1. African Development Bank Group

2. Africa’s growth prospects Investing in Africa Benchmarking Nigeria
Outline of the presentation
The Bank Group
Africa’s growth prospects
Investing in Africa
Benchmarking Nigeria
African Development Bank Group

3. 1 The Bank Group
African Development Bank Group

4. Term referring collectively to:
Bank Group
Term referring collectively to:
African Development Bank
African Development Fund
Nigeria Trust Fund
May also include other funds managed by the Bank
African Development Bank Group

5. Membership Composition:
MANDATE – African Development Bank
Established in 1964 by Agreement between member states
Mandate: Contribute to the sustainable economic development and social progress of its regional (African) member countries
Fulfills mandate through financing of projects, mobilization of resources, technical assistance, cooperation
Membership:
Currently 77 countries with 3 finalizing membership
Membership Composition:
53 African Countries and 24 Non- African Countries
Provides financing through Loans, Guarantees & Equity Investments for sovereign and non- sovereign transactions
African Development Bank Group

6. Bank Group Membership Europe 14 member countries Shareholding: 21%
Asia
4 member countries
Shareholding: 7%
North & South America
4 member countries
Shareholding: 11%
Middle East
2 member countries
Shareholding: 1%
Africa
53 member countries
Shareholding: 60%
African Development Bank Group

