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Investing in AfricaSir Paul Judge
20th November 2012
AfricaAfrica is a Rich Continent
Sadly many of the people are still poor
3
2000 2011
5
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
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%
Oceania 36 45 51 42%
World 6,909 8,309 9,150 32%
World Population (bn)
0.8, 13%
0.3, 6%
1.3, 21%3.6, 60%
Europe/ex-USSR
Western Offshoots
L. Am/Africa
Asia
0.7, 8%0.4, 5%
2.6, 29%5.2, 58%
Europe/ex-USSR
Western Offshoots
L. Am/Africa
Asia
2000
2050
Supporting Education
"Education is the most powerful
weapon you can use to change the
world“
Nelson Mandela(1918 - )
African Children Aged 5-14These 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
Total 334.0 26.5% 88.4
DIGITAL DIVIDE- THE REALITY
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
UK has 10 million school pupils
Computers per pupil:Primary schools: one for 7 pupils Secondary schools: one for 4 pupils
“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
14FDI inflows
Global and by group of economies, 1995 - 2011
Source: UNCTAD
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
200
400
600
800
1000
1200
1400
1600
1800
2000USD billions World
Developed economies
Developing economies
Transition economies
15
2005 2006 2007 2008 2009 2010 20110
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
% %
Africa - FDI inflows and outflows
As a % of world total
Source: UNCTAD
16Africa - FDI inflows
In USD billions
Source: UNCTAD
2005 2006 2007 2008 2009 2010 20110
10
20
30
40
50
60
FDI inflow into Africa
17FDI Projects in Africa
Source: Ernst & Young
2007 2008 2009 2010 20110
200
400
600
800
1000
421
901
747
675
857
18
Manufactur-ing; 24.6%
Infrastruc-ture-related;
13.0%Extraction;
9.9%
Services; 50.9%
Other; 1.5%
New projects (proportion, 2003 - 2011)
FDI flowing in a diverse range of sectors
Manufacturing and infrastructure-related activity account for a significant proportion of FDI
Source: Ernst & Young
Manu-facturing;
29.9%
Infra-structure-related; 38.3%
Extraction; 27.6%
Services; 4.0%
Other; 0.2%
Capital (proportion, 2003 - 2011)
19Africa - FDI inflows
2005 - 2011
Source: UNCTAD
2005 2006 2007 2008 2009 2010 20110
10
20
30
40
50
60
70
Eastern Africa Central Africa Northern Africa Southern Africa Western Africa
USD billions
20Top 15 African country destinations
Attract 82% of new FDI projects since 2003
Source: Ernst & Young
SA
Egyp
t
Mor
occo
Alge
ria
Tuni
sia
Nig
eria
ango
la
Keny
a
Gha
na
Liby
a
Uga
nda
Tanz
ania
Zam
bia
Moz
ambi
que
Bots
wan
a
Oth
er c
ount
ries
i...0
200
400
600
800
1000
1
4
7
10
13
16
19
827
563537
328 317 307 282
207178
141 134 128 119 96 80
924
New projects % share of total
•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.
Investments in Africa – Consumer
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
2.1x MoC / 42% IRR
Brookside Dairy
•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.
Description/Investment Rationale
Investments in Africa – Consumer
Vehicle Aureos Africa Fund Investment amount $18.5m
Country Kenya Transaction type Strategic minority/ growth capital
Sector Consumer Staples - Diary products Investment date February 2009
21% revenue growth 2009-2011
27% EBITDA growth 2009-2011
Multi year data not available yet for comparison performance analysis
22
•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.
Investments in Africa – Materials (Cement)
Vehicle Aureos Africa Fund Investment amount $13.7m
Country Senegal Transaction type
Strategic minority/ Growth Capital
Sector Materials- Cement Investment date February 2009
28% revenue growth 2009-2011
29% EBITDA growth 2009-2011
Ciments Du Sahel (CDS)
23
•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.
