,000 per school, total
cost $144 million, average $8.3 million per year
(138 schools)
• Secondary education:
– 14,400 teachers to be trained
– 2400 new schools, $103,000 per school, total
cost $247 million, average $13.8 million per
year (133 schools)
Overview and Key Metrics
5.76%
1.30%
All Causes of Death
Communicable Diseases
Non-communicable
Diseases
39.16%
53.78%
Violence & Injury
Other
Leading Communicable Causes of
Death
14.69
HIV/AIDS
11.36
47.4
Influenza & Pneumonia
Tuberculosis
11.31
Diarrhoeal diseases
Malaria
7.72
7.52
Other
Physicians
•
•
•
•
Need 4,300 doctors by 2030
It costs $80,000 to train each
doctor
Total of $344 million or $17
million per year
9.7% of health budget
 Other alternatives
 Import doctors
 Export specialization
Project Vision
Togo
The Jewel of West Africa
13th July 2012