Marketing South Africa in Angola & DRC

Marketing South Africa in Angola & DRC
Wavela Mthobeli 02 September 2012

SA Tourism is the tourism marketing organisation of South Africa
South African Tourism is the official tourism marketing organisation of South Africa. We market across the world focusing on three groups of travellers – international leisure travellers, the domestic and regional traveller, and business tourists who travel to South Africa for conferences and incentives. A key part of our business is to: Understand the market Choose the attractive segments Market the destination Angola has been identified as a core market and DRC as an investment market in the SA Tourism portfolio of markets and a route to market strategy was developed in 2011 to define SA Tourism’s entry strategy into the market and define marketing strategies to grow tourism from this market. This booklet has been developed to help market South Africa in Angola. Detailed information on our marketing plans in each market is available from our Regional Director: Africa & Middle East (see address on the back cover). As the information in this booklet was sourced in the development of the marketing strategy, it does not include the latest data available on the Angolan market. Current information on the Angolan market is available on our website 2

Focus Markets Within Africa
Below is the outcome of the fourth portfolio review process that took place during July/August 2009 and which covers the the country SAT will focus its marketing from 2011/12 to 2013/14 Africa Americas Asia & Australasia Europe Core Markets Angola Botswana Kenya Nigeria South Africa1 USA1 Australia1 India France1 Germany Netherlands UK1 Investment Markets DRC Mozambique Brazil Canada China (incl. Hong Kong) Japan Belgium Italy Sweden Tactical Markets Lesotho Swaziland New Zealand Ireland Watch-list Markets Malawi Namibia Zambia Zimbabwe Argentina Republic of Korea Austria Denmark Portugal Spain Switzerland Strategic Importance Bahrain, Oman, Qatar, Saudi Arabia Strategic Air Links/Hubs Egypt, Ethiopia, Ghana, Mauritius, Senegal, Tanzania, UAE Malaysia Singapore Responsibility 2011 – 2013/4 Country Manager Regional Director Stakeholder Manager Global Channel Manager Note: 1indicates business tourism hubs

Market Phase and Key Characteristics
Tourism in African markets is still in a nascent stage. Tourism Industry Life Cycle Time1 Kenya Nigeria USA Germany, Netherlands, France, UK, Japan Italy SADC, DRC India South Africa Brazil This phase may be very long China, Australia Botswana Introduction Growth Maturity Percentage of population travelling for leisure Angola Mozambique Market Symptoms Consumer Uninformed, price insensitive, multi-purpose Very individualised Status oriented Few One-stop-shops Unsophisticated, isolated, experience based Combine with trade initiatives Develop positioning Seek information & opportunity; discover leisure Emergence of packages (seeking scale effects) Emerging specialisation/focus Integrate products; information/choice provider “Shout”: get as many as you can Facilitate scale effects (e.g., packages) Very informed, price sensitive, focus on leisure Specialised packages High competition Clear focus Specialisation; information provider Adapt trade and market to select segments Understand segments and select Product Competitor Channel Tourism Authority Actions Marketing Overall Strategy Note: 1The duration of the four phases of the life cycle may vary significantly; their graphical representation with equal distances may thus be misleading. Source: Framework based on Michael Porter: Competitive Strategy, 1980, Chapter 8 (Industry Evolution)

Agenda Angola within SA Tourism’s portfolio Angolan Market Context
Angolan Tourism Market Angolan Travellers Messages, Channels and Products for the Angolan Market

Macro-Economic Outlook Economic Growth (1)
450 Macro-Economic Outlook Economic Growth (1) The Economist and the IMF ranked Angola as the fastest growing economy from 2001 to 2010, with an annual average GDP growth rate of 11.1% Economic Growth Angola in the African Context GDP at Constant Prices and GDP Growth in Angola, 2005–2015E, in Kwanza Bn Country Comparison, by GDP, GDP per Capita1 and GDP Growth Rate1, 2010 Country GDP (USD Bn) GDP per Capita (USD) GDP Growth Rate (%) Nigeria 206.7 1,324 7.4% Angola 85.8 4,812 5.9% Kenya 32.4 888 4.1% DRC 12.6 189 5.4% Mozambique 10.2 473 6.4% 5.8% Kwanza billion 17.3% The Economist and the IMF ranked Angola as the fastest growing economy from 2001 to 2010, with an annual average GDP growth rate of 11.1% However, analysts predict that Angola will not be among the top 10 countries in the world between 2011 and 2015 05 06 07 08 09E 10E 11E 12E 13E 14E 15E Note: 1At constant prices Source: Monitor and Grail Primary Research and Analysis; “Angola’s Uncertain Future”, The Economist, Nov 2007; “2009 Investment Climate Statement-Angola”, US Department of State; CIA World Factbook; “Africa’s Impressive Growth”, The Economist, Jan 2011; “Oil, Glorious Oil”, The Economist, Jan 2010

Geographic Economy Luanda is the most important province in the country, accounting for ~90% of Angola’s economic activity. It is also the most populated province in the country. CABINDA ~60% of the oil resources in Angola are situated in the Cabinda province UPCOMING CITIES Although Luanda remains the centre of activity in Angola, there are people who have decided to move/return to other cities Benguela Lobito Lubango Huambo These cities are perceived to offer better lifestyles and/or business opportunities LUANDA Luanda is the most active region in terms of the economy Most of the country’s wealth is concentrated here It is the most populous region in the country, accounting for one third of the country’s population Luanda is the most important city economically, and is likely to remain so for the foreseeable future Source: Monitor and Grail Primary Research and Analysis; “Charming Chaos”, The Washington Post

