energy: the lifeblood of africa’s economic development1.5 1.5 libya 48 tunisia 0.4 south sudan 3.5...
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Quantum Power Information Pack
49th AfDB Annual Meeting: Energy Seminar
Kigali, Rwanda
22 May 2014
Energy: The Lifeblood of Africa’s Economic Development
Dr. J. Louis van Pletsen
Founding Partner,
Quantum Power
“The next 50 Years: The Africa we Want”
1
Quantum Power is an industrial investment platform focusing on Africa, investing in power, energy, commodities and related infrastructure
• Direct long-term hold investment strategy,
taking control or significant influence
positions
• Active hands-on investors
• “Invest and hold” strategy to build an
African industrial conglomerate of scale
• Invests across project development
lifecycle, from greenfield to operational
assets
• Agnostic with respect to fuel and
technology for power generation
• Experienced team and flat decision-
making structure
Quantum Power Services
28-29 Dover Street London
Lagos Accra
Nairobi
Windhoek
Johannesburg
Cape Town
Quantum Energy Nigeria
Quantum Power Ghana Gas
Quantum Power East Africa
Quantum Power Namibia
Inspired Evolution
Private equity fund manager
2
Agenda
1. Africa is on the Rise and a Partner of Choice
2. Energy is Key to ‘The Africa we Want’
3. Partner with Africa
3
Africa is a Partner of Choice
• Young and growing population of over 1 bn
• Politically more stable than ever
• Macro economically sound
• Well endowed with natural resources
• Rapidly growing middle class
• Improving infrastructure to facilitate commerce
• Attractive investment destination and a partner of choice
Highlights
4
Geographical Size of Africa
• 1 bn people (in 2012) make Africa the second most
populated continent after Asia. Africa is home to 15% of the
world’s population
• 7 out of 10 of the world’s fastest growing economies for
2011-2015 are forecast to be African - Ethiopia,
Mozambique, Tanzania, Ghana, Zambia, DRC and Nigeria
• 18 top African cities will have a combined annual spending
power of USD 1.3 trillion by 2030
• 20 African companies already have revenues topping USD 3
billion
• 40% of African’s live in cities. Africa is expected to be 50%
urbanised by 2030
• 41% of Africans are under 15, the youngest population of
any continent
• 60% of the world’s total arable, uncultivated land is in Africa
• 68% of multinationals are not in Africa
Source: Economist; Kai Krause; Various; The Beijing Axis Analysis
Fast Facts
Africa is more than three times the size of China and ten times the size of India
Netherlands
United States
India
India
Part 2
Portugal
Italy
Germany France
Spain
Switzerland
Japan
Belgium
Eastern
Europe
China
UK
China
Geographically large
5
0%
20%
40%
60%
80%
100%
World GDP2012
World GDP2012
Africa GDP2012
Africa GDP2012
Africa GDP2012
Africa GDP2012
Africa GDP2012
Africa GDP2012
Breakdown of Africa’s Share in the Global Economy (USD tn, 2012)
Source: IMF; UNCTAD; The Beijing Axis Analysis
Africa’s economic fundamentals and current global position reflect its potential for long term economic growth and development, but it is still small
USD 71 tn USD 71 tn USD 28 tn USD 2 tn
Middle East Africa
Developing
Countries
(excl. Africa)
Africa
South
Africa
Egypt
Nigeria
Algeria
Angola Kenya
Others
Ghana Tanzania
Northern
Africa
Southern
Africa
Western
Africa
Central
Africa
Eastern
Africa
Primary
Industry
Secondary
Industry
Tertiary
Industry
Private
Consumption/
Expenditure
Gross Capital
Formation
Government
Consumption/
Expenditure
Net Exports
USD 2 tn USD 2 tn USD 2 tn USD 2 tn
Europe
North
America
Asia
Africa
Latin
America
Developed
Countries
Developing
Countries
(excl. Africa)
Africa
GDP
6
460
384
263
206
114
96
59
42
41
41
28
25
25
21 20
18
18
17
15
14
14
14
13
46
7
0%
2%
4%
6%
8%
10%
12%
0 2,000 4,000 6,000 8,000
Average GDP Growth Rate (%, 2008-2012)
GDP Comparison of Major African Economies (USD bn, 2012)*
*Source: World Bank; IMF; The Beijing Axis Analysis
African countries generally have small GDPs, but these have grown rapidly over the last five years. Growth is expected to continue at a healthy rate
GDP Per Capita (2012)
Gabon’s GDP
per capita was
USD 11,257
Gabon South Africa
Eq. Guinea’s GDP per
capita was USD 24,035
Eq. Guinea
Botswana Namibia
Angola
Algeria
Egypt
Nigeria
Congo
Morocco
Tunisia
Sudan
Ghana
Zambia
Ivory Coast
Cameroon
Senegal
Kenya
Rwanda
Tanzania
Mozambique
Uganda
Ethiopia
DR Congo
Fast growing
economies
7
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
China
India
Africa
GDP Per Capita Comparison of China, India and Africa (USD, 1980-2012)
Source: World Bank; The Beijing Axis Analysis
Africa’s GDP per capita has grown rapidly but is still lagging China in spite of the increasing relationship over the last decade
Increasing wealth
8.3 2 1.8
2012 GDP in USD tn
China Africa India
0.34 0.39 0.52 1990 GDP in USD tn
8
Africa’s Share of World Production for Selected Commodities (%, 2012)
Source: USGS; The Beijing Axis Analysis
Africa is well endowed with minerals and the continent’s importance in the global mining sector will continue to grow – hamstrung by the lack of power and infrastructure
Africa Rest of World
0%
50%
100%
Chromite
78%
0%
50%
100%
Platinum
0%
50%
100%
68%
Cobalt
0%
50%
100%
9%
Copper
0%
50%
100%
19%
Gold
8% 0%
50%
100%
Bauxite
0%
50%
100%
19%
Uranium
0%
50%
100%
36%
Manganese
0%
50%
100%
57%
Diamonds
0%
50%
100%
24%
Phosphate
48%
Well endowed
with natural resources
9
World Oil Production by Region (%, 2012)
Note*: Kenya's reserves are still not fully proven and current estimates range from 1 - 23 billion barrels
