Mega trends driving mega opportunities in sub saharan africa
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Mega trends driving mega opportunities in sub saharan africa
- 1. We Accelerate Growth 1 BBuussiinneessss IImmppaacctt iinn AAffrriiccaa Mega Trends driving mega opportunities in Sub Saharan Africa Mani James, Regional Director Frost & Sullivan Africa
- 2. New Mega Trends Macro to Micro Opportunities on Future Business, Cultures and Personal Lives
- 3. Agenda • Introduction and Definition of Mega Trends • Presentation of Top Mega Trends of the Future – A snapshot in Africa – Urbanisation – Focus on Mega Cities – Infrastructure development & Water – Mobile Africa – Connecting the Unconnected & E - Learning – Africa (Collabo)rising – New Business Models & Made in Africa – Health and Well being – Healthcare services and Digital medicine – Energy – Regional Integration and Renewable power – Adding Higher Local Value – Food – Responsible Revolution – Financial Services – Emerging markets in Africa • Key Success Factors for Market Entry • Strategic Conclusions
- 4. Definition of a Mega Trend What is a Mega Trend? Impact of Mega Trends on Key Organisational Functions Mega Trends are global, sustained and macro economic forces of development that impact business, economy, society, cultures and personal lives thereby defining our future world and its increasing pace of change
- 5. Frost & Sullivan covers the following Mega Trends - Global Top Mega Trends That We Track Under our Mega Trends Program Urbanization – City as a Customer Smart is the New Green Social Trends: Gen Y, Middle Bulge, She-conomy, Geosocialization Connectivity and Convergence Bricks and Clicks Innovating to Zero New Business Models: Value for Many Economy: Beyond BRIC: The Next Game Changers Future Infrastructure Development Health, Wellness and Well Being Future of Mobility
- 6. Energy: $800 billion Electricity infrastructure, renewable energy, rehabilitation of existing structures Agriculture: US$50 billion Includes fertilizers, crop protection, animal health, feed and additive products, and plant biotechnology. Manufacturing: $204 billion Manufacturing, food packaging Oil & Gas: US$3.6 trillion Infrastructure, extraction chemicals, and rehabilitation Water: US$700 billion Includes sanitation, water infrastructure and chemicals, renewable water, and water and wastewater treatment. and fortification. Infrastructure Development: >US$400 billion Transport infrastructure and rehabilitation, housing, ICT, building and other materials, construction and PPE
- 7. Urbanisation – in -Africa
- 8. Mega Cities Mega Regio ns Mega Slums Mega Corridor
- 9. Cities, and Not Countries, Will Drive Wealth Creation In the Future Gauteng will account for roughly 40% of South Africa’s GDP by 2020 In 2014, Lagos contributed about 25% to the Nigerian GDP What are the Micro Implications? New Products and Solutions High Economic Power Hub and Spoke Business Model Transit oriented development New Mobility Solutions City as a Customer
- 10. Urbanisation in Africa 16.3 Million People Lagos+Eko Atlantic City Luanda & Dar Es Salaam • 2020, Luanda is expected to grow from 4.7 million in 2010 to over 8 million by 2025 forming a mega-city of high population density and commercial activity Lagos and Eko Atlantic City Region •Lagos’s Eko Atlantic City will merge with the city of Lagos to form a future business gateway to Africa – a mega-region of over 16 million Abidjan – Accra – Lagos & North South Corridors • Transport routes across the region will be expanded and integrated to create corridors for trade and inter- -continental co-operation by linking mega-cities Cairo Luanda Cape Town Ouagadougou Abidjan Accra
- 11. Africa – Population Forecast – Region wise Urban Population Forecast by Region, Africa, 1995–2025 Source: UN Department of Economic & Social Affairs and Frost & Sullivan analysis.