Angola’s Growing Middle Classes
2 2 Angola’s Growing Middle Classes The Angolan demographic landscape is changing, with a wealthy upper middle class emerging. It grew from 9.4% to 15.8%. This group is focused on status and are thus big spenders. Growth in the Middle Classes… …Leading to Increased Consumerism This group is focused on status and are thus big spenders Prefer international, luxury brands (e.g.: Prada shoes, Louis Vuitton bags, Herm̀es scarves) Drive large luxury SUVs (e.g.: Toyota Prado / VX, Range Rovers) SEC Distribution in Luanda (2008–2010) CAGR ’08–’10 3.5% -3% +23% +30% A: B: C: 9.4% 15.8% 31.8% 42.1% Upper Class (A) Class (B) A chauffeur guides Drivw shining SUV Mostly in smartly suits Gated condominium, ferrying a smartly-dressed executive” Louise Redvers, Inter Press Service Middle Class (C) Low Class (D) Class (E) 2008 2010 Note: Assume SEC class is linked to income groups: A = >10,000 USD per month, B = 5,000–10,000 USD per month, C = 2,000–5,000 USD per month Source: Monitor and Grail Primary Research and Analysis; Market Studies; “Rich and Poor — One Country but Worlds Apart”, IPS, Sept 2009; “Rebuilding a Nation”, Mail & Guardian Online, Sept 2008; “It’s Party Time for Luanda’s Elite as Angola Grows Rich on Oil and Gems”, The Observer, Aug 2008; “Media and Market Overview — Angola”, Executive Centre, 2011

Angolan Tourism Market Angolan Travellers Messages, Channels and Products for the Angolan Market

Angolans Visiting South Africa Overview (1/2)
, 4 Angolans Visiting South Africa Overview (1/2) In 2011, 39K Angolans visited South Africa. The Angolan travellers to South Africa are generally 30–39 years old, and are either single with no children or married with children Angolans visiting South Africa Angolans Visiting South Africa by Gender 57% 56% 48% 53% Male In 2011, the number of Angolans visiting South Africa increased to 39k The major groups travelling to South Africa were single Angolans with no children and married Angolans with children In 2009, 32% of travellers were single and 54% were married with children However, despite the high number of travellers who are married with children, most Angolans travel to South Africa alone Angolans across income segments were aware of South Africa, and were willing to visit South Africa However, their purpose of visit varied from business-related to multipurpose to leisure Female 2006 2007 2008 2009 Angolans Visiting South Africa by Age 4% 5% 3% 4% 33% 35% 37% 37% 31% 29% 29% 30% 2% 2% 2% 1% 2006 2007 2008 2009 Over 55 40–54 30–39 20–29 18-20 Source: Monitor and Grail Primary Research and Analysis; SAT Departure’s Survey

a Market Attractiveness – Key Indicators Volume and Spend of Tourist Arrivals to South Africa Angola recorded a 3% growth in arrivals and a 2% increase in average spend in South Africa between 2009 and 2011 Volume and Growth of Tourist Arrivals to South Africa (000’s) 23% 3% 3% 9% (‘000s) Angola DRC Kenya Nigeria 2009 2010 2011 Average Spend in South Africa per Tourist (ZAR) 2% -15% -4% 10% (ZAR) Angola DRC Kenya Nigeria Source: Grail Research & Monitor Analysis; SAT Arrivals Survey, 2009–2011 2009 2010 2011

Entry Strategy Overview
A structured process was followed to define and prioritise consumer groups and develop SAT’s communication strategy and its timeframe Target Consumers Messages, Channels and Products Definition of consumer groups based on meaningful variables which differentiate consumer needs and travel behaviour along the buying process Identification of high growth potential consumer groups based on potential attractiveness to SAT and its ability to win through actionability Detailed characterisation of consumer groups Definition of key elements of the message to be used in each market Identification of the best channels to reach the consumer groups per market Definition of the key components of the basic package to offer in each market and additional specific components meaningful to the markets Source: Grail Research & Monitor Analysis

Angolan Travellers Consumer Groups
The buying process was then mapped for different consumer groups created according to different variables. Lifestyle was proven to be the most significant indicator of travel behaviour Lifestyle When analysing the data, it became clear that income was not always a good indicator of lifestyle and travel behaviours, instead, a lifestyle indicator was assigned Older respondents earning in a high income bracket could not always afford to lead lifestyles correlated to their income due to large numbers of dependents or other financial burdens Younger respondents from wealthy families may not be earning in the high-income bracket, but benefit from familial wealth which allows them to live a “Luxury Seekers” lifestyle In one case, spending clearly indicated that a respondent had not been truthful about his income 3 CONSUMER GROUPS EMERGED Budget Travellers Rising Nouveau Riches Luxury Seekers Usually leverage a business trip and stay a little bit longer for leisure or buy for trade Mainly travel alone Rely on friends or colleagues to gather information about what to do and where to stay Look to take advantage of “paying less for the same” by eating out at inexpensive restaurants, relaxing in public parks, shopping at discount stores Use travel agents to book hotel and flights Travel usually driven by a personal need (Medical, Event, Study, VFR) Travel alone, but when possible bring family along (one child at a time) Rely on friends but also use internet to gather information about where to go Look to take advantage of “getting much more for the same price” by eating at luxury restaurants, shopping at high-end stores and partying in chic nightclubs Use travel agents to book hotel and flights Besides traveling for business, frequently travel for pure leisure Travel alone, but when possible enjoy the company of friends and family Rely on friends but also use internet to gather information about where to go Look for experiences that cannot be obtained in Angola, such as new and different cultures, museums, sights, natural beauty Use internet to book hotel and flights more often Note: Lifestyle income p.a for each consumer group: Budget Travellers: USD20k-USD50k; Rising Nouveau Riches: USD50k-USD100k; Luxury Seekers:100k+ Source: Monitor and Grail Primary Research and Analysis; SAT Departure’s Survey