Source: BP Statistical Review of World Energy 2013; The Beijing Axis Analysis
Major African Oil and Gas Reserves (2012 and 2013)
Africa accounts for 10.9% of the world’s total oil production yet holds only 7.8% of the world’s proven reserves. On the contrary, Africa accounts for 6.4% of total natural gas production but holds 7.7% of proven gas reserves
Existing gas reserves end
2012 (tn cubic meters)
Existing oil reserves end
2012 (bn barrels) Angola
12.7
4.3
Gabon
2 1.7
Congo
1.6
37.2 5.2
Nigeria
2
Egypt
32.5
20.3 17.5
10.9
9.6
9.2
Middle East
Europe &EurasiaNorth America
Africa
Asia Pacific
South & CentralAmerica
World Natural Gas Production by Region (%, 2012)
16.3
30.7
26.8
6.4
14.5 5.3 Middle East
Europe &EurasiaNorth America
Africa
Asia Pacific
Namibia
0.03
Ghana
0.7
Uganda
2.5
Tanzania
0.9
Equatorial
Guinea
12.2
Chad
1.5
1.5
Libya
48
Tunisia 0.4
South Sudan
3.5
Sudan 1.5
Algeria
4.5
Well endowed
with natural resources
Mozambique
4.5
Kenya*
20.1 0.3
New discovered gas reserves
in 2013 (tn cubic meters)
Newly discovered oil reserves
in 2013 (bn barrels)
South Africa
14
1
1.5
0.7
0.6
1
10
Security Risk Profile of African Countries (2013)
Source: Control Risk Map; The Beijing Axis Analysis
Political Risk Profile of African Countries (2013)
The extent of security and political risk varies greatly across the continent. Africa is generally politically more stable and has improved security
Africa Security Risk
(2013)
Low
Medium
High
Extreme
Africa Political Risk
(2013)
Low
Medium
High
Extreme
Politically
stable
11 Source: African Elections Database; BMI; The Beijing Axis Analysis
Political Ratings of Key African Economies (2012)
African countries have shown slow but steady improvement in governance over the past few years. Moreover, a number of countries outperform the emerging market average for political stability
65.7
63.4
47.9
55.6
63.8
66.7
67.3
69
70.8
72.7
74.8
63.3
59.8
48.8
50.7
54.2
64.3
68.8
44.6
62.7
68.6
70.4
0 20 40 60 80
Global
Emerging…
Nigeria
Kenya
Zambia
Tanzania
South Africa
Angola
Namibia
Ghana
Botswana
Long-term Short-term
Total Number of Democracies in Africa (1990-2012)
0
5
10
15
20
25
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Partly Free Democracies
Free Democracies
Politically
stable
12
0
20
40
60
80
100
120
140
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Kenya Egypt Ghana Angola Morocco Nigeria South Africa Ethiopia US EU
Comparison of Total Debt to GDP of Major African Countries with Select Economies (%, 2003-2013)
Africa is increasingly becoming macro-economically stable. Debt to GDP ratios are lower than the ratios in developed countries such as the US and EU
Source: IMF; World Bank; The Beijing Axis Analysis
Macro-eco stable
13
0-45-9
10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+
China’s Population Structure (2012)
India’s Population Structure (2012)
0-45-9
10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+
Source: IMF; The Beijing Axis Analysis
Europe’s Population Structure (2012)
Africa and India will be an important source of labour for the global economy over the next 50 years due to their young populations
Africa’s Population Structure (2012)
0-45-9
10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+
Male Female
Male Female
Male Female
Male Female
80m 70m 60m 50m 40m 30m 20m 10m 0 10m 20m 30m 40m 50m 60m 70m 80m 80m 70m 60m 50m 40m 30m 20m 10m 0 10m 20m 30m 40m 50m 60m 70m 80m
80m 70m 60m 50m 40m 30m 20m 10m 0 10m 20m 30m 40m 50m 60m 70m 80m 80m 70m 60m 50m 40m 30m 20m 10m 0 10m 20m 30m 40m 50m 60m 70m 80m 0-45-9
10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+
Large young popn.,
large workforce
14
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2010 2020 2030 2040 2050
Africa Asia Europe Latin America North America Oceania
Global Population Projections (mn, 2010-2050F)
13% 15% 18% 22% 26%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2020 2030 2040 2050
Africa Asia Europe North America Latin America Oceania
Source: UN Department of Economic and Social Affairs; The Beijing Axis Analysis
Global Working Population (15-59) Breakdown (%, 2010-2050F)
By 2050, Africa is expected that the continent will have more than 25% of the world’s working population
Nigeria is projected to
become the world’s 3rd
most populous country
by 2050
Africa’s working
population is set
to almost triple
to 1.4 bn in 2050
Africa’s working
population is expected
to double in 30 years
Large young popn.,
large workforce
15
Size of Working Age Population1 by Region (mn, 1970-2040F)
Note (1): Working Age Population refers to those between 15-64 Years old
Note (2): The labor force is the actual number of people available for work. The labor force of a country includes both the employed and the unemployed
Source: UN; ILO; UNWPP; McKinsey Global Institute; The Beijing Axis Analysis
Growth of Labor Force2 (2010 – 2020F)
Africa’s labour force is projected to increase by 122 million people to a total labour force of 500 million by 2020. This is a large opportunity for Africa to benefit from the ‘demographic dividend’
0
200
400
600
800
1,000
1,200
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Africa China Europe India
Japan North America South America South-East Asia
-4
6
12
40
45
78
122
Europe
North America
China
Southeast Asia
Latin America
India
Africa
Growth of the Labor force (2010-2020F) Labor force in
millions (2020)
504
534
316
331
702
178
354
Large workforce
16
0 20 40 60 80 100
Africa
Asia
Developing Countries
World Avg.