- 12. Mega Cities will increase by 25% by 2025; at an average growth rate of 3.4%, 1.2 billion people, 60% of Africa’s population, will be urbanised by 2050 Growth of African Cities % increase, 2010- 2025 forecast 5.6 million Data Source: Africa Progress Report, 2010 Algiers Dar es Salaam Alexandria Nairobi Casablanca Accra Abidjan Addis Ababa Dakar Ibadan Douala Cape Town Durban 3.6 million 4.1 million 4.3 million 3.2 million 3.1 million 4.7 million 6.2 million 6.2 million 3.8 million 3.2 million 6.3million 3.5 million Luanda 8 million Migration Urban Mega City population, 2025 Population, 2025
- 13. Snapshot of Sustainable/Eco Cities in 2025 - Africa Sustainable/Eco City in 2025 Sustainable/Eco City built from scratch Accra Johannesburg Cape Town Durban Tunis Masdar City Doha Belo Horizonte Bogotá Brasília Rio de Janeiro São Paulo Curitiba Mexico City Portland Sacramento Oakland San Diego Dallas Houston Orlando Austin Minneapolis San Jose Denver Boston Ottawa Montreal Philadelphia Washington DC Columbus Edmonton Cardiff Brussels Zurich Lyon Frankfurt Milan Rome Cambridgeshire Marseille Tampere Note: Eco Cities are cities built on a green initiative, from buildings to transportation, governance, city planning, energy, and technology. These cities are either upgraded or built from scratch. Geneva Graz Riga Vilnius Metz Tubingen Montpellier Bordeaux Casablanca Norwich Hamburg Manchester Gothenburg Isle of Wight Glasgow Liverpool Dublin Marseille Bergen Edinburgh Nantes North America Gyor Latin America Europe Middle East and Africa Asia-Pacific & Australia Istanbul Bursa Ankara Eskisehir Izmir Denizli Antalya Adana Edinburgh Gujarat International Finance Tec City (GIFT) Sino-Singapore Tianjin Eco-city, Tianjin Nanjing Hong Kong Foshan Guangzhou Wuxi Osaka Yokohama Wanzhuang Eco-city, Hebei Medan Palembang Jakarta Surabaya Denpasar Makasar Balikpapan Adelaide Moreland
- 14. Mega Regions in Africa Mega Regions in 2025 Potential Mega Regions in 2030 Source: United Nations, Department of Economic and Social Affairs, Population Division (2012); World Urbanization Prospects: The 2011 Revision; and Frost & Sullivan analysis. Lagos and Eko Atlantic City Region Population 2025: 25 M Cairo-Giza Population 2025: 17.6 M Johannesburg & Pretoria Region Johannesburg, Sandton, Randburg, Midrand, Centurion, and Pretoria Population 2025: 7.6 M Mega Regions, Africa, 2025
- 15. Mega Corridors in Africa The North Delta Region •Combined population of 77 million •3 emerging corridors: Cairo-Suez; Cairo-Alexandria; Cairo-Ismailia Addis Ababa 900 km Kampala-Nairobi- Mombasa Urban Corridor Nairobi Source: UN-Habitat, 2010 and Frost & Sullivan analysis. 1,000 km Abidjan- Ouagadougou Corridor Abidjan Ouagadougou Kinshasa Cape Town Johannesburg/Pre toria Dar es Salaam Accra Ibadan Lagos Luanda Alexandria Cairo The Greater Ibadan Lagos Accra (GILA) Corridor •Combined population greater than 18 million •Contributes combined GDP of about $127.6 million Trans-Cunene Corridor Will link the Democratic Republic of Congo (DRC) with South Africa through Angola and Namibia Transportation Corridors Population less than 25 million people North-South Corridor •Facilitate inter-regional trade from Cape to Cairo •Free trade area comprising 533.0 million people •Combined GDP of $833.00 billion or 58% of Africa’s GDP Transportation Corridors, Africa, 2025
- 16. Mega Slums in Africa Splintered Urbanization African urban communities will be comprised of 70% informal settlement dwellers living alongside an emerging middle class, similar to condition in India. Percent of Urban Residents by Type of Settlement, Africa, 2020 Forecast of Major Slums, Africa, 2050 Chad 99.4% of country’s population lives in informal settlements Ethiopia 99.4% of country’s population lives in informal settlements Source: UN-Habitat and Frost & Sullivan analysis. Lagos, Nigeria 75% of population lives in informal settlements Luanda, Angola Cacuaco to have 600,000-plus people Johannesburg/Pretoria Soweto Kinshasa, Democratic Republic of Congo Nairobi, Kenya Kibera to have 1 million-plus people Maputo, Mozambique Cape Town, South Africa Khayelitsha