Budget Travellers Consumer Group Consumer Portrait
Despite not generally choosing their destination, these travellers are focused on getting as much out of international trips as they can, especially shopping for everyday items that are expensive in Angola Budget Travellers Budget Travellers Branca is a single mother of 1 and lives in a informal house in Prenda Branca earns ~USD 25,000 per annum working as a computer operator, but also has an entrepreneurial venture of her own trading clothes She is not a flashy person and works hard to afford the basics She travels extensively for business but has not really been exposed to travel outside of the places to which her company chooses to send her. When she travels, she is usually on a shoe-string budget and stays at hostels / backpackers Branca always takes the opportunity to buy a few things when she goes travelling so that she can come home and sell them for additional income Branca relies on information from people who have travelled to a country before her She is interested in whether or not there is crime and whether there are good places to shop Branca always books directly with a travel agent and is very price-sensitive when it comes to booking any international travel Branca enjoyed the time she spent in the shopping malls in South Africa the most, and usually spends on only one good dinner when she travels Ernesto is married with 8 children and lives in a home in Viana Although Ernesto earns good money (~USD 70,000 per annum) as a colonel in the Angolan Naval Force, he finds it hard to keep up with the cost of living in Luanda He is always saving to pay for his children’s education and to buy them clothing, and is looking to move up from his beat-up Corolla Ernesto travels internationally quite regularly for business and always tries to add on a few days for leisure He also saves to be able to go on one international trip once every 1–2 years, where he buys items such as furniture or appliances. He rarely spends superfluously on these trips, choosing budget accommodation and skipping the high-end living / dining experience For these trips, Ernesto will decide where to go based on what he needs to buy and where he thinks he can find those things for the lowest price He regrets not being able to take his wife and children with him when travelling, because he thinks it is important to learn about new places and to experience new things Ernesto generally books his tickets through a travel agency but is sure to shop around for the best price Meet Branca, a 26 year old Angolan Meet Ernesto, a 49 year old Angolan I do business; take advantage of buying a few things to sell I usually go through a travel agency because TAAG is a lot of confusion Source: Monitor and Grail Primary Research and Analysis

Rising Nouveau Riches Consumer Group Consumer Portrait
This group of consumers is extremely aspirational and visits places like South Africa in order to experience world class luxuries at prices that they can afford Rising Nouveau Riches Rising Nouveau Riches Marco is single and has no children He has a job as a retail salesman but makes regular trips to Portugal and Spain to buy shoes and clothes to sell for extra money He is a very aspirational person and is driven to move up in life. As a result, status is extremely important to him and he likes to show things like his cellphone off and the upgrades he has made to his Toyota Pick-up Marco is also extremely price-sensitive; he is always on the lookout for deals and tries to travel internationally when he can find the cheapest air tickets. When there he usually stays at 2-3 star hotels or with family Marco only ever travels to Spain and Portugal because he feels comfortable there and knows all of the best places to shop. He can be very effective in using his trips to purchase high-quality merchandise for his business, but also in terms of maximising his relaxation time Marco is thinking about visiting a new destination like Dubai or Singapore, because his friends have been talking a lot about them He hasn’t considered travelling to South Africa because has heard it is difficult to get a visa Isis is single and has no children She makes a good salary working in Total’s HR department, and recently bought herself a sedan She understands the value of money and will never shop for clothes in Luanda as she believes that it is way too expensive. She would much rather save up for an international trip to do her shopping, and while there stay at a 3 star B&B and spend some time immersing herself in the local culture Isis is very conscious of living a healthy lifestyle. She goes to gym regularly and is focused on eating well On weekends, she spends a lot of time out with friends partying and eating out at the local favourites, but she cannot afford to frequent Luanda’s most exclusive venues; she does like to treat herself to a luxury night out once a month though Isis says that she needs to travel at least every three months because Luanda is so chaotic. She generally likes to spend more than 10 days away to really feel relaxed Isis was not aware that travel agents could offer packages, but she would be interested in buying a package that didn’t mandate too many activities. When she goes to a new place, she likes to have time to explore for herself Meet Marco, a 39 year old Angolan Meet Isis, a 26 year old Angolan I say trust: I feel at home in relation to language, people and places, and already know the products I need and trust the quality 8–10 days vacation is not enough time to relax; you can do and see a lot of things, but it is not long enough if you really want to relax Source: Monitor and Grail Primary Research and Analysis