Oceania
Europe
Developed Countries
Latin America
North America
Global Urbanisation Rate (%, 2012)
Source: UN; The Beijing Axis Analysis
No. of Cities with a Population Greater than 1 Million (2012)
Africa’s urbanisation rate is currently much lower than other parts of the world – expect this trend to shift following economic development
0 cities
1-2 cities
3-5 cities
>5 cities South Africa
Egypt
DR Congo
Morocco
Sudan
Ghana
Ethiopia
Cameroon
Ivory Coast
Kenya
Tanzania
Angola
Senegal
Algeria
Guinea
Mali
Mozambique
Madagascar
Togo
Somalia
Uganda
Zambia
Burkina Faso
Congo
Libya
Liberia
Rwanda
Nigeria
Cities with popn. greater than 1 mn
Urbanisation
Zimbabwe
In comparison, China
has 59 cities with a
population greater than
1 mn and India has 46
cities
17
African Households by Income Bracket (%, mn of households, 2000-2020F)
Note 1: Purchasing power parity adjusts for price differences in identical goods across countries to reflect differences in purchasing power in each country
Note 2: Russia’s household consumption expenditure data only available from 1988 onwards – data for the Soviet Union is not included
Source: McKinsey Global Institute; IMF; The Beijing Axis Analysis
Household Consumption Expenditure (USD bn, 1982-2012) 2
Household consumption expenditure is on the rise and by 2020, more than half of African households will have discretionary spending power
34 24
18
29
32
29
18 21
23
11 14 17
6 8 12
2000 2008 2020F
100% = 196 163
Households with income
> $5,000 (mn)
Basic needs
Destitute (<2,000)
Basic consumer needs
(2,000-5,000)
Emerging consumers
(5,000-10,000)
Consuming middle class
(10,000-20,000)
Global (> 20,000)
Household income brackets
$PPP1 2005 244
Discretionary
income
59 85 128
0
500
1,000
1,500
2,000
2,500
3,000
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Africa Brazil Russia India China
Consumption
18
Locations of World’s Top 20 Sovereign Wealth Funds (USD bn, 2014*)
Note*: As of April 2014
Source: SWF Institute; The Beijing Axis Analysis
African Sovereign Wealth Funds Landscape and Size (USD bn, 2012)
Sovereign wealth funds from the Middle and Far East dominate the rankings. African sovereign wealth funds are still in their infancy
Active
Planned
Established
Nigeria 1
Gabon 0.4
Equatorial Guinea 0.08
Ghana 0.07
Mauritania 0.3
Norway
838
China
567.9 China
160.6
UAE
773
China
575.2
Australia
90.2
Algeria
77.2
Kazakhstan
68.9
Kazakhstan
77.2
S. Korea
72
Russia
88
Russia
86.4
Saudi Arabia
675.9
UAE
70
Hong Kong
326.7
Singapore
320
Singapore
173.3
Kuwait
410
Qatar
170
Libya
66
South Africa 150
Algeria 77
Libya 65
Botswana 7
Angola 5
South Africa 150
Sovereign
wealth funds
19 Source: Ventures-Africa; Business Insiders
African Sovereign Wealth Funds Landscape and Size (USD bn, 2012)
Fund Name Country Year of
Establishment
World Rank
by Fund
Size (2012)
Public Investment
Corporation South Africa 2005 14
Fund for the Regulation of
Receipts Algeria 2000 16
Libyan Investment Authority Libya 2006 20
Pula Fund Botswana 1994 45
Fundo Soberano de Angola Angola 2012 53
Nigerian Sovereign
Investment Authority Nigeria 2011 57
Gabon Sovereign Wealth
Fund Gabon 1998 65
National Fund for
Hydrocarbon Reserves Mauritania 2006 67
Fund for Future Generations Equatorial
Guinea 2002 70
Ghana Petroleum Fund Ghana 2011 71
African sovereign wealth funds and national investment funds have been gaining prominence over the last decade
Active
Planned
Established
South Africa
150
Algeria
77 Libya
65
Botswana
7
Angola
5
Major African Sovereign Wealth Funds
Nigeria 1
Gabon 0.4
Equatorial Guinea 0.08
Ghana 0.07
Mauritania 0.3
Sovereign
wealth funds
20
Note 1: World includes all global stock markets with available information
Note 2: Developed vs. developing based on available UN Statistics Division classification
Source: Bloomberg; World Bank; The Beijing Axis Analysis
African stock markets still account for a small share of global capital markets but will grow rapidly in the future
World1 US Others (Developed)2
BRIC Others (Developing)2
Japan Africa
Tota
l Glo
bal M
arke
t Cap
(U
SD
tn, 2
013)
Global Market Capitalisation Breakdown1 (USD tn, 2012)
100%
33.8
35.6% XX% % represents share of world market cap.
Top African
Countries
Market Cap
(USD bn)
South Africa 612.3
Egypt 58.0
Nigeria 56.4
Morocco 52.6
Kenya 14.8
13.5%
1.6%
7%
8.5%
52.5 18.7
17.7
7.1
4.5
3.7%
0.9
Market Capitalisation of Major African Stock Markets (USD bn, 2012)
USD
1
1
2
3
3
7
7
8
9
12
15
53
56
58
0 100 200 300 400 500 600
Malawi
Namibia
Tanzania
Zambia
Ghana
Mauritius
Uganda
Ivory Coast
Tunisia
Zimbabwe
Kenya
Morocco
Nigeria
Egypt
South Africa 612
South Africa accounts
for 72% of Africa’s total
market capitalisation
Improved
capital markets
21
Note*: Lending rate refers to the bank rate that usually meets the short- and medium-term financing needs of the private sector. This rate is normally differentiated according to creditworthiness of
borrowers and objectives of financing.
