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AFRICA DARK HOLE OR ROUGH DIAMOND ?

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AFRICA DARK HOLE OR ROUGH DIAMOND ?. Hiroshima 1945. In 1945 Detroit was experiencing prosperity If you were investing in 1945: Would you have chosen Detroit ahead of Hiroshima. Detroit 2010. Hiroshima 2010. Are we expecting Africa to overtake the world ?. GDP in $ Billions (PPP).

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Presentation Transcript
slide3
In 1945 Detroit was experiencing prosperityIf you were investing in 1945: Would you have chosen Detroit ahead of Hiroshima
gdp in billions ppp
GDP in $ Billions (PPP)

2007 2010 2020 ?

  • SA 467 505
  • Algeria 227 253
  • Angola 96 115
  • Morocco 125 146
  • Liberia (excl BHP) 1.5 2.5
  • USA 14 256
  • China 8 765
it is difficult to grow a business in the usa or china
It is difficult to grow a business in the USA or China
  • Tight margins
  • Fierce competition
  • Strict regulation
  • High labour cost
  • Lengthy paperwork
  • Lots of lawyers
slide9
What caused Africa’s problems
  • FEAR, GREED

What is driving the GROWTH

  • GREED
fear for africa consist of
FEAR FOR AFRICA CONSIST OF:
  • Violence, law enforcement
  • Uncertainty of numbers
  • Political, legislation
  • Financial viability
  • Malaria, climate
  • Staff willingness to venture to go there
  • Infrastructure ?: Transport, health, shops

Did the last 10 years reduced these fears ?

fact or fiction
Fact or Fiction:
  • Continent with biggest % of new tarred roads over last 10 years
  • Continent with biggest % of new rail tracks in last 10 years
  • Greatest potential for expansion in next 10 years
slide12
Massmart, Woolies, Foschini, Edgars (< 10%)
  • Shoprite 15% of sales, 20% of profit.
  • African Bank, Capitec
  • Sanlam, Metropolitan
  • The big 4 banks
  • Illovo, Tongaat operates on land 3 times the size of Belgium
  • Omnia, Afgri, Astral
  • Big construction contracts, materials
  • Transport, logistics, Car dealers, Tourism
  • Mining, mining, mining
small developments
Small Developments
  • Transnet privatising more rails
  • China offering to build railways rather than pay for mining rights
  • Current CHEAP cost of capital
things to look for
Things to look for:
  • Income level of top 5% of population
  • Technology
  • Big investments: Eg. BHP into DRC, Liberia
  • Population categorisation:

- Regional identity. Manage small chunks

- ID numbers, other individual detail

- Credit history

- Better econ stats measurement

conclusion
Conclusion:

Whatever rating we give Africa at the moment, we are likely to give it a better rating in 10 years time.

Question:

Is it time to invest in Africa?