Luxury Seekers Consumer Group Consumer Portrait
These consumers are aware of the social value that is placed on travel and are interested in being able to interact with their peers when it comes to discussing the most interesting travel destinations Luxury Seekers Luxury Seekers Patrick is single and has no children His work as a consultant does not bring in a lot of money, but he has a very wealthy European family who has bought him his LandCruiser and who pays for his apartment Despite his affluent background, Patrick still has aspirations of making it on his own and is very aware of the world around him, from politics to popular culture Patrick understands that living in Luanda has de-sensitised him to the value of a dollar, as he easily spends over USD 400 on a night out Patrick is very image conscious and spends time going to gym and taking care of his appearance. He always dresses well but is never flashy He uses the new iPhone but doesn’t feel like he needs to flash it around as a status symbol Patrick likes to travel purely for leisure and always prefers to go with friends. He usually stays at 5 star hotels / resorts and lives large on these trips He likes to read up on a destination through travel blogs and magazines before he goes there, identifying the ‘cool’ places to visit and things to do Patrick does not ever buy packages, but would be interested in being able to customise one for himself. He doesn’t use travel agents except for business trips as he doesn’t trust them Jose is a married entrepreneur with 3 children As a self-made man, Jose has a very strong work ethic and only sleeps 4–5 hours every night He gets up early to go to gym as often as he can, and tries to maintain a healthy lifestyle, even with his hectic work schedule Jose owns a large mansion in Talatonia, where he lives with his family. His 4-car garage houses his 4x4s and family sedans Jose is not restricted in his travel behaviour by money at all: he recently spent 47 nights at the Sheraton in Dubai with his entire family Although Jose enjoys travelling internationally and does so often, he still travels domestically more frequently Jose has taken advantage of fully inclusive packages before, but believes that the prices charged for packages in Angola are inflated Jose travels to ensure that he is exposed to new cultures and people. He thinks that knowledge is one of the most valuable things in life and wants to be exposed to lots of new and different things He also thinks that life is short and sees international travel as a way of living life to the fullest Meet Patrick, a 26 year old Angolan Meet Jose, a 43 year old Angolan I always Google the top 5 nightclubs before I go Travel agents in Angola are not serious — they don’t have enough information and provide poor service Source: Monitor and Grail Primary Research and Analysis

Angolan Tourism Market Angolan Travellers Messages and Products for the Angolan Market

Messages, Channels and Products Key Messages – Overview
Messaging for each market is made up of a number of key components of differing importance Key Components of Message High Importance Angola Cosmopolitan, urban living 1st-world destination Only a couple of hours away Value for money Key Message(s) Key Channel(s) Key Product(s) Affordable cosmopolitan destination with great cities and diverse activities at 1st-world standards only a short flight away from Luanda Building awareness: TV, internet and social media Information gathering / driving purchase: travel agents, internet and social media Airfare, transfers and a 4-star hotel close to shopping and other “luxury 1st-world activities” Note: Colour-coding is intended to help with identification of similarities in messages across different consumer groups, white boxes indicate no similarity Source: Grail Research & Monitor Analysis

BASIC PRODUCT OFFERING Components of a Package
Messages, Channels and Products for the Angolan Market Drive Purchase – Products: Some Options (1/3) Angolans do not like the idea of traditional packaged holidays crammed with activities, but would be open to simple packages that bundle flights and accommodation BASIC PRODUCT OFFERING Airfare Return airfare in economy class Additionals Transfer Transfers (airport > hotel > airport) These packages can also be used to drive increased spend by adding a shopping component to the itinerary or ensuring that the accommodation is linked to a shopping centre (e.g. Michelangelo) Angolans who travel almost always include some shopping in their trips In addition, it is important for these packages to include information on the world class activities nearby (e.g.: restaurants, nightclubs and even spa’s) Hotel 4- or 5-star hotel in a major city (e.g.: Johannesburg, Cape Town, Durban) Angolans travelling to South Africa are used to paying “South African 4-star hotel prices” for much lower quality accommodation in Angola Length of Stay 4 nights or 7 nights1 Price ~ USD1,800 for 4 nights, ~USD 2,500 for 7 nights2 Components of a Package 4- or 5-Star Accommodation, preferably linked to a shopping centre (e.g.: Sandton Sun and Towers in Johannesburg, Radisson Blu Cape Town) Return Airfare Transfer Note: 1 Based on the range of nights spent by the majority of Angolans when in South Africa; 2 Prices based on normal rate; they may decrease when negotiated Source: Monitor and Grail Primary Research and Analysis

Messages, Channels and Products for the Angolan Market Drive Purchase – Products: Some Options (2/3)
Additional elements and “reasons to travel” can be added to the basic package to create limited offer promotions, event-driven packages and wedding-destination packages OFF-PEAK PROMOTIONS EVENT-DRIVEN PACKAGES Offering the same basic package at lower prices during off-peak months Drive consumers to travel during low seasons to ensure that available airlift is used throughout the year Increased frequency Components of a Package Event-driven packages can be used to drive increased frequency In addition, it can be used to trigger travel in Angolans considering South Africa, but who have not done so yet International concerts and shows Return Airfare Transfer 4- or 5-Star Accommodation (e.g.: Beverly Hills Umhlanga, Michelangelo Johannesburg) For the low price of...during the months of June and July Components of a Package Memorable Event (e.g.: Durban July, Cirque du Soleil, U2) Return Airfare Transfer WEDDING DESTINATION 4- or 5-Star Accommodation, preferably linked to a shopping centre (e.g.: Sandton Sun and Towers in Johannesburg, Radisson Blu Cape Town) South Africa is a popular wedding destination for couples from developed countries all over the world Low prices and beautiful scenery In the longer-term, SAT could promote South Africa as a convenient and memorable wedding destination for Angolan couples Increase frequency of travel and spend Source: Monitor and Grail Primary Research and Analysis