Source: Bloomberg; World Bank; The Beijing Axis Analysis
Access to capital from domestic equity markets is still a significant challenge for African firms
0
2
4
6
8
10
12
0 2 4 6 8 10 12 14 16 18 20
Capital Market Capitalisation Comparison of African Countries with Major Global Economies (2012)
GDP Growth Rate (%, 2002-2012)
Lending Rate in Local Currency* (%, 2012)
A bubble this size represents a market capitalisation to
GDP ratio of 50%, as based on the 2012 figures
Uganda Kenya
Nigeria
Egypt
India
South Africa
Russia
Brazil
China
Italy
Spain
US
Ivory Coast
Tunisia
Japan
Zimbabwe
UK
Germany
Morocco
South Africa has the
most advanced capital
market in Africa
South Korea
Improved
capital markets
22
0
20
40
60
80
100
120
140
Fixed TelephoneSubscription
Mobile CellularSubscriptions
Individuals Using TheInternet
Africa Asia Pacifc Europe Americas
Regional Mobile, Mainline and Internet Penetration Rates (per 100 people, 2013)
0
20
40
60
80
100
120
140
160
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Algeria Egypt Morocco South AfricaBurkina Faso Ethiopia Mozambique TanzaniaCameroon Ghana Nigeria UgandaChad Kenya Senegal Zambia
Source: ITU; The Beijing Axis Analysis
Africa’s Mobile Penetration (per 100 people, 2002-12)
Africa has witnessed rapid improvements in the last decade on the back of new technology - telecommunications and connectivity as an example
Consumption
23
38%
18%
22%
8%
7%
7%
Power Plants & Transmission Grids Roads and Bridges
Rail Water
Airports Ports
Breakdown of Africa’s Infrastructure Projects by No. of Projects (%, 2005-2012)
Breakdown of Africa’s Infrastructure Projects by Capital Invested (%, 2005-2012)
Source: Ernst & Young; The Beijing Axis Analysis
Power projects lead all other types of infrastructure projects in Africa, both in terms of total number and capital
36%
17%
30%
4%
3% 11%
Power Plants & Transmission Grids Roads and Bridges
Rail Water
Airports Ports
Consumption
24
0 100 200 300 400 500
Africa
Oceania
NorthAmerica
LatinAmerica
Europe
Asia
2002 2012
FDI Inflows by Region (USD bn, 2002, 2012)
Source: UNCTAD; The Beijing Axis Analysis
FDI Inflows to Africa by Destination (USD bn, 2012)
FDI flow to Africa has grown significantly in the last decade but is still substantially lower than the flows to other regions
15%
-2%
15%
8%
13%
17%
X% Represents CAGR for the period 2002 to 2012
0 2 4 6 8 10
Others
Ethiopia
Zambia
Mauritania
Liberia
Tanzania
Uganda
Eq. Guinea
Sudan
Congo
Ghana
DR Congo
South Africa
Mozambique
Nigeria
Foreign capital
25
Agenda
1. Africa is on the Rise and a Partner of Choice
2. Energy is Key to ‘The Africa we Want’
The Inter-dependence of Power and Economic Development
Africa’s Energy Challenge & Potential
Suppressed Energy Demand
3. Partner with Africa
26
The Inter-dependence of Power and Economic Development
• Power is the lifeblood for economic and social development
• Energy is key to GDP growth
• Energy is key to improvements in sanitation and reduction in infant mortality
• Energy is key to human development and better education
Agenda
27
The correlation with electric power consumption is analysed to determine its importance for economic and social development:
Correlation Analysis
Source: The Beijing Axis Analysis
Countries Analysed for Correlation Analysis
Power is the lifeblood for economic and social development
Low HDI Medium HDI High HDI
India China US
Pakistan Indonesia Russia
Nigeria Brazil Japan
Bangladesh Philippines Mexico
Ethiopia Egypt Germany
Vietnam Iran France
DR Congo Turkey UK
Tanzania Thailand Italy
Kenya South Africa South Korea
Sudan Colombia Spain
Morocco Algeria Argentina
Ghana Peru Poland
Mozambique Malaysia Canada
Cameroon
GDP
GDP Per Capita
Infant Mortality
Sanitation Facilities
Human Development Index (HDI)
Means Years of Schooling
1
2
3
4
5
6
These countries
represent 83% of the
global population
The threshold for transitioning from a low to medium human
development economy appears to be when an electric power
consumption of 500 kWh per capita is attained
Represents African countries
Inter-dependence
28
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0 5000 10000 15000 20000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0 5000 10000 15000 20000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0 5000 10000 15000 20000
Correlation Between Electric Power Consumption and GDP
0
10,000
20,000
30,000
40,000
50,000
60,000
0 5000 10000 15000 20000
Source: World Bank; The Beijing Axis Analysis
Correlation Between Electric Power Consumption and GDP Per Capita
Energy is key to GDP growth
Electric Power Consumption (kWh per capita)
GDP (USD bn)
Electric Power Consumption (kWh per capita)
GDP Per Capita (USD)
Low HDI Countries Medium HDI Countries High HDI Countries
0
10,000
20,000
30,000
40,000
50,000
60,000
0 5000 10000 15000 20000
0
10,000
20,000
30,000
40,000
50,000
60,000
0 5000 10000 15000 20000
Inter-dependence
29
0
20
40
60
80
100
120
0 5000 10000 15000 20000
Correlation Between Electric Power Consumption and Infant Mortality Rate
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 5000 10000 15000 20000
Source: World Bank; The Beijing Axis Analysis
Correlation Between Electric Power Consumption and Sanitation Facilities
Energy is key to improvements in sanitation and reduction in infant mortality
Electric Power Consumption (kWh per capita)
Infant Mortality Rate (per 1,000 live births)
Electric Power Consumption (kWh per capita)
Sanitation Facilities (% of population with access)
0
20
40
60
80
100
120
0 5000 10000 15000 20000
0
20
40