- 17. Infrastructure Development in Sub- Saharan Africa – Overview of Development in Key Sectors < 0.5 0.5 – 1.0 1.0 – 5.0 5.0 – 10.0 0.0 – 15.0 >15.0 Transport $174 billion Energy $139 billion Legend: Investment ($ billion) • High value investments (>$1 billion) • Focus on road, rail and port networks • Historical reliance on thermal/hydropower • Increased focus on driving renewables Source: Frost and Sullivan analysis *based on active projects in 2012 Water $20 billion Social Total investment in $45 billion ongoing infrastructure projects in Sub- Saharan Africa (excluding ICT & • Secondary Focus for Govts Telecoms) amounts • Could pose major to risk in $378 billion medium/long-term • Driven by Millenium Development Goals • High reliance on Development Aid
- 18. 18 Mobile Africa - Connecting the Unconnected
- 19. Connecting the Unconnected – Mobile , Broadband and Internet penetration Asia Europe North America Latin America 140% 123% Africa Oceania 90% 41% 120% 91% 110% 56% 112% 75% 82% 27% 4% 90% 56% 85% 7% 65% 11% 83% 57% Mobile Penetration 2009 Source: 2009 telecommunications statistics from ITU; 2020 projections from Frost & Sullivan analysis. 110% 90% 100% 68% 50% 9% 100% 82% 100% 70% 8% 60% 21% 95% 70% Mobile, Broadband, and Internet Penetration per Region, Global, 2009 and 2020 Mobile Penetration 2020 Broadband Penetration 2009 Broadband Penetration 2020 Internet Penetration 2009 Internet Penetration 2020 Currently, 77% of the World’s Population Holds a Mobile Subscription
- 20. Annual Growth Rates of 9% to 2020 will Allow Africa to Reach a Mobile Penetration Rate Close to Market Saturation Mobile Telephone Penetration Rates: 2010 Mobile Telephone Penetration Rates: 2020 80-100% 60-80% 40-60% 20-40% <20% Mobile Phone Subscriptions •In 2010, African mobile penetration is just less than 50% •That said, several countries have reached saturation •By 2020 we expect 90% mobile penetration rate $80.00 billion investment in networks Low cost mobile phones Value-added Services Mobile subscribers 2010 Mobile subscribers 2020 Source: Frost & Sullivan analysis. Growth Opportunities
- 21. Internet Penetration to Exceed 60% by 2020 Resulting in the Development of Online Services such as E-commerce Internet Usage Penetration Rates: 2010 >15% 10-15% 5-10% <5% Internet Usage Penetration Rates: 2020 Internet Users •Internet penetration to exceed 60% •However, broadband penetration will lag at around 27% •Increase in localized applications* can drive internet penetration Mobile Phones PC’s / Laptops Tablets Wireless Networks FTTx- Fiber to the x Satellite Terrestrial Fibre Satellite & O3b Submarine Cables Multiple Devices Multiple Networks Increased Bandwidth Growth Opportunities Source: Frost & Key: * Localized Applications refers to local content. The higher the local content the higher the internet penetration rates will be Sullivan analysis.
- 22. E-Learning Can Help Africa Cross the Digital Divide Into 21st-Century Economic Activity Education Statistics, Africa, 2012 Enrolment Ratio Learner Numbers 1ary 2ary 3ary Teacher : Pupil Ratio • Few improvements despite increases in education budgets • Ratios above world average due to teacher supply challenges Ratio of Education Spend to GDP •Above world average •Poorer returns Literacy Rate •5% improvement in the last ten years •Significant gender disparities Investment in data networks increases broadband access E-learning initiatives improve education access and quality Source: UNDP, UNICEF; Frost & Sullivan analysis. Improved income levels per capita and country Workforce equipped with 21st-century skills Primary Secondary Photo Credits: Dreamstime From Classrooms To E-learning
- 23. 23 Collabo(rising) Africa – New business Models and Made in Africa
- 24. Africa Collabo(rising ) – By Africa for Africa Healthcare Breakthroughs Free & Fair Elections Circumventing the African Data Tragedy Negating the Infrastructure Challenges Disaster Relief, Agriculture, many more…
- 25. Africa Collabo(rising ) – Emerging opportunities as a result of new business models Future Business Model Drivers, Africa, 2011-2020 Source: Frost & Sullivan analysis. Unshackling Governance Political Revolution will make Africa Radical Returns Investors awake to sustainable growth opportunities stronger Powerful Purchasing Discretionary income will rise by 50% over the next decade Intelligent Replenishment Bringing home both financial and human capital Mega Consumption $1.4 Trillion Rise of African urban consumer will continue to fuel growth