7. Bank Group loan and grant approvals and disbursements, 2001-2010 (UA millions)
In 2009, the Bank Group’s lending was about US$10bn (owing to the financial crisis). It returned to pre-crisis levels of US$5bn in End 2011 projections are for US$9bn. This excludes trust funds.
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8. 2 Africa’s growth prospects
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9. Annual average real GDP growth rates by regions (in %) 2000-2010
● Africa is the fastest growing region other than Asia
● Africa’s growth rate is a good indicator for economic development and poverty reduction
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10. Evolution of annual average real GDP growth rates by regions
Africa was more resilient to the global financial and economic crisis than most other developing regions.
The high growth rates in Nigeria were due to high world price of oil  and the efficiency gains resulting from economic reforms in Nigeria. Non-oil sector was also growing at higher rates that than oil sector – telecoms, general commerce, agriculture, and services. The decline could be explained by the disruptions in oil production in the Niger Delta and later the impact of global economic and financial crisis of
As a result of political events in Tunisia, Lybia and Egypt, growth performances in North Africa and Sub-Saharan Africa have diverged:
SSA GDP growth should reach 5.5%
NA is expected to grow by 0.7%
Africa growth will reach 3.7%
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11. Projected real GDP per Capita growth rates in 2011
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12. Africa’s GDP per Capita growth prospects
In recent years African growth rates have exceeded those of the world as a whole – Some of the fastest growing economies are in Africa (Ghana, Ethiopia, Botswana).
Even adjusting for the political events, North Africa will continue to post the highest income per capita.
East Africa is likely to show the strongest growth performance, reaching 9.3% in By 2060, the sub-region will have a per capita income ten times higher than in 2010.
Global developments, particularly the escalating price of commodities like food and oil, could yet pose serious threats to governance, peace and security.
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13. Sector contributions to growth in Africa, 2000-2009
The Service sector is the largest contributor to growth in Africa.
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14. Share of Traditional Partners (TPs) and Emerging Partners (EPs) in Africa’s total trade
Impact of the Instability in Financial Markets on Investment Opportunities/Risk Perception
Trade Risk
OECD countries: more than 60% of Africa’s total trade
Share of emerging partners’ trade has increased from 20% to close to 40% in 2009
Opportunities for African emerging markets through portfolio relocations.
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15. Investment, aid and remittances inflows to Africa (1990-2010)
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16. FDI inflows to Africa (US $ mn)
FDI to Africa fell to USD 55 bn. in 2010 after a peak at USD 73.4 bn. in
China and India FDI inflows are acting as a game changer.
In June 2010, Bharti Airtel (India’s biggest mobile phone operator) bought the African assets of Zain for USD 10.7 bn.
In 2007, Industrial and Commercial Bank of China purchased a 20% of Standard Bank, South Africa’s largest bank by assets and earning for USD 5.5 bn.
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17. Africa’s governance progress
Political stability is on the increase and the control of corruption is also increasing as more taylor-made and higher quality of regulations come into play.
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18. Demographic growth evolution
West Africa has tended to have the highest growth in Africa over time
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19. A growing economically active population
Continued rapid growth in the size of the economically active population (men and women years of age), at an average of around 3.5% per annum, will lead to an absolute increase in Africa’s working age population of around 1.87 billion.
Around 74% of Africans will be of working age in
Human resources strongly impact on overall factor productivity.
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20. Africa’s age distribution
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21. Poverty headcount ratio at $1
Poverty headcount ratio at $1.25 a day (PPP) (% of population), most recent year
Nigeria is one of the Countries in Africa in which more than 55% of the population earn less than $1.25 a day
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22. Under five mortality rates total per 1000, 2010
Mortality rates will decline in most places over the coming decades as the strong focus on reducing the impact of communicable diseases continues. Good progress is expected in reducing child and infant mortality. Child mortality is projected to decline from 127 per 1,000 live deaths in 2010 to 45 per 1,000 live deaths in This will result largely from improvements in incomes, access to improved water supply and sanitation and better health services. North and East Africa will benefit the most from the reduced burdens of child mortality, in large part due to the declining impact of HIV/AIDS.
It is, however, to note that malaria is still endemic in most African countries and continues to represent a major cause of morbidity and mortality in the continent. The impact of climate change on the geographical spread of malaria is still unknown. A lot remains to be done to reduce the impact of malaria.
HIV/AIDS and deepening poverty are the most important challenges facing Africa, particularly sub-Sahara Africa. HIV prevalence rates are expected to decline from 2.1% in 2010 to 1.4% in The number of deaths due to HIV/AIDS is also projected to drop substantially as a result of HIV prevention programs and improved access to antiretroviral treatment.
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23. Growing middle class & urban sectors
The growth of urban sectors will act as a driver for strengthening the continent’s economic advancement.
Strong economic growth has resulted in a significant increase in the size of the African middle class (defined as earnings of between US$4 and US$20 per day).
The proportion of urban dwellers in 2010 was nearly 40 percent, it will rise to 50% by , and will reach 65% by 2060.
The movement of working age people from rural areas to urban centers will lead to more diversified economies.
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24. Distribution of African population by selected classes
There is a lot of GOOD NEWS for the future of Africa
The middle class will continue to grow, from 355 million (34% of Africa’s population) in 2010 to 1.1 billion (42%) in 2060.
Poverty levels are expected to fall, with the proportion of the population living on less than US$1.25 a day declining from 44% in 2010 to 33.3% in 2060.
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25. Real estate
The Egypt Annual Current GDP Real Estate Index has shown a dramatic increase since This is mainly due to:
The robust economic and demographic growth.
The strong demand from the local market.
The small size of the Egyptian mortgage market has protected the country from the contagion of the global financial crisis.
The Nigeria Quarterly Real GDP Industry Real Estate Index rose by 19.8% in Q compared to the same period of This performance was mainly driven by the high economic growth in Nigeria.
The initiatives undertaken by the Federal Government (restructuration of the Stock Exchange and stabilization of the financial system) should boost the financing of the real estate sector.
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26. Great potential in natural and biological resources
9.5% of the world oil reserves and close to 8% of gas reserves.
Highest reserve of agricultural land: 807 million ha.
Well positioned to embark on a low carbon growth and development path.
Unique fauna and flora.
Investment opportunities in the tourism given the unique fauna and flora
Renewable Energy
Solar Power
 Many African countries receive on average 325 days per year of bright sunlight. This gives solar power the potential to bring energy to virtually any location in Africa without the need for expensive large scale grid level infrastructural developments.
 The distribution of solar resources across Africa is fairly uniform, with more than 80% of their landscape receiving almost 2000 kWh per square meter per year.
Wind Power and Wave Power:
 Africa has a large coastline, where wind power and wave power resources are abundant and underutilized in the north and south.
 The western coast of Africa has a substantial availability of wind power, exceeding 3,750 kWh, and will accommodate the future prospect for energy demands.