60
80
100
120
0 5000 10000 15000 20000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 5000 10000 15000 20000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 5000 10000 15000 20000
Low HDI Countries Medium HDI Countries High HDI Countries
Inter-dependence
30
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0 5000 10000 15000 20000
Correlation Between Electric Power Consumption and HDI
0
2
4
6
8
10
12
14
0 5000 10000 15000 20000
Source: World Bank; UN; The Beijing Axis Analysis
Correlation Between Electric Power Consumption and Means Years of Schooling
Energy is key to human development and better education
Electric Power Consumption (kWh per capita)
HDI Value
Electric Power Consumption (kWh per capita)
Means Years of Schooling
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0 5000 10000 15000 20000
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0 5000 10000 15000 20000
0
2
4
6
8
10
12
14
0 5000 10000 15000 20000
0
2
4
6
8
10
12
14
0 5000 10000 15000 20000
Low HDI Countries Medium HDI Countries High HDI Countries
Inter-dependence
31
Africa’s Energy Challenge & Potential
• Africa currently has a very low power generation capacity
• Installed capacity is concentrated in a few countries
• Enough fuel of every type to satisfy demand is available
• Energy cost can be significantly reduced
Agenda
32
0
1,000
2,000
3,000 Geothermal Solar WindBiomass Nuclear HydroGas Coal Oil
Global Energy Use by Region (GW, 2012)
28%
25% 20%
13%
5%
4% 4% 1%
0.1%
Oil Coal Gas Hydro Nuclear
Biomass Wind Solar Geothermal
Source: IEA; BP; Various; The Beijing Axis Analysis
Global Energy Use by Source (%, 2012)
Africa uses substantially less energy than other regions
Total: 7,489 GW
Energy usage
33
80% of the people in the world have access to electricity. In sub-Saharan Africa, only 24% of the population of has access to electricity versus 40% in other low income countries
Percentage of Population with Access to Electricity (2012)
Source: IEA; UN; The Beijing Axis Analysis
0%-25% 25%-50%
50%-75%
75%-100%
Access to electricity
34
Africa’s Share of Global Population and Power Generation (%, 2012)
Source: ARB; SOFRECO; World Bank; McKinsey Global Institute; The Beijing Axis Analysis
Energy Use per Capita (kg of oil equivalent, 2011 and 2012 data)
Africa produces a disproportionally low amount of power relative to its population and has a per capita energy consumption far below the world average
15%
85%
Global Population
Africa
RoW
3%
97%
Global Power Generation
Africa
RoW
731
1,808
Africa BRICS
2.5X
Power Generation vs BRICs (kWh per person, 2012)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Ara
b W
orld
Asi
a P
acifi
c
EU
Eur
ope
& C
entr
al A
sia
Latin
Am
eica
Mid
dle
Eas
t & N
A
Sub
-Sah
aran
Afr
ica
World average is 1,890 kg
of oil equivalent per capita
Power generation
35
Africa’s entire installed power generation capacity is comparable to those of single countries
Source: EIA; The Beijing Axis Analysis
60
Global Installed Capacity and Population of Top 20 Economies and Africa
Installed Capacity (MW
thousands, 2011) Population (mn, 2012)
China
Canada
35 138
United States 1,052 314
61 121 Mexico
119
199
Brazil
64
47
66
80
93 159
136 102 118
1,057
137
238
1,237
231 144
128
287
1,351
1,100 84
50
62 23
Africa India
Russia
Japan
South Korea
Australia
UK
Germany
Spain
France Italy
Power generation
36
Africa’s installed power generation capacity is mainly concentrated in South Africa and Egypt
Source: EIA, IMF, World Bank; The Beijing Axis Analysis
South Africa
45
Egypt
27.8
Morocco
6.8
Nigeria
6.1
Tunisia
4.2
Ghana
2.3
Sudan
3.1
Kenya
1.9
Angola
1.7
Installed Capacity of Africa’s Top 10 Economies (GW, 2012)
Population of Africa’s Top 10 Economies (mn, 2012)
Egypt
81 Algeria
38
Morocco
Nigeria
169
Tunisia
11
Ghana
Sudan & South Sudan
Kenya
43
Angola
South Africa
52
48
33
25
21
Algeria
11.5
Power generation
37
Power generation and electricity transmission is further challenged by Africa’s large landmass. Distributed generation and regional grid will grow
Major Transmission Lines (simplified) in Africa Landmass of Africa Compared with Other Major Economies
Source: IRENA; The Beijing Axis Analysis
China
Europe
India US
Power transmission
38
0%
5%
10%
15%
20%
25%
30%
Angola Botswana CentralAfrican
Republic
DRC Ethiopia Kenya Mali Rwanda Tanzania Uganda Zimbabwe
Power shortages, frequent electrical outages and high power costs negatively impacts the overall development of Africa
Losses Due to Electrical Outages as Percentage of Annual Sales (2010 - 2012 Data)
Source: Worldbank, International Renewable Energy Agency; The Beijing Axis Analysis
Power shortages
39
Africa has enough fuel of every type to address the needs of the continent at competitive tariffs rather than rely on expensive diesel generation
Levelized Cost of Power (US cents/kWh, 2012)
Source: Eskom; Frost & Sullivan; A.T. Kearney Analysis; The Beijing Axis Analysis
0
5
10
15
20
25
30
35
40
Existing CoalFleet
Geothermal ExistingNuclear
Biomass Natural Gas(Combined
cycle)
Hydro Wind New Coal Solar (PV) Diesel
4-6 7-8
7-14
8-12
8-15
8-23
10-14
25-40
5-10
15-26
Power tariffs
40
Major African Oil and Gas Reserves (2012)
Note*: Kenya's reserves are still not fully proven and current estimates range from 1 - 23 billion barrels
Source: BP Statistical Review of World Energy 2013; World Bank; Various; The Beijing Axis Analysis
Africa Gas-fired Installed Capacity (MW, 2012)
Africa accounts for 7.7% of global proven natural gas reserves to power the continent
Nigeria
11,113
Tunisia
15,957
