africa: a new emerging markets frontier?
TRANSCRIPT
27 June 200827 June 2008
Africa: A New EmergingAfrica: A New EmergingMarkets Frontier?
Javier Santiso
Director & Chief Development Economist, OECD Development Centre
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UNECA UNECA
OECD Development Centre
GrowthGrowth Investment : a new driver?
40
DP
Public and Private Investment % of GDP
• The share of investment in GDP has increased in Africa, both public and pri ate both domestic and foreign
30
35
Percen
t of G
D private, both domestic and foreign.
• Saving rate increased by 30% since 2002, witnessing more prudent economic policies
20
25
economic policies.
28
t
African savings and investment ratesshare of GDP (%)
10
15
Ghana
Madagascar
22
24
26
Per cen
t
0
5
Madagascar
Tanzania
Zambia16
18
20
Investment
Gross national savings
2
UNECA
Source: OECD Development Centre / UNCTAD, 2008
GrowthGrowth Private capital flows more important than ODA?
70
n)
Development aid and private capital flows to Africa2000 ‐ 2007
Remittances
40
50
60
USD
(billion
FDIPrivate portfolio flowsOther private flows
20
30
40
African ODA
0
10
‐20
‐10
2000 2001 2002 2003 2004 2005 2006 2007*
3
UNECA
Source: OECD Development Centre / UNCTAD, World Bank, IMF, 2008*: UNCTAD preliminary estimation
FDIFDI Record investment inflows for 2007
Africa FDI 2007 : $36 billion• +20% on 2006; +200% on 2004
African FDI: Sub‐regional breakdown2004‐2006
•FDI outflows ‐ $8 billion 2006
• Largely due to surging extractive industry investment: South Africa and oil producing
h f
North Africa
p gcountries are still receiving the bulk of direct investment to Africa
• Previously off‐limit sectors opening to foreign West Africa
Southern Africa
investment:Banking: Congo, Egypt, Nigeria
Telecoms: Botswana, Burkina Faso, Cape Verde, Ghana, Namibia
Central Africa
2006
2005 Cape Verde, Ghana, Namibia
Land ownership: Morocco
FDI inflows likely to remain strong, but l di t ib t d b t d d ti ti
(5) ‐ 5 10 15 20 25
East Africa
US$ billion
2005
2004
4
UNECA
Source: OECD Development Centre / UNCTAD, 2008 unevenly distributed by sector and destination.
FDIFDI Asian investments driving African growth
Distribution of cross‐border M&A purchases in Africa by home region, 2001‐2006 (US$ million)
2001 2002 2003 2004 2005 2006
World 15524 4684 6427 4595 10509 17569World 15524 4684 6427 4595 10509 17569
Developed economies 14964 3668 3156 4571 9564 7173
Developing economies 559 1016 3270 2024 476 9721
Africa 520 809 569 1849 360 746
Asia 39 141 2536 175 116 8850Source: OECD Development Centre based on UNCTAD cross‐border M&A database, 2008
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UNECA
EquitiesEquities South Africa: dominating the investment landscape
• Africa still lagging behind in investment 20
Equity flows to AfricaMonth‐end aggregate holdings
compared to other emerging regions (Asia especially).
• In turnover, the SA stock exchange is 14
16
18
20
USD
Billion
Total Africa
South Africa
worth 100 times that of Africa’s second market: Nigeria.
• Over 2001‐2006 period, South Africa 10
12
14
received as much portfolio equity investment as the entire rest of SSA, 46 times over…
4
6
8
• African allocations in global equity funds remains stable at 10% of total.
0
2
6
UNECA
Source: OECD Development Centre / EPFR, 2008
Private EquityPrivate Equity Well adapted to African conditions?
Total emerging world private equity funds raised:
emerging markets private equity
CEE/RussiaLatam & Caribbean
8%
emerging markets private equityby region 2007 2003 2004 2005 2006 2007
$3.4 bln $6.4 bln $25 bln $33 bln $59 bln
• Sub‐Saharan Africa 2005 ‐ 2006: $2.3 billionraised (+198% yoy)
27% 8%Sub‐Saharan
Africa4%
Middl E & • Average deal size $1.2 million (2005), trending towards larger deals
• South Africa: 81% of investments, Nigeria 50% of remainder (2005)
Emerging Asia52%
Middle East & North Africa
9%
remainder (2005)
• Top sectors: Transport, consumer‐related investments, telecommunications/IT (2005)
f $ b ll f f d
Above: OECD Development Centre / African Venture Capital Association, EMPEA, 2008
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UNECA
• 2006: first $1 billion pan‐African fund
BondsBonds Lowering spreads signal increased confidence
1800
)
Egypt 450
500
1400
1600
Spread
(BP
Morocco
South Africa
EMBI Global
h300
350
400 Ghana
Gabon
EMBI
800
1000
1200 Ghana
Gabon
200
250
Global
South Africa
Egypt
400
600 100
150
0
200
8
UNECA
Source: OECD Development Centre, based on Thomson Datastream, 2008
OpportunityOpportunity Sovereign Development Funds: future investors?
0 500 1000 1500 2000 2500 3000 3500
USD billion
Sovereign Wealth FundsEmerging market investment potential
SWFs total assets
Potential 2018 SWF flows to EM
United Arab Emirates: ADIAUnited Arab Emirates: ADIA
Norway: Pension Fund Global
Potential current SWF flows to EM
Si GIC
If Sovereign Development Funds allocated 10% of their portfolios to emerging and developing countries, this will generate inflows of $100 billion/year over the next
Singapore: GIC
Kuwait: KIA
China: CIC
10 years.
With such huge potential flows, it is critical to address SWF impact on developing world early on.
Russia: Stabilisation Fund
Singapore: Temasek
Development Aid DAC donors
SWFs will dwarf ODA flows to developing world.
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UNECA
$1.4 trillion to the emerging world over coming decade?
DevDev CentreCentre A platform for global dialogue
Non‐OECD membersOECD members at
Development Centre
IsraelChile
S h Brazil
Romania
South Africa
India
VietnamThailand
ColombiaEgypt
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UNECA
AEOAEO African Economic Outlook impact
International Forum on African PerspectivesParis June 2008
Seminar on Capitol Hill Washington D.C, June 2008
Paris, June 2008
EU Africa SummitEU‐Africa Summit Lisbon, December 2007 TICAD
Tokyo, May 2008
AfDB Annual MeetingMaputo, May 2008
• International launch at AfDB Annual Assembly: 11th May 2008• European launch: 13th May 2008• Over 40 presentations and events within 3 months of publication
27 June 200827 June 2008
Javier Santiso
Director & Chief Development EconomistDirector & Chief Development Economist, OECD Development Centre
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UNECA UNECA