Teemana Eteläinen Afrikka
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This document provides an overview of business opportunities and economic trends in Southern Africa. It notes that international mining investments are a major driver of growth in the region. Countries like Botswana have seen their economies boosted by diamond mining. The region is also developing new industries like oil and gas extraction as well as manufacturing. Rapid urbanization is fueling growth in sectors like housing, infrastructure, healthcare, and consumer businesses. The mining, energy, and agriculture sectors in particular present opportunities for Finnish companies to export technologies and solutions.
Teemana Eteläinen Afrikka
- 1. Teemana Eteläinen Afrikka Heta Pyhälahti, Finpro Southern Africa 1.9.2015
- 2. Southern Africa Finland has special status International mining investments as driver Oil country starting to develop Developing with new gas and coal resources. Developed manufacturing country in BRICS. 2 Diamonds a good base for the economy
- 3. Southern African Countries3 Country Botswana Namibia Zambia Angola Mozambique South Africa Numbers are rounded! Diamonds a good base for the economy. Finland has special status. International mining investments as driver. Oil country starting to develop. Developing with new gas and coal resources. Developed manufacturing country in BRICS. Population, million, 2014 2.0 2.3 15.0 22.1 26.5 54.0 GDP, billion current USD, 2014 (rounded) 16 13 27 131 16 350 GDP (PPP) per capita, current intl. USD, 2014 17 500 9 900 4 100 7 900 1 200 13 000 GDP growth, annual %, 2015 estimate 4.2 5.6 6.7 4.5 6.5 2.0 Mobile cellural subscriptions per 100 people, 2014 167 114 67 63 70 150 Doing Business ranking, 2015 74 88 111 181 127 43 Source: World Bank. Doing Business ranking: 1 = best, 189 = worst. GDP growth estimates by IMF, April 2015.
- 4. Miten Afrikan markkinoilla voi menestyä? Heta Pyhälahti, Finpro Southern Africa 31.8.2015
- 5. Africa’s attractiveness 5 2015 real GDP growth estimates Source: IMF World Economic Outlook (April 2015)
- 6. Atractiveness of Africa for investors - More you know more attractive it is! 6 Africa’s relative attractiveness Private capital flows to sub-Saharan Africa reached 67 billion USD in 2012 and overtook official development aid (42.5 billion USD).
- 7. How to success in Africa -Strategies, Time and Resources – Market strategy for each country and/ or market individually – There is 54 countries in Africa – It’s not one market place. – Market development and environment are different in each country/ market. – Don’t assume – find out. – Reserve enough time. – Thinks take time – longer than you expect – applies specially to decision making. – Reserve enough resources. – Doing business in Africa is not cheap. Get to know local costs , local risks. – Financing options also for clients are valuable. (knowledge , contacts, support) 7
- 8. How to success in Africa - Get Connected and Stay Committed – Relationships are crucial – Contacts, networks and relationships are crucial - people do the business. – Reach the decision makers. – Learn to understand the drivers and targets in decision making. Personal , connected to business environment and network. – Commitment in several levels is needed – The whole company should be committed to chosen strategies in African countries. One sales person without real support from the top has it very difficult. – Know your partners, build up the trust and commitment with local partners. 8
- 9. How to success in Africa - Quality, Financing and Pricing – Good quality of technology is competitive advance especially in Africa – Tested - good quality solutions are desired Clients are not looking for products made for Africa – Financing options are often game changer – Provide to your clients business opportunities - new earning models – Know you target market for setting the price – Price competition (e.g. Chinese are there) – Know the local pricing structure (e.g. reserve double margin in Angola) – Know local currency situations 9
- 10. How to reach the markets in Africa – experiences from Finnish companies in ICT – Finding right people to talk to . Distance to target market is a challenge. Finding right people in decision making level. Identification of needs. – Commercial rules in target countries need to be understood, laws to follow, juridical issues. – Understanding – structure of the market and sector , players and roles – business ethics in the country and local way to operate – corruption in the country – local culture and unwritten rules in behaviour 10
- 11. Strong Urbanization Trend – Large housing projects in all countries – Water management – Sanitation – Waste management – Growing traffic challenges with growing amount of cars – Internet connectivity 11
- 13. Growing Middle Class – Consumer Business – Large amount of new shopping malls in Namibia, Botswana, Zambia and Angola - as well as South Africa – Large retail chains from South Africa are strong in investing to neighboring countries: Shoprite, Pick’n Pay , Woolworths – e.g over 130 shops in 16 countries – International and local fast food chains – South African franchising chains 13