Cote d'Ivoire
4,228
Morocco
2,831
Tanzania
2,586 Gabon
584
Cameroon
439
Gas power
generation
Existing gas reserves end
2012 (tn cubic meters)
Existing oil reserves end
2012 (bn barrels) Angola
12.7
4.3
Gabon 2
1.7 Congo
1.6
37.2 5.2
Nigeria
2 Egypt
Namibia
0.03
Ghana
0.7
Uganda
2.5
Tanzania
0.9
Equatorial
Guinea
12.2
Chad
1.5
1.5
Libya
48
Tunisia 0.4
South Sudan
3.5
Sudan 1.5
Algeria
4.5
Mozambique
4.5
Kenya*
20.1
0.3
New discovered gas reserves in
2013 (tn cubic meters)
New discovered oil reserves in
2013 (bn barrels)
South Africa
14
1
1.5
0.7
0.6
1
Nigeria
41
African Countries with Significant Coal Reserves (2012)
Africa accounts for 3.8% of global coal to meet a significant portion of the continent’s power demand
Morocco
1,785
Namibia
20
Tanzania
60
Zimbabwe
2,258
South Africa
37, 655
Botswana
372
Source: EIA; World Bank; The Beijing Axis Analysis
South Africa
30,156
Africa Coal-fired Installed Capacity (MW, 2012)
Swaziland 144
Zimbabwe 501
Zambia 10
Tanzania 200
Nigeria 190
Niger 70
Mozambique 212
Morocco 123
Egypt 16
DR Congo 88
Botswana 40
Algeria 59
Proven coal reserves in mn metric tons
Coal power
generation
42
Africa Wind Speed Distribution (2013)
Note*: Wind power also includes wave and tide power
Source: EIA; Quantum Power Services Analysis; The Beijing Axis Analysis
Africa’s Wind Installed Capacity (MW, 2013)
Africa has enough wind energy resources to meet a significant portion of the continent’s power demand
Egypt
550 Morocco
291
Tunisia
104
Kenya
38
Nigeria
2
South Africa
1,835
Eritrea
1 Cape Verde
24
Reunion
14
Wind power
generation
43
Cost of wind generation is decreasing and installed capacity is increasing
Note*: This example is for the US market
Source: Cleantechnica; GWEC; US Department of Energy; The Beijing Axis Analysis
0
1
2
3
4
5
6
7
8
9
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2012
2013
Price of Wind Energy Per Unit (US cents/kWh, 1996-
2013)
Starting at a price of USD
8.5 cents/kWh in 1996
The cost is estimated
to be USD 2.1
cents/kWh in 2013
6 10 17 31
48
74
121
198
283
318
0
50
100
150
200
250
300
350
1996
1998
2000
2002
2004
2006
2008
2010
2012
2013
Global Cumulative Installed Wind Capacity (GW, 1996-2013)
.03 .03 0.4 0.7 1.3 1.4 2.1 3.7 5.3 6.0
X Represents Africa’s cumulative installed wind capacity in GW
Wind power
generation
44
Solar Map of Africa (2012)
Source: GeoModel Solar s.r.o; BP Statistical Review of World Energy 2013; The Beijing Axis Analysis
Africa’s Solar Installed Capacity (MW, 2012)
Africa has enough solar power resources to power the entire continent
This currently represents
only 0.05% of all power
capacity in Africa
South Africa
1,624
Eritrea
2
Senegal
3
Reunion
10
Solar power
generation
45
Africa should take advantage of the significant decrease in the price of photovoltaic cells and subsequent increase in installed capacity
Source: Bloomberg; New Energy Finance; The Beijing Axis Analysis
0
10
20
30
40
50
60
70
80
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
Price of Crystalline Silicon Photovoltaic Cells
(USD/watt, 1977-2013E)
Starting at a price of
USD 76.67/watt in 1977
It is estimated the
2013 price will be
USD 0.74/watt
2.8
6.6 7.7
18.2
28.7 30.6
35.7
46.6
54.5
0
10
20
30
40
50
60
2007
2008
2009
2010
2011
2012
2013
E
2014
E
2015
E
World Photovoltaic Capacity Built (GW/year, 2007-2015E)
Solar power
generation
46
Overview of Africa’s Hydropower Resources (2012)
Source: EIA; The Beijing Axis Analysis
Africa’s Installed Hydropower Capacity (MW, 2012)
Africa has enough hydropower resources to meet a significant portion of the continent’s demand
South Africa
661
Namibia
249
Cameroon
805
Ghana
1,180
Zambia
1,672
Morocco
1,748
Nigeria
2,040
Sudan and South
Sudan
2,123
Ethiopia
1,900
DR Congo
2,500
Mozambique
2,179
Egypt
2,800
Ethiopia’s installed
capacity has increased to
4,679 MW by 2014
Hydropower
generation
47 Source: REI; EIA; The Beijing Axis Analysis
Africa’s Geothermal Installed Capacity (MW, 2013)
Africa has enough geothermal resources to meet the majority of East Africa’s power demand
Ethiopia
7.3
East African Countries with Significant Geothermal Energy Reserves (2013)
Kenya
215
Geothermal power
generation
48
Suppressed Energy Demand
• Electricity consumption from utility scale generation is low
• Self generation is a significant part of the energy mix
• Fuel cost for self generation in Africa is estimated at USD 50-70 bn per year
• This creates a suppressed demand of 130,000 MW
• Significant generation expansion could therefore be self funding
Agenda
49
0
40,000
80,000
120,000
160,000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2017
E
Conventional Thermal CoalHydroelectric Hydroelectric Pumped StorageNuclear WindBiomass & Waste GeothermalSolar, Tide & Wave
Africa’s Installed Capacity (MW, 1997-2017E)
0
40,000
80,000
120,000
160,000
2007 2008 2009 2010 2011 2017E
Conventional Thermal CoalHydroelectric Hydroelectric Pumped StorageNuclear WindBiomass and Waste GeothermalSolar, Tide & Wave
Source: IEA; The Beijing Axis Analysis
Africa’s Installed Capacity Excluding the Big 4 (MW, 2007-2017E)
Growth of installed capacity in Africa is low compared to its potential and is dominated by Algeria, Egypt, Libya and South Africa. Fuel and demand could support doubling capacity
Big 4 includes Algeria, Egypt,
Libya and South Africa
Generation is low
50
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Alg
eria
Ang
ola
Ben
inB
otsw
ana
Bur
kina
Fas
oB
urun
diC
.A.R
.C
amer
oon
Cap
e V
erde
Cha
dC
omor
osC
ongo
DR
Con
goIv
ory
Coa
stD
jibou
tiE
gypt
Eq.