Messages, Channels and Products for the Angolan Market Drive Purchase – Products: Some Options (3/3)
In addition, it will be important to ensure that travel agents and online sites encourage consumers to stay longer, return more regularly and bring their friends and family to South Africa through highlighting specials offered by collaborators and / or groundhandlers DRIVING INCREASED LENGTH OF STAY Highlight hotels which offer free / bonus nights Drive customers to visit more than one region in South Africa Create deals whereby consumers stay with one hotel group wherever they travel in exchange for bonus nights (e.g.: Shop South Africa’s 3 major cities with Radisson and get 2 free nights) DRIVING INCREASED FREQUENCY Highlight hotel frequent guest programmes Link to events throughout the year (e.g.: Visit South Africa for these 3 events in 2011 and receive 10,000 bonus points on your frequent guest programme) ENCOURAGING TRAVEL WITH FRIENDS AND FAMILY Highlight hotel offers where kids stay free Link to kid-friendly activities (e.g. uShaka Marine World, Gold Reef City) Source: Monitor and Grail Primary Research and Analysis

Marketing South Africa in the DRC
May 2012

Context: Africa is Important Focus Markets Within Africa
Below is the outcome of the fourth portfolio review process that took place during July/August 2009 and which covers the period 2011/12 to 2013/14 Africa Americas Asia & Australasia Europe Core Markets Angola Botswana Kenya Nigeria South Africa1 USA1 Australia1 India France1 Germany Netherlands UK1 Investment Markets DRC Mozambique Brazil Canada China (incl. Hong Kong) Japan Belgium Italy Sweden Tactical Markets Lesotho Swaziland New Zealand Ireland Watch-list Markets Malawi Namibia Zambia Zimbabwe Argentina Republic of Korea Austria Denmark Portugal Spain Switzerland Strategic Importance Bahrain, Oman, Qatar, Saudi Arabia Strategic Air Links/Hubs Egypt, Ethiopia, Ghana, Mauritius, Senegal, Tanzania, UAE Malaysia Singapore Responsibility 2011 – 2013/4 Country Manager Regional Director Stakeholder Manager Global Channel Manager Note: 1indicates business tourism hubs

Agenda DRC within SA Tourism’s portfolio DRC Market Context
DRC Tourism Market DRC Travellers Messages, Channels and Products for the DRC Market

Economic Current Economic Situation is Small but Promising
3 Economic Current Economic Situation is Small but Promising The DRC has high economic potential but nevertheless the economy remains small and the country is considered the poorest in the world Projected GDP Growth Extreme Poverty Real GDP Growth Rates1 Country Comparison, by GDP, GDP per Capita and GDP Growth Rate, 20101 Country GDP (USD Bn) GDP per Capita (USD ) GDP Growth Rate (%) Nigeria 206.7 1,324 7.4% Angola 85.8 4,812 5.9% Kenya 32.4 888 4.1% DRC 12.6 300 5.4% Real GDP % Change In 2010, the DRC was ranked the lowest GDP per capita in the world More than three-quarters of the population live on less than 1 USD per day Extremely high rates of poverty and inequality with a Gini coefficient of 40% Fewer than 20% have reliable access to water and electricity A large portion of the country is isolated from the capital in Kinshasa 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E Note: 1At Constant Prices (2000) Source: Grail Research & Monitor Analysis; IMF; CIA Factbook

Economic A Few Key Economic Drivers
24% Economic A Few Key Economic Drivers GDP growth is and will continue to be driven by agriculture and mining sector performance, supported by infrastructure development and increased FDI GDP Growth Agriculture Mining Wholesale / Retail Drivers The agricultural sector is expected to increase as producers and traders start to benefit from improvements in national infrastructure The government has undertaken various reforms in the law on the Agricultural Code to attract private investment The mining sector is expected to recover strongly in , with copper exports expected to increase by 25% Several new mining facilities are scheduled to start production in , which should boost output levels “BMI believes that the Congolese mining sector can reach an average annual growth rate of between 4.7% across our forecast period”1 The South African retail group Shoprite plans to start trading in the DRC by the end of or early 2011 after investing up to ZAR400 MM The Chief Executive of Shoprite, Basson, was quoted as saying the group would start trading by the end of next year, and that the first two stores would be located in Kinshasa and Lubumbashi Outlook Support Infrastructure Development FDI Note: 1Business Monitor International Source: Africa News; New Markets Research; Infrastructure Consortium of Africa; Office of the US Trade Rep; African Trade Policy Notes – Worldbank

Economic Financial Indicators Show Relative Improvement
Economic Financial Indicators Show Relative Improvement Considering a few key indicators, the DRC made some significant economic improvements since 2000, but the fundamentals still require vast improvement Dramatic Decrease in Inflation High Government Debt in Slow Decline Consumer Price Inflation Government Debt as Percent of GDP -81% % of GDP % change -532% 2000 2008 2002 2008 Increasingly Negative Current Account Balance Productivity Increasing Slowly Current Account Balance as Percent of GDP GDP per Person Employed, Constant 1990 PPP$ % of GDP +15.5% USD -11.8% 2000 2009 2000 2008 Source: IMF

Population Diverse Ethnic Groups
There are four main ethnic groups in the DRC; the majority of the population practicse Christianity Ethnic Group Spread in the DRC Major Ethnic Groups in the DRC Luba The Luba– Known to be a very creative group of people but historically known to be ambitious and inclined to nepotism with better literacy rates Mongo The Mongo- Live in the African equatorial forest, south of the main Congo River bend and north of the Kasai and Sankuru Rivers Kongo The Kongo – Live along the Atlantic coast of Africa from Pointe-Noire) to Luanda, Angola. Like the Luba they are historically known to be ambitious and inclined to nepotism DRC has four major ethnic groups: Luba, Mongo, Kongo and Mangbetu-Azande (Hamitic). In addition, DRC has over 200 African ethnic groups of which the majority are Bantu Religious affiliations are: Roman Catholic 50%, Protestant 20%, Kimbanguist 10%, Muslim 10%, other (includes syncretic sects and indigenous beliefs) 10% Hamitic The Hamitic - Found in the east and north east of the country that originally come from Darfur in southern Sudan and Ethiopia Source: CIA Country Profile; Gateway Africa; Library of Congress

