Taking advantage of african growth opportunities geo expansion
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The document outlines growth opportunities in the African mobility and transportation markets, highlighting factors such as market size, competitive landscape, customer preferences, and economic conditions. It notes Africa's projected GDP growth of 6% per annum, driven by infrastructure investment and a burgeoning service sector, while addressing challenges like crime, corruption, and skills availability. The analysis includes insights on investment attractiveness by sector and suggests strategies for successful market entry and expansion across the continent.
Taking advantage of african growth opportunities geo expansion
- 1. Frost & Sullivan Taking advantage of African growth opportunities:
- 2. 2 Africa Mobility: Capability Summary How big is the market? How does this market behave? What are the major drivers or restraints? Growth of major industry verticals utilizing automotive and transportation? Major competitors in the market? Who are the global competitors entering the market? How does the competition understand the market? What are their go-to-market strategies? What partnerships have been formed? Presence of foreign vs. local operators? What are the customer demands/ preferences? Willingness to pay? Customer perceptions? Type of finance and ownership preferences? NGO vs. private sector vs. government? Government/trade policy & legislation? Infrastructure development and modality shifts? Major trade lanes? Transit costs and times influencing fleet decision making? Digital disruptions influencing fleet and logistics? Competitor landscaping Voice of customer Market Operational Craig Parker Programme Manager, Mobility Africa [email protected] Byron Messaris Senior Industry Analyst, Mobility Africa [email protected] Ryan Bax Industry Analyst, Mobility Africa [email protected] Lynn Gunning Sales Director Africa [email protected]
- 3. 3 Trusted growth partner with more than 50 years of experience Growth consulting firm with offices in 40 locations around the globe – Local understanding with global context Facilitates expansion across all the stages of the growth cycle through: – Strategy consulting services – Strategic business intelligence 60 people strong African operation exclusively focussed on the continent Direct and indirect presence in 16 locations across the African continent
- 4. 4 Vision & Strategy Focussed on all aspects of strategy and execution related to growth and expansion Generation Qualification Design Implementation Monitoring & Evaluation
- 5. 5 Vision & Strategy Taking an integrated approach to supporting the growth cycle Generation Qualification Design Implementation Monitoring & Evaluation ExternalInternal Managers & Staff Market Pre Due Diligence Due Diligence Strategy Framework Detailed Strategy Business Case Planning Content Development Roll-out Culture & Alignment Skills, Capabilities & Assets Organisational Structure Business Process & Governance Operational Efficiency Partners
- 6. 6 Partial list of Africa clients
- 7. 7 Africa Economic Prospects: Africa to Grow at 6% per Annum Africa to be the 2nd most fastest growing region to 2025. GDP to Reach $4.5 Trillion. 2.4 2.9 3.6 4.5 2013 2017 2021 2025 6% 8.5 6.1 5.6 5.3 4.8 4.1 3.1 Emerging Asia Africa Middle East Latin America and Caribbean Eastern Europe and Central Europe World High Income countries 2nd Compound Annual Growth Rate, 2013-2025 (%)Nominal GDP ($ Trillion), Africa, 2013 - 2025 Drivers of Economic Growth in Africa Infrastructure Investment (around 50% of all investments) Around 2x expansion in agricultural production buoyant Service sector (More than 50% of GDP) Source: IMF, World bank, African Development bank Group, Frost, and Sullivan. Buoyant Service sector (More than 50% of GDP) Increase Infrastructure Investment (as 50% of all investments) Around 2x increase in agriculture production
- 8. 8 Improving Business Landscape in Africa End to Armed Conflicts Improved Governance Inflation Reduced from 22% (1990s) to 8% (2000+) Foreign Debt Reduction by 35% Budget Deficit Reduction by 60% In 15 years, Africa Adressed Many Challenges: 2000 - 2014 Key Challenges of Today Infrastructure: Universally seen as the foremost inhibitor to intra regional trade Crime & Corruption: Both in decline but persistent deterrents to investors China’s Interest: In almost all sectors, Chinese players now competing Skills Availability: Prominent & persistent across the entire region Power: Unavailability across the continent a key growth inhibitor Extreme Costs: In most oil based economies, basic costs are prohibitive, transportation Complex Tax, Legal and Excise: Improving but Still a huge deterrent to investment in many countries