Gui
nea
Erit
rea
Eth
iopi
aG
abon
Gam
bia
Gha
naG
uine
aG
uine
a B
issa
uK
enya
Leso
tho
Libe
riaLi
bya
Mad
agas
car
Mal
awi
Mal
iM
aurit
ania
Mau
ritiu
sM
ayot
teM
oroc
coM
ozam
biqu
eN
amib
iaN
iger
Nig
eria
Reu
nion
Rw
anda
Sai
nt H
elen
aS
ao T
ome
Sen
egal
Sey
chel
les
Sie
rra
Leon
eS
omal
iaS
outh
Afr
ica
Sou
th S
udan
Sud
anS
waz
iland
Tan
zani
aT
ogo
Tun
isia
Uga
nda
Zam
bia
Zim
babw
e
Production Capacity per Country (kWh per person per year)
Source: IEA; The Beijing Axis Analysis
The world average for electricity consumption is 2,500 kWh per person per year, with Africa’s consumption significantly lower than the world average
• USA = 29,730 kWh per person per year
• France = 14,772 kWh per person per year
World Average: 2,500 kWh
per person per annum
Consumption is low
51
Assuming actual consumption of 500 kWh per person per year, the suppressed demand for electricity is 130,000 MW. With 1/3rd of the population self generating, the cost is estimated at USD 50-70 bn per year
2,166
1,814
3,123 2,906
966
2,157
157
3,153
12,355
24
97
16,272
318
3,015
1,751
6,635
553
3,945
2,550
404
25,829
0
20
40
60
80
100
0 50 100 150 200 250 300 350 400 450 500
Ethiopia
DR Congo
Nigeria
Suppressed Demand for Selected African Countries (MW)
Source: IEA; The Beijing Axis Analysis
Populations (millions)
Installed Base (MW)
• The world average is 2,500 kWh per person per year
• If 1/3rd of Africa’s population suffering from lack of power
supply is self generating 500 kWh p/p p/y using diesel
generators (43GW at 4000hrs p/y at 40 cents/kWh), the total
costs of self generation is estimated at USD 50-70 bn per year
• This cost of self generation is sufficient to cover the capital cost
of 130,000 MW of renewable energy (ignoring generation mix)
A bubble this size represents a
suppressed demand of 5,000 MW
Kenya
Cameroon Madagascar
Burkina Faso
Chad
Comoros
Guinea
Libya Mauritania
Ghana Ivory Coast
Angola Mali
Benin C.A.R
Gambia Djibouti
Equatorial Guinea
Suppressed demand
Nigeria has
a population
of 169 mn
52 Source: The Beijing Axis Analysis
Improving Africa’s current energy situation is key. Africa has the potential to become energy self-sufficient. Partnership is key
Unleash Africa’s
Energy Potential
Utilise
International
Financing and
Development
Incorporate
Renewable
Energy
Increase
Regional
Cooperation
Seek out
Partners
Unleash Africa’s
energy potential
53
Agenda
1. Africa is on the Rise and a Partner of Choice
2. Energy is Key to ‘The Africa we Want’
3. Partner with Africa
54 Source: AfDB
“Now is the time to think out of the box, time for a step
change. Fifty years after independence it is time for that
step change – a step change with Africa taking
ownership.”
- Donald Kaberuka, AfDB President
“The next 50 Years: The Africa we Want”
AfDB theme
55
Partnering with Africa is the way forward
• There are different ways to partner with Africa
• The days of aid and prescriptive engagement are over
• The long-term partnership/co-development approach is crucial
• The ‘Partner of Choice’ is being heavily courted
Agenda
56
Top 20 Investors in Africa by FDI Stock (USD bn, 2012)
0 1 2 3 4 5 6 7
Poland
Croatia
Czech Republic
South Africa
Finland
Turkey
Mauritius
Thailand
Austria
Sweden
Denmark
Japan
Cyprus
Swizerland
Germany
India
China
Malaysia
US
France
Source: UNCTAD; The Beijing Axis Analysis
Top 20 Investors in Africa by FDI Flows (USD bn, 2012)
Developed countries have historically invested heavily in Africa but Asian countries, led by China, are catching up and becoming significant investors
0 10 20 30 40 50 60
France
US
UK
Malaysia
South Africa
China
India
Norway
Japan
Belgium
Sweden
Denmark
Thailand
Austria
Russia
Cyprus
Croatia
Slovenia
Poland
Finland
Asian Countries Asian Countries
FDI in Africa
57
A different approach to engaging with Africa
• There are different ways to partner - every country has to find its way
• The preferred partnership model will be where there is mutual benefit with
beneficiation, industrialisation and job creation in Africa
• The China way – dominated by state-owned companies; provide funding with
equipment and construction from China; often linked to resources
• The Indian way – dominated by private companies; limited government
backing; often focused on services and manufactured sectors
• The colonial partners – historical relationship and well positioned but slow to
translate into a two way partnership
• The USA curiosity – engaged but reserved
Approach to Africa
58
China found a specific model that works for them and developed a strong relationship with Africa. The Chinese government plays a key role in driving engagement
Source: The Beijing Axis Analysis
G – G Agreement
Step 1
Solicit bids from list of
Chinese companies
Step 2
China govt. receives bids from Chinese companies
Step 3
China govt. sends bid info to African govt.
