1. NEW MARKETS Østafrika Fremtidens Vækstmarked DI International Business Development 2011

2. NEW MARKETS Tomorrows market?

3. NEW MARKETS DI International Business Development (DIBD) DIBD is DI's international consultancy unit established in 1996 65 people throughout different countries Experience from +500 project in developing countries Small and medium-sized companies Business development Focus: BRIC, Asia and Africa Offices in Sao Paolo, New York, Shanghai, Moscow and Mumbai

4. NEW MARKETS DI foreign offices Project experience DI collaboration with sister organizations  600+ projects  30 consultants  15 years of experience  40+ countries project experience  20+ collaborations with sister organizations

5. NEW MARKETS $1.6 trillion Africa’s collective GDP in 2008, roughly equal to that of brazil 7/10 7 of the 10 fastest growing economies, will be African between 2011 and 2015 220 million Number of Africans who are able to meet only basic needs but will become consumers by 2015 8% vs. 22% In the 90’s the average rate of inflation was 22% in the 00’s it was 8% 60% Africa's share of the world's total amount of uncultivated, arable land 52 Number of cities with a population over 1 million

6. NEW MARKETS Africa 1996 -3.3 1.7 -3.2 -6.5 2.4 -4.0 -7.5 1.2 4.4 1.13.3 -9.6 -0.3 6.2 0.2 2.0 -3.1 22.5 -3.1 2.6 -10.5 -5.8 8.5 -2.8 5.3 1.7 -8.6 2.8 -8.4 0.6 2.1 -1.1 2.8 0.6 1.2 -8.9 -3.1 3.0 6.6 1.0 7 to 9% GDP Growth Above 9% 5 to 7% 3 to 5% 0 to 3% Negative Armed Conflicts -3.2 Source: IMF, World bank & Danida Situation  19 armed conflicts across the continent  Average growth rate of -1.1% between 1985 and 1995

7. NEW MARKETS Africa 2011 3.5 5.1 5.4 5.2 3.9 6.2 -2.8 4.4 5.4 3.94.3 5.2 9.5 4.0 9.9 4.7 7.4 2.9 2.1 4.9 8.7 6.9 7.1 4.8 3.5 3.8 2.5 7.5 2.8 4.5 6.7 6.4 5.8 6.1 5.4 2.8 8.5 -N/A 3.6 5.9 4.5 7 to 9% GDP Growth Above 9% 5 to 7% 3 to 5% 0 to 3% Negative Armed Conflicts 4.0 What explains the growth surge?  Governments ending armed conflicts  Improved macroeconomic conditions  Better business climate  More than commodities  Oil and other natural resources accounted for just 24% between 2000 and 2008  Growth sectors include tourism, banking, telecommunications and increasingly manufacturing and agriculture Source: IMF

8. NEW MARKETS Overview of economies Transition New markets Impressive growth rates and political stability Relatively good business climate Increasingly diversified economies Markets remain largely untouched Senegal, Ivory Coast, Ghana, Kenya, Mozambique. Tanzania, Uganda, Zambia

9. NEW MARKETS Economic TechnologyEnvironment Considerable improvement of political stability and corruption transparency

10. NEW MARKETS

11. Consumer goods Why consumer goods? Consumers are moving from the destitute of income level to the basic needs Urbanisation, rising income and population growth creates incredible growth in number of consumers Not a market share game instead market development Estimate that 221 million new consumers will enter the market by 2015 Opportunities S-curve growth: When a country achieves a basic level of income purchase of consumers goods accelerates three or fourfold Sectors: Amongst other fast-moving consumer goods, banks, and telecommunications BOP business: 71% of income remain at the Base of the Pyramid requiring companies to reinvent their business model Two hundred million new customers South Africa, Nigeria, Angola, Uganda, Ghana, Kenya, Tanzania, Ethiopia, Rwanda, Zambia, Zimbabwe, Mozambique Where are the opportunities? Africa’s consumers by income Source: McKinsey Global Institute

12. NEW MARKETS Agriculture Why agriculture? Largest economic sector, representing 15% of total GDP 25% of the worlds arable land lies in Africa The top 10 countries producing 75% of total output and 85% of all farms are smaller than 2 hectars Only 10% of the worlds output is African, creating massive unexplored opportunities Opportunities Agricultural innovation: Developing technological breakthroughs as drought-tolerant crops New value chain approaches: Improve access to markets and brand African quality products New land: Development of large tracts of high potential agricultural land Bio-fuel: Using drought resistant plants for local energy consumption replacing fossil fuels and trees The green revolution South Africa, Nigeria, Uganda, Ghana, Ivory Coast, Ethiopia, Kenya, Tanzania, Rwanda, Zambia, Zimbabwe, Mozambique Where are the opportunities? Source: McKinsey Global Institute

13. NEW MARKETS Infrastructure, Energy & Cleantech Why construction & infrastructure? A third of Africa's 1 billion inhabitants currently live in urban areas, but by 2030 that proportion will have risen to a half. Combined with an increasing level of income the demand for housing is dramatically increasing Between 1998 and 2007 spending on infrastructure increased at a rate of 17% per year Opportunities Real estate & commercial: The growing middle class creates opportunities for real estate development in suburbs to major cities. Further offices, hotels, shopping malls, schools, etc. Low income housing: The vast majority of behind the explosive urban population growth are low income consumers living at the BOP Major infrastructure: Several countries have announced major infrastructure programmes looking at transport, energy & airports Building the future Ghana, Nigeria, Angola, South Africa, Mozambique, Zambia, Zimbabwe, Tanzania, Kenya, Uganda, Rwanda, Ethiopia Where are the opportunities? Growth of African cities % increase, 2010-2025 forecast Source: The Economist, McKinsey Global Institute

14. NEW MARKETS Challenges Challenges in Africa varies from country to country and must be assed on a individual basis. However, there are general challenges: Talent shortage: Companies struggle to find competent local partners and employees, but local know-how and talent is required to develop a competitive business Cultural differences: The importance of cultural management must not be neglected Lack of information: Data about markets, consumers’ needs and behavior are scarce, making it harder to develop specific consumer insights Market are growing rapidly, but remain challenging

15. NEW MARKETS Services Business plans, market study and research, strategic consultancy, etc. Financing: Applications B2B program, B2B Environment, IPD, NOPEF, Nordic Development Fund, etc. Implementation: Partner selection and training, project management, strategic implementation, CSR assistance, training plans, etc

16. NEW MARKETS Sources of Capital Financial ROI Social & Environmental ROI Traditional sources Emerging markets "hard money" Medium-hard money Blended values sources Aid money - no financial return

17. NEW MARKETS Project experience West Africa 185 companies Project Experience: Ghana, Nigeria, Benin, Liberia, Burkina Faso, Mali East Africa 178 companies Project Experience: Uganda, Tanzania, Kenya, Mozambique, Zambia, Zimbabwe Southern Africa 61 companies Project Experience: South Africa DIBD has assisted numerous companies throughout Africa

18. NEW MARKETS Thank you! Andreas Flensborg anfl@di.dk +45 3377 4625 dibd.dk & boplearninglab.dk