Population Influx of Expats
There are several expat and immigrant groups present, which could represent potential tactical groups UN and Diplomatic Expats International Immigrants Global MNC expats African Refugees The UN has been more active in the DRC due to high levels of social unrest and violence (Estimated number of expats ~ 20,000) Spillover benefits of marketing in DRC, more tourists from Asia Approximately military expats are from India, Pakistan and Bangladesh India and SA already have a favourable economic, political and cultural relationship DRC could potentially be used to gain access into other markets North African immigrants estimated ~ 92,000 but are unskilled There is a substantial Belgian population due to DRC’s colonial past Russian immigrants are present in the DRC estimated ~ 36,004 Indian immigrants are mostly employed in telecoms and auto repairs estimated ~ 23,274 DRC have few MNC’s concentrated in 3 sectors (Mining, ICT and Financial services) MNC expat community is estimated to be quite small in DRC Due largely to social unrest i.e. BHP Billiton runs its DRC operations in Johannesburg Vodacom only employs 600 people with less than 10% being expat Refugees are not attractive as a target segment Refugees live below the poverty line Refugee numbers in DRC have declined by 10% p.a. between 2000 and 2008 to 155,162 72% of all refugees are from Angola Potential tactical target groups Source: UN MONUSCO; IOM – International Organisation of Migration; Vodacom; National Agency for Investment Promotion; Mining Weekly

Population Large Division of Rich and Poor
% Population Large Division of Rich and Poor The richest 20% of the population account for 51% of the total income earned in the DRC Household Income Breakdown by Population, 2006 “Our country is extremely rich [in terms of natural resources]; however, there are only two classes [the rich and the poor]” – Claude Nyamugabo, Minister of SME 5% 9% 14% 21% Percent of Total Country Income / Consumption 51% “My wish, it is the emergence of a Congolese middle class” – Gaspard-Hubert Lonsi Koko, President of the Union of Congo Highest 10% makes up 35% of the total income of the DRC Highest 20% Second 20% Third 20% Fourth 20% Lowest 20% Source: WorldBank; Grail Research & Monitor Analysis

Population Small Concentration of Wealth
Commercial activity is concentrated in the regions surrounding; Kinshasa and Lubumbashi Key Commercial Clusters Kinshasa Kinshasa is the capital, and most populated city (~10M inhabitants) in DRC Kinshasa has a young population, with more than half the people under 22 years of age, and a small proportion over 50 It is the centre of economic activity and many companies are headquartered here Kinshasa has the best physical infrastructure i.e. rail, ports and roads The built-up area of Kinshasa is divided into industrial, residential, and commercial zones Lubumbashi Lubumbashi is the second largest city of the DRC (population of 1.5M in 2010) Copper and cobalt mining continues to be Lubumbashi's principal economic activity Lubumbashi is an important tourist destination in the DRC There are many European foreign nationals living there, particularly at the managerial, professional, and commercial level There is a growing demand for housing, office, shopping and other community related facilities in the city Source: NL EVD Int; Invest in DRC; OECD; Action Against hunger; High Beam Research; US Institute of Peace; Commercial Bank of Congo

Congolese Consumers Who are the Congolese and What Do They Do? (1/2)
Congolese are proud, life-loving, and status conscious people that have learnt to face life’s issues, while enjoying the simple pleasures available The Congolese are generally proud and status conscious... …they are ingenious and enduring, always seeking business opportunities to improve their day-to-day life... …while looking to enjoy la ‘belle vie’1, which includes night life, music, dancing and good food “Appearance is crucial for Congolese. They prefer to wear expensive branded clothes rather than eat. It is the SAPE1 phenomena” – Congolese Consumer “Travelling is a luxury so when I travel, I always share my experience and show the pictures taken to my friends just to show off” “Salaries are insufficient to meet family’s expenses in DRC. To make ends meet, people are forced to have one or more side businesses” – Congolese Consumer “I always say that Congolese are the most resourceful people in the world” – Congolese Journalist at RFI “Congolese’s slogan is ‘Inzo ya ngolo, Mvuatu ya ngolo, Nketo ya ngolo’ (Beautiful house, beautiful clothes, beautiful woman)” – Congolese Journalist at Congo Vision “Kinshasa has several bars and clubs and so only few African cities are as lively” – Congolese Consumer Note: 1Society of Ambiance Makers and Elegant People Source: Monitor Grail Primary and Secondary Research and Analysis

Congolese Consumers Who are the Congolese and What Do They Do? (2/2)
They are proud of their music, local languages and family, although they prefer international over domestic travel A nation that likes its music and language... ...Congolese are family oriented and this impacts their travelling decisions ...they tend to prefer travelling abroad rather than in DRC “Congolese enjoy their music a lot and rarely play foreign music. Someone who would work towards promoting Congolese music would be seen as a hero in the Congo” – Canadian Centre of Intercultural Learning “Congolese speak French only when it is not possible to communicate in local languages” – Congolese Consumer “Congolese are taught to contribute to the family’s well being by respecting their elders and providing for family” – Australian Department of Immigration “I prefer travelling to visit my family than going to a country where I do not have relatives” – Congolese Consumer “DRC is undeveloped and it is difficult to travel within the country due to lack of road and infrastructure. ” – Congolese Consumer “I prefer travelling to developed countries where I can experience luxury and look for business opportunities” Source: Grail Research & Monitor Analysis; Canadian Centre of Intercultural Learning; Australian Department of Immigration

