think: act STUDY "Inside Africa" - Roland Berger

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Roland Berger Strategy Consultants f5 African Business Opportunities Africa presents itself as five different business settings to potential investors calling for differentiated strategic approaches 33% of GDP Mediterranean North Africa Medium-income countries, large economies in political transitions. Oil & gas and tourism. Trade links focused on EU and Middle East markets for near-shoring labor-intensive manufacturing, service outsourcing, oil & gas, and advanced consumer goods, renewable energies ("Desertec") 14% of GDP 4% of GDP New Frontiers: The most important include Ethiopia, Zambia, Dem. Rep. Congo, Cameroon, Senegal and Cape Verde Improving governance, post-conflict/crisis economies, large resource endowments or sizeable populations. Pioneer investors present, local financing often a challenge. Targets for special opportunities or expansion after establishing bridgeheads and expertise in Africa Question Marks Special situation (Zimbabwe), small economies or low stage of development. Few resources, poor soils, high incidence of poverty, poor infrastructure. Reserve for special opportunities 27% of GDP 22% of GDP African Growth Giants: Angola, Botswana, Côte d'Ivoire, Ghana, Kenya, Mozambique, Nigeria, Tanzania, Uganda Africa's emerging markets, solid or improving governance, large populations or high per capita income, strong resource endowment or already diversified economy. Focus on strategic expansion in high growth, low competition environment South Africa Africa's diversified economy and traditional hub for Africa. Very large resource endowment and professional business environment. Strong presence of local and international players, manufacturing competitiveness under threat. Sizeable middle class but wide social disparities. Market entry requires clear differentiation
Study 11 have been active on the continent claiming their share of consumer and industrial markets ranging from oil and gas to telecommunications, mining, hotels, steel and hospitals. Engaging the private sector will be crucial in enabling African countries to achieve growth. The gap between existing investment and infrastructure needs is USD 33 billion – each year 20 . Business involvement in delivering telecommunications is already an example of how private companies can spur rapid economic development, changing people's lives practically overnight. An opportunity that cannot be missed More than 20 years ago, few predicted that Brazil, China and India would be the countries on the forefront of investing instead of receiving international aid. As with Africa today, many were skeptical about the ability of these BRIC countries to overcome their challenges in governance, economic instability, violence and poverty to bring about sustained growth. Now BRIC countries are seen as opportunities that cannot be missed. As of today, countries in Africa must be viewed in that same light. Rapid progress is already being made on a number of fronts. While development in each country and region is proceeding at various paces, African countries are laying firm foundations for future growth. Already today, Africa's leading economies present a mix of business-friendliness and growth perspectives that matches or outpaces that of the BRIC countries. Political rights, civil liberties and citizen participation are growing throughout the continent. In 2011, 28 national-level elections took place in 20 countries 21 . Since 1999 four parliamentary and presidential elections have been held after the end of military dictatorship in Nigeria, the continent's most populous country with almost 155 million people. In 2010, Kenya adopted a new constitution approved by 67% of voters. Rwanda, Mozambique and Liberia have been able to rebuild their political systems and economies after major conflicts. Last but not least, the "Arab Spring" in December 2010 toppled dictatorial regimes in Tunisia, Egypt and Libya. In Rwanda, it now takes about three days to start a business, compared with five in Canada – or Senegal, for that matter. As a result, Rwandan entrepreneurs started 4,545 businesses in 2010, up from just 1,070 in 2006 22 . Uganda and Ghana have recently started new credit bureaus to help ease the process for consumers and businesses seeking loans 23 . Building on existing regional initiatives and new measures, trade barriers across Africa have also come down, further supporting the continent's economic growth. A 5% increase in trade has the potential to boost GDP by 2.3%. Countries are fostering intracontinental trade through smoother border crossings in East Africa. Closer collaboration through organizations such as the Economic Community of West African States and the South African Development Community has helped lower trade tariffs. Countries are also speeding up trade flows by cutting the number of documents required for customs, introducing electronic data interchange systems and improving port infrastructure. As a result of these measures, the number of days needed to import products to Sub-Saharan Africa fell by 7 from 2007 to 2011, while the number of days required for exports fell by 5 24 . Meanwhile, Africa's societies are becoming prosperous and healthy. Even though about 400 million Africans still live in poverty, overall poverty rates are on the decline, from 59% in 1995 to 50% in 2005 25 . Literacy rates are also improving, with primary school enrollment jumping to 73% in 2009 from 59% in 2000. Ghana's literacy rates among young people have increased 9.9% since 2000, reaching 78% in 2009 which now exceeds that of Tunisia, Africa's country with the highest percentage of middleclass citizens (89.5%). Africans' health has also seen marked improvement thanks to an array of public and private initiatives. The number of deaths among children under five dropped to 132 per 1,000 in 2009, down from 181 in 1,000 in 1990. Countries like Rwanda and Uganda have made enormous gains in life expectancy, of about 8 and 7 years respectively from 2000 to 2009 26 . Many countries are also implementing reforms that support new business creation, from reduced capital requirements for starting a business and less red tape for entrepreneurs. Rwanda, Cape Verde and Zambia topped the International Finance Corporation's list of the most improved countries in which to do business. 19) Estimate by Chinese Ministry of Commerce 20) WB 21) OECD 22) Rwanda Development Board 23) & 24) IFC 25) & 26) World Bank
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