- 9. 9 Economic Power Houses: GDP of Top 10 Countries of Africa Top 10 countries account for around 78% of continent’s GDP. Nigeria to be a trillion dollar economy by 2025 South Africa 633.4 billion Nigeria 1082.7 billion Egypt 437.6 billion Algeria 311.6 billion Angola 289.4 billion Kenya 218 billion Ethiopia 162.2 billion Morocco 159.7 billion Libya 120.2 billion Ghana 103.4 billion 2 1 3 4 5 6 7 8 9 10 Nominal GDP ($ Trillion), Top 10 Countries Africa, 2025 Source: IMF, World bank, African Development bank Group, Frost, and Sullivan. Advanced Economies of Africa Evolving Economies of Africa Egypt, Nigeria, South Africa and Algeria Libya, Kenya, Morocco, Ethiopia, Ghana, Angola Egypt, Morocco and South Africa have diversified economies where the manufacturing and services sector together account for more than 80% of their GDPs. Rapid urbanization and population growth had led to high growth in the banking, telecom, retail and construction sectors. Algeria, Angola, Libya and Nigeria are Africa’s oil and gas exporters. Economic growth is linked to the petroleum wealth of these countries. Ghana and Kenya are agriculture and resourced based economies. Due to increased connectivity and mobile phone proliferation in these economies, the telecommunications, banking, and retail sectors also have high potential for growth. Ethiopia is a resource based economy. Coffee accounts for more than 60% of the country's exports and increased investment in hydro power projects have also lead to significant economic growth. Advanced Economies Evolving Economies
- 10. 10 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Low High Low HighLevel of Inter regional Trade Activities LevelofFDI 8.2% Cote dIvoire 7.3% Burkina Faso 7.5% Ethiopia 7.1% Zambia 7.1% Rwanda 6.8% Tanzania DRC 6.4% Uganda 6.4% Size of bubbles indicates GDP growth rate Factors Leading to Economic Growth Young and Upcoming Economic Hubs of Africa High rate of return on foreign investment Burgeoning Consumer Markets Privatization of State-owned enterprises Increased openness of trade Source: IMF, World bank, African Development bank Group, Frost, and Sullivan. Rapid Logistical Infrastructure Development Socio- Political Stability 8.7% Mozambique
- 11. 11 $ 7.0B 19.6% 1 2 3 4 5 6 7 8 9 10 14.1% 3.3% 5.3% 6.3% 7.5% 8.0% 18.1% $ 1.5B TMT $ 5.6B $ 56.0B $ 0.6B $ 2.8B $ 0.4B 4.1% $ 1.2B 3.5% $ 32.5B $ 7.0B TMT: Technology, media and telecommunications RHC: Real estate, hospitality and construction DIP: Diversified industrial products CPR: Consumer products and retail Business Services RHC CPR Financial Services Chemicals Coal, oil and natural gas Automotive DIP Transport and Logistics Foreign Direct Investment (By Capital Investment) , Africa, Top Sectors, 2014 Foreign Direct Investment in Africa: Investment Attractive Sectors TMT, financial services and CPR together accounted for more than 505 ( out of 733) FDI projects in Africa in 2014. RHC gained the maximum investment of $56B followed by coal, oil and natural gas at $32.5B FDI capital investment in projects (2014) Projects share (%, 2014) Ranking is based on total number of projects (2014) Source: IMF; World bank; African Development bank Group;fDi Intelligence; Frost, and Sullivan. Image Source: Frost, and Sullivan Image Library
- 12. 12 EXAMPLE: Cairo MEGA CITY City with a minimum population of 8 million and a GDP of $250 billion in 2025 (13 Mega Cities in 2011 and 25 Mega Cities in 2025) MEGA REGIONS Cities combining with suburbs or other neighboring cities to form regions (Population over 15 million) MEGA CORRIDORS The corridors connecting two major cities or Mega Regions (60 km or more apart, and with a combined population of 25 million or more) MEGA SLUMS 1 million urban poor live in an area measuring just 1.5 square miles EXAMPLE: Lagos and Eko Atlantic City Region EXAMPLE: North-South Corridor EXAMPLE: Kibera, Cacuaco Four Main Trends in Urbanisation: Development of Mega Cities, Mega Regions, Mega Corridors and Mega Slums Source: Frost and Sullivan.
- 13. 13 Building the fact foundation Frost & Sullivan’s strategic approach to geographic expansion 1 Shortlisting Shortlisted markets for deep-dive analyses Planning Workshop Market-entry strategy Deep-dive analyses Output 2 3 Market entry options Market entry strategy and strategic roadmap Well-rounded integration Integration and strategic alignment 4 Internal Capabilities Assessment Shortlisting the 54 African markets to the top attractive markets based on a combination of direct and proxy indicators Growth Opportunity Workshop Detailed analysis of the top markets with a focus on: • Market size, structure and growth • Market and legislative dynamics Opportunity Identification Identifying the top target countries for market entry strategy development Business Case Development • Commercial • Operational • Financial Strategic Options Workshop Market Entry Options • Green Fields • Brown Fields • Merger & Acquisition • Strategic Partnerships • Joint VentureMacro- economic factors & manufacturing industry factors Business Case Approval Implementation Framework Manage the Change Range: 20 to 25k Euro Range: 80 to 100k Euro Range: 70 to 120k Euro TBD