Consumers Overview (1/2)
4 % Consumers Overview (1/2) In 2011, more than 33k Congolese visited South Africa; the Congolese travellers to South Africa are generally males between the ages of 30 and 54, and are either single or married with children Congolese Visiting South Africa Congolese Visiting South Africa by Gender Male 73% 66% Female 73% 2006 2007 2008 In 2010, the number of Congolese visiting South Africa increased to 33,101 from 16,079 in 2005 In terms of demographics, in 2009, 27% of travellers were single and 46% were married with children On average, 86% of Congolese travel alone, 9% with one other person Congolese across income segments were aware of South Africa, and were willing to visit South Africa However, their purpose of visit varied from VFR (37%) to business (34%) to pure holiday (11%) Congolese Visiting South Africa by Age 8% 6% 34% 37% 55+ 41% 40-54 30-39 40% 37% 34% 21-29 18-20 2006 2007 2008 Source: Grail Research & Monitor Analysis; SAT Departure’s Survey

a Market Attractiveness – Key Indicators Volume and Spend of Tourist Arrivals to South Africa Angola recorded a 3% growth in arrivals and a 2% increase in average spend in South Africa between 2009 and 2011 Volume and Growth of Tourist Arrivals to South Africa (000’s) 23% 3% 3% 9% (‘000s) Angola DRC Kenya Nigeria 2009 2010 2011 Average Spend in South Africa per Tourist (ZAR) 2% -15% -4% 10% (ZAR) Angola DRC Kenya Nigeria Source: Grail Research & Monitor Analysis; SAT Arrivals Survey, 2009–2011 2009 2010 2011

Where to Play: Consumers Target Customers
In the DRC three consumer groups were identified; the level of education and stated income emerged as the most significant influences on travel behaviour Education Social Status Respondents with a lower income and lower levels of education often perceived travel to be an opportunity to augment their supplemental income through entrepreneurial (commercial) activities Respondents who were educated abroad, and returned to DRC to find positions as executives in MNCs, had different travel preferences and behaviours than the other two consumer groups Finally, respondents who were born into wealthier families and earn high incomes are used to the concept of international travel for pure leisure Stated Income 3 CONSUMER GROUPS EMERGED Entrepreneurs Mainly travel for business shopping Mainly travel alone Rely on friends or colleagues to gather information Looking for value for money experiences, and to save as much money as possible in order to purchase more Purchase tickets mainly at airline counters, sometimes asking friends and family for help Go Getters Travel usually driven by a personal need (Medical, Event, Study, VFR) Travel alone, but when possible will bring a friend Rely on friends but also use the internet to gather information about where to go Looking for world class experiences, mainly in shopping and nightlife, with some cultural activities Use airline counters to purchase tickets Well-To-Do Travellers Frequently travel for pure leisure Typically travel with family Rely on friends but also use the internet to gather information about where to go Look for luxury world class experiences in restaurants, spas and shopping with some cultural activities Use airline counters and, to a lesser extent, travel agents to book travel and accommodation Source: Grail Research & Monitor Analysis

Entrepreneurs Consumer Group Consumer Portrait
These travellers are focused on getting as much out of international trips as they can, especially shopping for everyday items that are expensive in the DRC Entrepreneurs Entrepreneurs Alain is married with 3 children He works as a mid-level employee for a local mining company He travels a lot for business, and has started a side business with his wife to supplement their income Alain may access the internet from time to time, but he prefers talking to people when gathering information For their honeymoon, he and his wife took a 4 week trip to China and Dubai, in part for shopping opportunities He has been to both Dubai and China several times, and has built up his network of contacts there which help him to find the best deals His trips to China usually last 7-10 days, to Dubai slightly shorter Although he has already travelled to SA, Alain will visit again if he gets a good deal on the flight ticket and hotel Meet Alain, a 40 year old Congolese Consumer Antoinette is married with no children She works for a local bank, in the accounting department Antoinette rarely goes on the internet, but enjoys discovering the new functions on her mobile phone Antoinette enjoys going to Dubai, especially for the shopping, but also appreciates the infrastructure and modernity She likes buying nice clothes for herself, and luxury goods to resell in Kinshasa Activities such as safari, wildlife and nature are not the key travel motivators for her Her trips are generally 3 times / year, for about 5 days each time The fact that the visa process to Dubai is very simple and fast also encourages her to choose this destination over others Meet Antoinette, a 25 year old Congolese Consumer “My wife and I started a side business together, so when we travel we are looking for opportunities” “You can buy luxury goods in Dubai for 1/3 of the price…plus the visa process is very easy” Source: Grail Research & Monitor Analysis