Geothermal Power : Kenya has been estimated to contain 2000 MW of potential geothermal energy and is the only country to-date that has exploited the potential of the Great Rift Valley. It has 20 potential drilling sites marked for survey in addition to 3 operational geothermal plants. It was the first country in Africa to adopt geothermal energy, in 1956, and houses the largest geothermal power plant on the continent, Olkaria II.
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27. Investments in ICT
The 2010 ICT broadband penetration estimated at 7 per cent of the population is projected to rise to 99 per cent of the population in 2060.
Win-win area of collaboration between Africa and foreign investors.
Catalytic role for market integration and competitiveness.
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28. The Need for substantial investments
Massive injections of capital will be needed to bridge the huge infrastructure gap.
Investments needed to build a business-enabling environment that will attract domestic and foreign investment, promote cross-border trade and regional integration, and bolster private sector-driven growth.
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29. Africa’s Infrastructure Stock
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30. 3 Investing in Africa
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31. Investing in Africa
Access to finance needs to be addressed in order to unlock Africa’s potential for a sustained and inclusive growth.
55 to 67 million SMEs on the continent, of which 70% are financially underserved.
Their funding needs are estimated between USD 385 and 455 billion.
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32. Africa’s Billionaires
Africa’s total billionaires numbered 7 in 2006 and 11 in 2010.
This year there are 14 on the 2011 Forbes Rich list made up of two Nigerians, 4 South Africans and 8 Egyptians.
Their main sectors of activity are: sugar, flour and cement, precious stones, construction, luxury goods, telecommunications, mining, cotton trading and banking.
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33. Credit to the private sector in selected regions (% of GDP)
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34. Deposit accounts per 1,000 adults in selected African countries, 2009
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35. Private equity funds raised in Africa by region, 2006-2010
 Private Equity Funds (PEF) in Africa mainly seek to invest in SMEs with significant growth potential.
Private equity funds can provide the capital and management expertise desperately needed for small African firms to thrive.
Even though the private equity market is nascent in Africa, evidence suggests that current transactions have a positive impact on employment, sales growth, innovation, and profitability. PEF-backed companies have been growing, exporting, and creating jobs at a higher pace than other firms. Sales of firms funded by PEF grew by an average of 20%, compared to 18% in companies listed on the Johannesburg Stock Exchange (JSE).
PEF also fosters innovation. Over two thirds of PEFs-backed companies introduced new products and/or services. Their research and development expenses also grew by 7% a year over the period , compared to 1% in JSE listed companies.
In addition, PEFs have been helping out underprivileged groups set-up viable and sustainable enterprises. The number of black-owned enterprises tripled post investment to reach 52%. Besides, 69% of total funds under management had at least 5% of black ownership in 2007.
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36. Sampling of Africa private equity investments 2008-2010
Developing the private-equity industry requires regulatory reforms, fiscal incentives, and capacity building for regulators.
For ex., regulation 28 of South Africa’s Pension Fund Act increased the share of assets that South African institutional and retail investors could invest in private equity from 2.5% to 10%.
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37. Market capitalization in major African stock exchanges (2003-2011)
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38. Market capitalization in major African stock exchanges (2003-2011)
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39. Prices of African indexes (in USD)
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40. Prices for selected African indexes (in USD)
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41. Improving SMEs access to finance through stock markets
Egypt’s Nile Stock Exchange (Nilex)
Lower requirements in terms of minimum capital and number of shares to be offered to the public.
An advisor is nominated to help eligible SMEs prepare their financial statement, comply with the listing rules and complete the initial public offering of their shares.
Platform within the Cairo and Alexandria Stock Exchanges (CASE) to facilitate SMEs access to stock markets.
Launched in 2007, yet trading only started in Nilex is too recent for its full impact to be assessed, and it has been affected by the recent political events in Egypt.
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42. Improving SMEs access to finance through stock markets (contd.)
South Africa’s AltX
A registered advisor is designated to assist SMEs through the listing process, the initial public offering and to help them maintain their status once listed.
The Directors Induction Programme is a compulsory education program offered to managers on corporate finance, management and governance.
Set up in 2003 as a window within the JSE dedicated to SMEs with high growth potential.
, AltX has been quite successful and allowed several SMEs access funding through the stock market. Both experiences show that establishing stock markets with relaxed listing rules needs to be accompanied with capacity building programs for companies to understand the benefits and procedures of listing, and potentially with some financial support to help SMEs bear the cost of listing.
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43. Private credit bureaus in selected African countries
South Africa
-Transunion
-Experian
-Compuscan
-XDS
Botswana
-TransUnion ITC
-CRB Africa
-Compuscan Botswana
Namibia
-Transunion ITC Namibia
-Credit Information Bureau Namibia
Swaziland
-ITC Swaziland
Mozambique
Zambia
Tanzania
Uganda
-Compuscan Uganda
Rwanda
Kenya
-Credit reference bureau africa limited
-Metropol East Africa Ltd
-Transunion Kenya
Egypt
-I-score
Morocco
Nigeria
-Credit registry corporation CR services LTD nigeria
-Credit reference company
Ghana
-XDS Ghana
Malawi
Public credit registries and private credit bureaus facilitate the cost-effective exchange of accurate and timely credit information, which allows financial institutions to assess borrowers’ creditworthiness.
They translate into lower barriers to access finance, especially for SMEs which suffer from high information asymmetry.
They help potential borrowers use their reputation, rather than tangible assets, as collateral.
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44. High average real GDP growth rate in the 2000s of 8
High average real GDP growth rate in the 2000s of 8.7%, higher than the average growth rate of 2.6% in the 1990s and the very low rate of 1.8% in the 1980s.
Over the period , GDP growth was 6.6%, higher than the average for SSA.
The country is expected to grow at 7.3% in 2010, 7.4% in 2011, and about 6% in
4 Benchmarking Nigeria
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45. Ease of doing business
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46. Corruption
Corruption in Nigeria has leveled since Expectations are that it will begin to fall as Taylor-made high quality regulations come into force
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47. Human development index in Nigeria vs selected comparators
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48. School enrolment (Secondary and Tertiary, % Gross) and adult literacy, 2001-2009
Higher education
In order to develop manufacturing industries and innovation, highly-skilled labor is needed
Opportunities for private tertiary education given the lack of capacities of public universities
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49. Potential for Diaspora Bonds, 2007
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50. THE FUTURE IS PROMISING… But there is much to be done!
Prospects…
THE FUTURE IS PROMISING… But there is much to be done!
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51. Eye on the future Access to credit Job creation
Technical skills building
Infrastructure, infrastructure, infrastructure
(Energy, transportation-air, rail, land, waterways)
Regional integration
Gender
Governance
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52. Acknowledgments Laureline Pla Nadim Guelbi Athanasius Coker
Simon Mizrahi
Desire Vencatachellum
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53. Thank you
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