- 26. 26 Health & Well being – Healthcare service & Digital Medicine
- 27. Key Trends in the Healthcare sector Burden of disease and shifting requirements Connected Health Regulation & Leadership Urbanization & changing internal demographics Lack of private equity & funding Who is next? Unlocking Africa’s potential Infrastructure •Transport • Power • Manufacturing • Supporting Industries • Hospitals/clinics
- 28. By 2025 the number of African households with discretionary income will rise by 50 per cent % of Middle Class in Africa 51% - 75% (Data Source: African Development Bank, 2011) `` Less than 25% 26% - 50% Greater than 75% $2<$<$20 per day Opportunities: •Low cost risk pooling initiatives •Franchise/PPP business model solutions to reach rural areas •Use of technology platforms – telemedicine, m-health •Remote/Mobile clinics
- 29. Summary of Key Opportunities – Investment in Healthcare 2020 Medical Devices: $16 billion Medical imaging and clinical diagnostics Pharmaceuticals: US$23 billion Annual market, includes prescription and OTC products Risk Pooling: US$2.5 billion Life Science: $800 million Medical insurance investment over the period 2010-2020 Local formulation and filling Healthcare Expenditure: US$200 billion Total annual healthcare expenditure will double over the next decade Private Healthcare: >US$20 billion The demand for Private healthcare presents a growing opportunity
- 30. 30 Energy – Renewable Energy and Regional Electricity integration
- 31. The market will be shaped by a combination of local and global trends forces Gas Finds Export Opportunity Local Infrastructure Relocation of factories GDP growth Global Economic Shifts Infrastructure Investment Chinese investment Economic growth Climate Change and Carbon Neutral Investment Renewables Off-grid solutions Nuclear IPP Licensing and Market Reforms Utility Scale Industrial Scale Rise of non ZA countries Strategic Partnerships
- 32. Wind Power is Expected to Dominate Renewable Power Development for the 2010 to 2020 Period Renewable Energy Installed Capacity Growth by Technology, Africa, 2010-2015 4,200 MW 1,400 MW 200 MW 100 MW 120 MW 300 MW 50 MW 2,150 MW 30 MW 1,200 MW 630 MW Egypt Target of 20% renewable energy by 2020 Ethiopia 120 MW Ashegoda wind power project for 2012. Two more wind projects planned Kenya 25% of total installed capacity by 2020. REFITs have been established Tanzania Singida Wind Farm only RE project planned before 2015. Further projects are expected to be driven Morocco increase renewable energy contribution to 10% by 2012 and 20% by 2020 Algeria Algeria has set targets of 6% of total installed capacity by 2015 Nigeria 30 MW Kanu Wind Power Project expected for 2012. A 30 MW second phase further planned South Africa 21% of installed capacity by 2030. This is to account for 33.3% of all further capacity additions Wind, 2015 Solar, 2015 Per cent Market Share: Wind 81% Solar 12.5% Geothermal 6.5% Source: Frost & Sullivan analysis.
- 33. Summary of Key Opportunities – Investment in Healthcare 2020 250 GW Electricity capacity needed to meet demand growth at a cost of $1 Trillion 600 million people Lack access to electricity 7 000 MW Is needed Every Year in Africa to Meet Growth Demand 5% 56 Days 5.5% Average Economic Growth Across the Continent Expected from traditional development institutions $ 5.8 billion Chinese investment in energy in 2012 $4.5 billion Investment needed in transmission annually to meet forecast demand Outages in the manufacturing sector per year cutting up to 2.1% of GDP growth
- 34. 34 Adding Higher Local Value
- 35. Africa will Develop from a Raw Material Exporter to a Beneficiation Leader by Adding Value to its Vast Mineral Resources Oil & Gas Minerals Processing Energy Minerals Mining Equipment Precious Minerals 2010 2020 2030 Mostly Raw Material Export Mostly Raw Material Export Largely Self Sufficient Mostly Imported Mostly Raw Material Export 15% Increased Capacity 20% Increased Capacity Increased in Energy Minerals Processing Strong Growth in drilling Technology Strong Focus on Diamond Polishing Africa a Nett Refined Petroleum Exporter Significant Refined Metals Export Africa is the Global Energy Processing Centre A large Proportion of Material Handling Equipment is Produced Locally Africa becomes a Jewelry Manufacturing Centre Source: Frost & Sullivan analysis.