Transaction Summary
Description/Investment Rationale
Investments in Africa – Industrials
Vehicle Aureos Africa Fund Investment amount $12.8mCountry South Africa Transaction type Change of Control
Sector Industrials - Industrial Congl. Investment date July 2009
27% revenue growth 2009-2011
19% EBITDA growth 2009-2011
Southey
24
Project Vision
Togo
13th July 2012
The Jewel of West Africa
Total Population (Millions)
Year Low Medium High
2010 6.0 6.0 6.0
2011 6.1 6.2 6.2
2013 6.4 6.4 6.4
2015 6.6 6.7 6.7
2020 7.2 7.3 7.5
2025 7.7 8.0 8.3
2030 8.2 8.7 9.2
Population By Age Group (000)Age: 0-4 5-19 20-64 65+ Total
2000 0.8 1.8 2.0 0.2 4.8
2005 0.8 2.0 2.4 0.2 5.4
2010 0.9 2.2 2.8 0.2 6.0
2015 0.9 2.3 3.2 0.2 6.7
2020 0.9 2.5 3.7 0.3 7.3
2025 1.0 2.6 4.2 0.3 8.0
2030 1.0 2.7 4.6 0.4 8.7
2030/10 112% 123% 168% 191% 144%
Annual Real GDP/Capita Growth Forecasts ($)5% 6% 7%
2010 535 535 5352011 550 550 5502012 578 583 5892013 606 618 6302014 637 655 6742015 669 694 7212016 702 736 7712017 737 780 8252018 774 827 8832019 813 877 9452020 853 929 1,0112021 896 985 1,0822022 941 1,044 1,1582023 988 1,107 1,2392024 1,037 1,173 1,3252025 1,089 1,243 1,4182026 1,143 1,318 1,5172027 1,201 1,397 1,6242028 1,261 1,481 1,7372029 1,324 1,570 1,8592030 1,390 1,664 1,989
Total Real GDP ($bn)Population (000) 5% 6% 7%
2010 6,028 3.22 3.22 3.22
2011 6,155 3.39 3.39 3.39
2012 6,283 3.63 3.66 3.70
2013 6,413 3.89 3.96 4.04
2014 6,543 4.17 4.29 4.41
2015 6,674 4.46 4.63 4.81
2016 6,807 4.78 5.01 5.25
2017 6,940 5.12 5.41 5.73
2018 7,074 5.47 5.85 6.25
2019 7,208 5.86 6.32 6.81
2020 7,343 6.26 6.82 7.42
2021 7,477 6.70 7.36 8.09
2022 7,612 7.16 7.95 8.81
2023 7,747 7.65 8.57 9.60
2024 7,881 8.17 9.25 10.45
2025 8,016 8.73 9.97 11.37
2026 8,150 9.32 10.74 12.37
2027 8,284 9.95 11.57 13.45
2028 8,418 10.61 12.47 14.63
2029 8,551 11.32 13.42 15.90
2030 8,684 12.07 14.45 17.27
Project Sectors
GovernanceBusiness Development
AgricultureMiningTourism
TransportEnergy
TelecommsEducation
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
41
“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
Source: Quote from New Togo, new governance, new business climate. African Business. May 2011, Issue 375, p35-35; FDI Data from E&Y Africa Attractiveness Report 2012 and World Bank Group FDI
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)
FDI flows into Africa from 2003-2011
Attracting Foreign Direct Investment
42
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
Olivier du Lac
AGRICULTUREThe Roots of Togo
• 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
National Priority
A smallholder revolution will take root in Togo, and ‘trickle-up’ through the economy.
Project Vision:(2012-2030)
1. Staple foods, ensuring food security
2. Efficient decentralisation
3. Livestock, reduction of imports and nascent exports
4. Tree crops, capitalising on quality
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…
Important Known Mineral Potential
46
Fair Revenues for the Country and for Companies
47
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
Why Tourism• Consumed at the point of production• Promoting Cross-cultural
Awareness• Developing communities poor in
resource but rich in culture • Upgrading the economy to a higher
value chain with a service orientation
Local
Global
Special
Add Value
Build New Hotels (2012-2030) 2011 2015 2020 2025 20305 Star Hotel 0 1 2 4 64 Star Hotel 0 2 4 8 15
COST (100 rooms/hotel) 2011 2015 2020 2025 20305 Star Hotel 42 45 52 60 704 Star Hotel 22 25 29 34 39
Total Cost 2011 2015 2020 2025 20305 Star Hotel 45 52 121 140 4 Star Hotel 50 58 134 273
Country Brand Star Cost ($m) Time Room Developer FundUganda Hilton 5 150 Feb-12 300 Aya Foundation Aya InvsetmentRwanda Hilton 4 30 Feb-11 160 Opulent Hilton
Rural & Urban AvailabilityTargeted Growth Rates – Electricity Penetration
% o
f Pop
ulati
on
with
Acc
ess
to
Elec
tric
ity
• Target = 100% of the population to have access to electricity
• Rural
• Mainly decentralised energy systems• Urban
• Mainly centralised energy systems
•
Sources: Niama’s report
• 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
• Cause major burn accidents every day
Kerosene Lamps
Sources, CNN, Rural Energy Foundation3
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
Vision for Telecoms
3 Year 8 Year 18 Year
Inclusive Society Growing Economy Jewel Of The Crown
Telecom as a social tool
Affordability of services
Telecom as a business tool
Reliable business
grade services
Platform for new
business
Full suite of services available
universally
Telecom’s Role
Implied Priorities
Business Development: M-Pesa
Coastal Cables
Developing Togo’s Transport
RoadAir
MarineRail
“Insufficient infrastructure is one of Togo’s biggest obstacles to stronger
growth”
US Treasury Official Neal Wolin, 9th May 2012.
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
Note: Indicative route shown on the map – detailed route planning would be required, considering relief, ground conditions, centres of population, mineral reserves etc.
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)
Total Togo rail: 720km + 120km Burkina Faso & Niger: 700km
(1)
(2)
(3)
(4.1)
(4.2)
Rail Transport - Delivery
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)
53.78%39.16%
5.76%1.30%
All Causes of Death
Communicable DiseasesNon-communicable DiseasesViolence & InjuryOther
14.69
11.36
11.31
7.727.52
47.4
Leading Communicable Causes of Death
HIV/AIDS
Influenza & Pneumonia
Tuberculosis
Diarrhoeal diseases
Malaria
Other
Overview and Key Metrics
• 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
Physicians
Other alternatives Import doctors Export specialization
Project Vision
Togo
13th July 2012
The Jewel of West Africa