Go Getters Consumer Group Consumer Portrait
This group of consumers is extremely aspirational and visits places like South Africa in order to experience world class luxuries at prices that they can afford Go Getters Go Getters Tino is married, but has no children He works for Tigo telecom as a sales manager He lives with his wife in a two bedroom apartment on the outskirts of Kinshasa Tino accesses the internet through his mobile phone, and also when he is at work; he has a facebook account Tino usually takes one vacation per year with his wife; they try to see new places and visit friends and family to reduce costs Their trips are typically days, depending on the distance and the cost Tino has aspirations to see new places; he has been to London once and would love to see the rest of Europe He views South Africa as a country with high quality of life, developed infrastructure, and quality shopping Meet Tino, a 32 year old Congolese Consumer Victorine is single and has no children She works for an international bank in the accounting dept Victorine likes her job, and has plans to move into management in the next 3 years Victorine surfs the internet from work, and has a facebook account but is not yet very active She still lives at home with her parents, but has plans to move into an apartment with friends of hers this year For vacation, Victorine loves to go to island destinations; she has been to Ile Maurice and Madagascar and would love to see the Caribbean Her trips are typically once a year, for about 7-14 days She compares South Africa to the US and the EU, and prefers to travel to there as it is closer to DRC Meet Victorine, a 28 year old Congolese Consumer “I like to check out fun, modern places…my wife enjoys checking out the shops too” “Vacation is a way for me to relax…I love going to islands and going to the beach” Source: Grail Research & Monitor Analysis

Luxury Seekers Consumer Group Consumer Portrait
The Well-To-Do Travellers view vacations as relaxing leisure time, and can be very flexible on their destination choices; the vacations are longer than the other consumer groups and typically they travel with their families Well-To-Do Travellers Well-To-Do Travellers Jean Marc is married with 3 children He is a senior executive at DHL consulting to other companies He considers himself very “virtually connected” with accounts on facebook, linked in, and hi5 Jean Marc takes at least one or two vacations a year with his family, almost always to a long haul international destination These trips last on average 3 weeks, but could last as long as 4- 6 weeks Jean Marc seeks new and interesting destinations, but also enjoys returning to the same location if he had a very pleasant experience Prestige / high status is a key driver of his destination choices For him visa, money and language are not issues for travelling as long as he can have ‘la belle vie’ (beautiful life) Meet Jean Marc, a 37 year old Congolese Consumer Virginie is married with 5 children She works as an HR manager, as well as helps her husband with a car rental business on the side She is tech savvy due to her business ventures, but rarely has time to surf the web or engage in social networking Virginie’s family is very important to her, having family vacation time is very neccessary As a family, they tend to take one long vacation which lasts about 4 weeks For family trips, she lets the kids decide on the location, as long as their grades in school have been satisfactory Virginie also takes separate shorter vacations with her husband, typically to beach destinations, at least once a year Virginie and her family have never encountered visa issues Meet Virginie, a 43 year old Congolese Consumer “I decide where to go based on what interests me…Europe and the US are always good choices” “I let the kids decide where we all go on vacation…this year they wanted to go to Atlanta” Source: Grail Research & Monitor Analysis

Messages, Channels and Products Key Messages – Overview
Messaging for each market is made up of a number of key components of differing importance Key Components of Message High Importance DRC Accessibility and affordability Variety of business and leisure opportunities Modern infrastructure Key Message(s) Key Channel(s) Key Product(s) Affordable and accessible destination, which offers modern infrastructure and multiple opportunities in terms of business and leisure Building awareness: TV, internet and social media Information gathering: travel agents and other partners Driving purchase: travel agents, airlines and social media Airfare, transfers and 3- or 4-star hotel (for Go Getters) and 2- or 3-star hotel (for Entrepreneurs) in a major city, hotel with free shuttles to city center Note: Colour-coding is intended to help with identification of similarities in messages across different consumer groups, white boxes indicate no similarity Source: Grail Research & Monitor Analysis

Objective: Drive Increased Arrivals through Basic Product Offerings
How to Win: Consumer and Product Communication Basic Product Offering Options The offering would differ slightly by priority consumer group with a combination of various elements as opposed to a package Objective: Drive Increased Arrivals through Basic Product Offerings Go Getters Entrepreneurs Airfare Airfare Return airfare in economy class Return airfare in economy class Transfer Transfer Transfers (airport > hotel > airport) Transfers (airport > hotel > airport) Hotel 3 or 4 star accommodation in a major South African city e.g. Cape Town, Durban or Johannesburg Close proximity to nightlife and shopping Hotel with free shuttles to city centre Hotel B&B or 2 star accommodation in a major South African city e.g. Cape Town, Durban or Johannesburg Close proximity to shopping Hotel with free shuttles to city centre Length of Stay Length of Stay 7 to 12 nights 7 to 12 nights Service Visa processing assistance Service Visa processing assistance Source: Grail Research & Monitor Analysis

Objective: Drive Increased Spend through Promotions and Add-On’s
How to Win: Consumer and Product Communication Promotions and Potential add-on Offers Promotions and other offerings would further help to drive arrivals and increase spend Objective: Drive Increased Spend through Promotions and Add-On’s Go Getters Entrepreneurs Promotions Promotions Off-peak flight reductions Discount on second flight for business partner Flight/accommodation discounts on stays longer than 10 days Off-peak flight reductions Discount on second flight for significant other/friend Flight/accommodation discounts on stays longer than 10 days Night out on the town in a limo Special access to private clubs Discounted concert and sporting event tickets Increased luggage allowance Shopping advice, coupons Discounted freight offers Business interpreter services Increased luggage allowance Others Others Source: Grail Research & Monitor Analysis

For more information contact our Johannesburg office:
South African Tourism Bojanala House 90 Protea Road Chislehurston Sandton, 2196 Private Bag X10012 Sandton 2146 Call centre: Website:

Marketing South Africa in Angola & DRC

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