- 36. Mechanisation is anticipated to significantly impact on the relationship between mining and supporting industries Equipment Suppliers Introduction of autonomous mining equipment EPCMs Mine design and construction to conform with equipment Railway Operators Integration of transportation with mine operations Port Systems Integration of logistics with mine operations Electricity Suppliers Uninterrupted supply of power to mines, railways and ports Municipalities Integration of water and waste water to mine operations
- 37. 37 Food - Responsible Revolution
- 38. Responsible Revolution – Food & Agriculture 2012 Global Hunger Index Level of Severity Angola 24.1 Alarming Tanzania 19.3 Serious Zambia 23.3 Alarming Mozambique 23.3 Alarming Uganda 16.1 Serious Ethiopia 28.7 Alarming Namibia 13.2 Serious Botswana 13.7 Serious Rwanda 19.7 Serious Cereal yield (kg per hectare) vs. rate of developed countries 27% Sub-Saharan African share of the global crop protection market 5% Fertilizers used per hectare (aim is 50kg) compared to 80kg, the world average. Soil degradation. Annual mineral nutrient loss ranges from 30kg to 60kg per hectare (Henao & Baanante). 9kg Increase in net food imports at constant prices in sub-Saharan Africa >60% since 2000 (FAO). Source: IFPRI, Frost & Sullivan 75% In Africa: Income from crop production Annual value of grain is lost postharvest 70% 15% Ageing infrastructure, water leakages Dam rehabilitation Treatment plants need to keep pace with urbanisation 1 3 4 5 2 Severity
- 39. By 2020, the Demand for Staple Food in Africa is Expected to have Doubled from 2000, but not Production Top Four African Countries per Major Crop Type, Cassava `` Sugar cane Maize Africa, 2008 Yams Egypt Sudan Ethiopia DRC Angola Kenya RSA Nigeria Côte d’Ivoire GhanaBenin Target: 468 million tons Source: FAO; Frost & Sullivan analysis. Crop Type: Top Four African Countries Per Crop Type (Tons) Cassava 1. Nigeria 44,600,000 2. DRC 15,000,000 3. Ghana 11,300,000 4. Angola 10,000,000 Sugar Cane 1. South Africa 20,500,000 2. Egypt 16,500,000 3. Sudan 7,500,000 4. Kenya 5,100,000 Maize 1. South Africa 12,700,000 2. Nigeria 7,500,000 3. Egypt 6,500,000 4. Ethiopia 3,800,000 Yams 1. Nigeria 35,000,000 2. Cote d’Ivoire 6,900,000 3. Ghana 4,900,000 4. Benin 2,500,000
- 40. 40 Financial Services – Emerging markets in Africa
- 41. Rapidly growing Financial markets in Sub Saharan Africa Fast Expanding Financial Markets, Africa, 2004- Angola 2004 2013 Source: Frost & Sullivan ATM’s per 100 000 adults Commercial Banks per 100 000 adults Credit provided (% of GDP) 1 2.1 4.5% 19 11.4 15.7% Ghana 2004 2013 Nigeria 2004 2013 ATM’s per 100 000 adults Commercial Banks per 100 000 adults Credit provided (% of GDP) 0.6 4.7 11.7% 11.4 5.8 20.4% ATM’s per 100 000 adults Commercial Banks per 100 000 adults Credit provided (% of GDP) 2 (est) 3.0 13.0% 5.6 5.7 14.8% Nigeria Mozambique Ghana Angola Kenya Kenya 2004 2013 ATM’s per 100 000 adults Commercial Banks per 100 000 adults Credit provided (% of GDP) 1.6 2.7 40.2% 10 5.5 52.9% Mozambique 2004 2013 ATM’s per 100 000 adults Commercial Banks per 100 000 adults Credit provided (% of GDP) 1.8 1.8 8.1% 6.9 3.8 28.9% Average FDI Inflow Increase, $ Billion, Sub-Saharan Africa 2013
- 42. Success Factors in Africa and Strategic Conclusions
- 43. Key Success Factors for Market Entry Focus on cash cow Focus on cash cow products products Strengthen e-commerce Strengthen e-commerce platforms platforms Trusted brand & loyalty - Strong local presence Trusted brand & loyalty - Strong local presence Regulatory and incentive policies by country Affordable product Affordable product pricing pricing Strong local Distributor Strong local Distributor partnerships partnerships Country and city specific Country and city specific strategy strategy Regulatory and incentive policies by country Key Success Factors Aggressive product Aggressive product promotion promotion “Do not judge me by my successes, judge me by how many times I fell down and got back up again” Nelson Mandela
- 44. Key Strategic Conclusions 1. Global and African Mega Trends are beginning to have an impact in Africa across multiple industries. Examine them carefully to optimally develop medium and long term strategies in current and new markets 2. Africa currently has 7 of the world’s fastest growing economies in Sub Saharan Africa and will be the last growth frontier 3. Product and Services are required to be tailored for African conditions as customers demand more customisation 4. All these trends are global and have global ramifications thereby offering scalable opportunities 5. Selecting the right sector, country and local partner will be critical to a successful market entry in Africa 6. Africa is for the long haul and has to be seen from a long term growth strategy stand point.
- 45. So Where Will You Grow?
- 46. Contact Us Mani James Regional Director: Africa Frost & Sullivan T: +27 (0)21 680 3208 Mani.james@frost.com Cape Town Maitland II building River Park Liesbeek Parkway Cape Town South Africa Tel: +27 (0)21 680 3260 Fax: +27 (0)21 680 3296