- 15. Growing Middle Class - Health Care – High level private services available in South Africa >> Health tourism from Other Southern African countries – Lacking facilities >> Building new hospitals (e.g. PPP, Chinese financing ) – Upgrading medical equipment, also information systems – Lacking services in rural areas >> new health posts, eHealt, mHealth – Lacking educated people >> Education hospitals – Lacking laboratory services – Fitness business and health consciousness is growing 15
- 16. Developing Agriculture and Food Processing – South Africa has export quality agricultural sector – strong food producing sector – Developing food processing is a target in Namibia and Botswana – Developing larger scale agriculture is one focus areas in Zambia and Mozambique. Now mostly small scale family activities, but also larger producers. 16
- 17. Mining Sector as a Driver – Several countries have renewed the mining laws to attract new investments , but also to ensure the local income – South Africa is one of leading mining countries globally – Automation, underground mining, energy efficiency, water efficiency – Targeting to create beneficiation of minerals in South Africa – Notice: Mining Growth program for Finnish compenies – Finnish Pavillion in Mining Indaba in February 2016 in Cape Town – Botswana looks for diversification with new mines specially large coal resources – Zambia has attracted several international mining investments. Not only a mine with new technology , but building up infrastructure, mining villages, services etc. – Namibia is opening some new mines. – International mining companies have strong influence in development in the country (e.g. Rio Tinto in Mozambique, Chinese companies ) 17
- 18. Infrastructure development in Southern Africa – Economical growth, growth in import and export, growing investments specially in mining create great need for better road and rail infrastructure. – South Africa has good infrastructure all over the country, but remarkable investments are going on – In Zambia and Mozambique strong role of China and mining companies in infrastructure projects – Bringing investments, engineering, technology, local and foreign workforce in use – In land locked Botswana mining investments depend on new infrastructure – Port investments in several cities: Luanda, Walvis Bay, Durban, Saldanha 18
- 19. Energy production in Southern Africa Country Access to electricity, % (2012) Total electricity net generation, TWh (2012) Renewable electricity net generation, TWh (2012) Fossil fuels electricity net generation, TWh (2012) Nuclear electricity net generation, TWh (2012) Crude oil production bbl/d (2014) Gross natural gas production, Bcf (2013) Refined petroleum products, bbl/d (2012) Angola 15 5,48 3,94 1,54 - 1741616 380 40001 Botswana 66 0,24 0 0,24 - - - - Lesotho 28 0,49 0,49 0,00 - - - - Mozambique 39 15,01 14,99 0,02 - - 152 - Namibia 30 1,80 1,59 0,21 - - - - South Africa 85 238,95 2,42 225,17 12,38 3000 41 456523 Swaziland 27 0,43 0,13 0,30 - - - - Zambia 26 11,73 11,70 0,03 - - - 14753 Zimbabwe 40 7,74 5,40 2,34 - - - - 19 Source: IEA World Energy Outlook 2014, EIA International Energy Statistics 1530 132 80 2436 508 44559 149 1888 2038 0 10000 20000 30000 40000 50000 Angola Botswana Lesotho Mozambique Namibia South Africa Swaziland Zambia Zimbabwe Total electricity capacity, MW (2012)
- 20. Energy sector development in Southern Africa – South Africa is in national energy crisis – Delayed production start of two large coal power plants (10 GW) with urgent maintenance demand in many existing power plants – Successful Independent Power Producer (IPP) programs for renewable energy continuing . Now agreements for over 5 GW from Solar and Wind. – New IPP cogeneration bidding for Bioenergy and Waste to Energy in 2015 – Bioeconomy Growth Program to support Finnish companies also in South Africa starting 2015 – Additionally efforts in energy efficiency and smart grids. – In Botswana and Namibia target to build own generation: clean coal and gas power plants – Zambia plans to build new hydropower, solar power tendering process has started and 2 bn USD electricity grid investments still in next 2 years. – In Mozambique large investments in globally remarkable new gas and coal sources (LNG port etc.) . They are also constructing new power plants and transmission lines 20
- 21. Manufacturing in Southern Africa – Job creation is high priority in the political agendas – South Africa is most developed manufacturing country in Sub-Saharan Africa – Car manufacturers are there: BMW, Mercedes Benz, Toyota… – Large infrastructure investment program: rail, ports.. – Creates train manufacturing, component manufacturing – Energy sector investments – Demand for local content creates manufacturing – Skill development needed, lack of professionals 21
- 22. Digital Africa • Telecommunication and IT services are booming in Africa • Africa has now 67 million smartphones >> in 2025 about 600 million. • Cyber security issues growing – need for special solutions • High potential with digitalization in Banking , Retail, Health Care, Education, Government • Growth Program supporting Finnish ITC sector Companies in Southern , Western and Eastern Africa starting in 2015 • AfricaCom is the biggest ITC conference in Africa. A good opportunity to meet all key players in the African telecommunication market. Next AfricaCom 17th – 19th of November 2015 in Cape Town, South Africa http://africa.comworldseries.com/ 22
- 23. Thank you ! For more information, please contact: Heta Pyhälahti Commercial Councellor Finpro Southern Africa Mobile: +27 72 661 1287 Office : +27 11 881 5530 [email protected] 23