1. 2 3 J U N E 2 0 0 8 T R E N D S I N G L O B A L F I N A N C E A N D I N F R A S T R U C T U R E

2. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 1 The credit crunch has triggered the worst banking crisis for decades with unprecedented write-downs and equity injections Stock performance of major investment banks Overview of selected announced capital injections Source: FactSet, Bloomberg. Market data rebased to 100 as of June 6, 2008 Write-downs across major financials institutions ($bn)

3. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 2 Credit crisis impact on sub-Saharan Africa Causes Consequences Key causes and consequences of recent credit crisis

4. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 3 Sub-Saharan Africa is enjoying a growth spurt Sub-Saharan Africa (SSA) has enjoyed strong growth for much of this decade, contributing to significant improvement in living standards in some countries. Buoyant commodity prices, improved governance and rising investment have underpinned this acceleration in growth rates. There are still, however, important discrepancies between countries. Oil exporters such as Nigeria and Angola have enjoyed the strongest growth rates, despite capacity constraints in some cases. Oil importers have been protected in many cases by high prices for non-oil commodities. The laggards are resource-poor and landlocked, which impedes their market access. Growth has averaged around 6% per year since 2004 Source:AfDB, IMF, and JPMorgan estimates *Big Four=South Africa, Algeria, Nigeria and Egypt

5. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 4 Sub-Saharan Africa: Commodity price strength is a major positive Inflation in SSA (excluding Zimbabwe) has eased from over 16% in 2000 to 7.2% in 2007. Rising global food and energy prices are creating problems for net importers, but the inflationary impact has generally been contained by prudent macroeconomic policy. The strength of commodity prices is a major positive for the resource-intensive region. Asias industrialisation and infrastructure development have been a key driver of demand for commodities, and should deliver continued price strength, reinforced by portfolio diversification by institutional investors. Resources make Africa a key beneficiary of strong Asian demand Commodity prices remain elevated Commodity prices to moderate in 09 but hold well above 05 levels Inflation, %oya Source: IMF Source: S&P GSCI spot indices

6. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 5 Sub-Saharan Africa: External balances are looking healthier Rising commodity prices and comprehensive debt relief have ignited private interest in investing in SSA, after several decades of isolation. At about $22 billion, FDI continues to be the largest source of private capital inflows into SSA. While South Africa and the oil-exporters still attract about 80 percent of the inflows, direct investment in the rest of SSA has been steadily increasing; for 2006 it is estimated to have reached $4.1 billion, with $1.2 billion going to landlocked countries. Capital inflows into SSA remain relatively small, however, because the costs of doing business there are still high by global standards. On the World Banks ease of doing business indicator, the average SSA country ranks more than 40 positions below that of the average East Asian and Pacific country, and nearly 30 positions below that of the average LatAm country. … and debt relief has also attracted private capital SSA is benefiting from a favourable external environment. Import demand from advanced economies has strengthened steadily in recent years, and Chinas hunger for commodities has driven higher prices as well as inward FDI. With the continued rise in oil and other commodity prices, exporters of both oil and non-fuel commodities have experienced an aggregate improvement in their terms of trade. However, a number of SSA textile exporters have come under pressure as the United States and the European Union (EU) have phased out textile quotas. Terms of trade have improved … Africas share of global FDI is finally rising again Terms of trade (Index, 2000 = 100) Source: IMF Source: UNCTAD

7. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 6 Sub-Saharan Africa: Reserves high and debt now low Foreign reserves for all of SSA are estimated to have reached an all-time high of US$137 billion in 2007, raising import coverage to 5.7 months. While this is not a high level of coverage by global standards, it comes from a low base. The improvement reflects positive terms of trade effects and the policy decision to build precautionary levels of FX reserves to guard against balance of payments risks, as well as limit the negative impact of currency appreciation on competitiveness outside the resource sector. Oil exporters and South Africa have led the way in building up reserve levels. Other SSA countries have kept reserves roughly stable as a share of imports. Record reserve levels reflect improved BOP balances Sub-Saharan Africas external debt is estimated to have fallen to just 11% of GDP in 2007. This represents a 30-year low, and is the result of rapid growth, comprehensive debt relief, and debt repayment by Nigeria, Angola, Malawi and others. Debt relief has been delivered through the enhanced HIPC initiative and MDRI, as well as bilateral deals in countries such as Nigeria. 17 countries have so far benefited from MDRI, and eight more could qualify once they reach the HIPC completion point. This latter group includes many of the most fragile economies, where debt ratios remain uncomfortably high. Government debt has fallen FX reserves by region, US$ bn External debt to official creditors (% of GDP) Source: IMF Source: JPMorgan

8. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 7 Sub-Saharan Africa: Investor interest is climbing rapidly SSA has led outperformance in frontier equity markets EMTA trading volumes in frontier markets are climbing Private equity activity in EM - 2007 vs plans for 2012 The region has shared in private equitys enthusiasm for EM EMPEA reports US$592m raised for SSA in H1 2007, but another two large closes for pan-African funds in July totalling over US$1.8bn. 2007 as a whole looks to have set new highs, and flows have continued in Q1 08.

9. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 8 Significant infrastructure gap across sectors Significant infrastructure gap – Ideal funding profile Strategic Countries (e.g. China/ Russia) DFIs (e.g. World Bank, IMF, AfDB) Local Financial institutions Foreign Direct Investments Government Foreign Financial Institutions 15% 10% 5% 25% - 35% 10% The total infrastructure spend over the next 10 years in sub-Saharan Africa is estimated at approximately US$1 tn. Key areas of deficiency include power, energy and transportation (especially roads and rails)

10. S U B - S A H A R A N A F R I C AS U B - S A H A R A N A F R I C A 9 Challenges/Opportunities Capital Markets PPP Environment Business Environment Development of capital Key Reference points required including - Risk free rates, yield curves etc Liquidity Depth of products Necessary to create a highly attractive environment for PPP Legal framework Regulatory framework Government support – for top priority projects only Subsidy/tariffs/tax breaks Co-investment 510% Guarantees Incentives to local banks – including tax breaks and lower liquidity limits. Ease of doing business must improve Transparency index must improve Anti-corruption Reality check on cost benefit for genuine investors