Step 4
African government selects winning bid amongst a consortium of Chinese investors/contractors
Step 5
Investors Contractors
Constructors Equipment
Suppliers
• During this process the Chinese government often preselects certain preferred contractors and only forwards their bids to
the respective African government. For example, if the Chinese government wants certain SOEs to establish a market
presence in the host nation, it would just forward the bids of those SOEs, regardless if other Chinese enterprises have
submitted more competitive bids. In a way, the Chinese government plays an important role here in selecting ‘the winner
• The Chinese government often has exclusive government-to-government arrangements with certain African nations where
the Chinese government is the financial backer for the project, contractor of the project, and often equipment supplier
• The Chinese entities enter Africa building de novo facilities, highly vertically integrated, source a significant
fraction of inputs from China (rather than in local markets), conduct the vast majority of its sales in Africa with
government entities and avail itself of its home government's substantial financial resources
African
Government Pro
cess
E
xpla
nat
ion
Chinese
Government
Overview of China’s Engagement Model with Africa
China model
Trade/Off-take
Financial Aid
Investments
Localised
Manufacturing
59
0 5,000 10,000 15,000 20,000 25,000
Resources
Electrical Equipment & Machinery
Textiles and Footwear
Metal & Products
Others
15,000 10,000 5,000 0
South Africa
Angola
Sudan
Nigeria
Egypt
Morocco
Algeria
Libya
Congo
Benin
China’s trade relationship with Africa is characterised by imports of raw materials from Africa and exports of finished goods to Africa
Exports to China Imports from China
Source: UN Comtrade; The Beijing Axis Analysis
China’s Trade with its Top 10 African Trading Partners (USD mn, 2012)
The top ten countries
comprise more than
76% of China’s total
trade with Africa
China’s trade
with Africa
60
0 200 400 600 800 1,000
Others
Guinea
Ghana
South Africa
Mali
Niger
Tanzania
Egypt
Kenya
Ethiopia
Angola
DR Congo
Algeria
Nigeria
Zambia
Zimbabwe
Sudan
China’s OFDI Flow to Africa (USD mn, 2012)
Source: MOFCOM; China Commerce Yearbook 2013 ; The Beijing Axis Analysis
Newly Signed Contract Value of Chinese Contractors in Africa (USD bn, 2012)
China’s engagement with Africa has been proactive and wide spread with heavy involvement of local Chinese content
0 5 10 15 20
Others
Guinea
Ghana
South Africa
Mali
Niger
Tanzania
Egypt
Kenya
Ethiopia
Angola
DR Congo
Algeria
Nigeria
Zambia
Zimbabwe
Sudan
The top 5 account for
70% of China’s total
OFDI flow to Africa
China’s investments
in Africa
61 Source: Various; The Beijing Axis Analysis
China has also announced various economic support as means to engage with its African partners. For example, this includes financial support given for power projects, although not all agreements are implemented
Congo-Brazzaville
Date of agreement:2003
Main project: Imboulou Dam
Cost: USD 280 mn
Power Generation: 120 MW
Funding: China Exim Bank
Morocco
Date of agreement:2002
Main project: Hrane Dam
Cost: USD 50 mn
Company: Sinohydro
Funding: China Exim Bank
Ethiopia
Date of agreement:2002
Main project: Tekeze Dam
Cost: USD 224 mn
Power Generation: 100 MW
Dates: 2002-2007
Company: CWHEC
Funding: China Exim Bank
Sudan
Date of agreement:2007
Main project: Merowe Dam
Cost: USD 2 bn
Power Generation: 1,250 MW
Company: Sinohydro
Funding: China Exim Bank
Zambia
Date of agreement:2003
Main project: Lower Kafee Gorge Dam
Cost: USD 600 mn
Power Generation: 750 MW
Company: Sinohydro
Funding: China Exim Bank
Mozambique
Date of agreement:2007
Main project: Mphanda Nkuwa Dam
Cost: USD 2 bn
Power Generation: 1,350 MW
Dates: 2006-2014
Company: Sinohydro
Funding: China Exim Bank
Botswana
Date of agreement:2008
Main project: Dikgatlhong Dam
Cost: USD 250 mn
Power Generation: 5,000 MW (Through
supply water to nearby energy project)
Dates: 2008-2012
Company: Sinohydro
Funding: China Exim Bank; Government of
Botswana
Gabon
Date of agreement:2008
Main project: Grand Poubara Dam
Cost: USD 622 mn
Power Generation: 400 MW
Dates: 20-year term
Company: Sinohydro
Funding: China Exim Bank
Nigeria
Date of agreement:2006
Main project: Mambilla Dam
Cost: USD 1.4 bn
Power Generation: 2,600 MW
Dates: 2007-2013
Company: Gezhouba Group Corporation; China
Geo-Engineering Corporation
Funding: China Exim Bank
Ghana
Date of agreement:2007
Main project: Bui Dam
Cost: USD 600 mn
Power Generation: 400 MW
Dates: 2007-2012
Company: Sinohydro
Funding: China Exim Bank
Guinea Bissau
Date of agreement:2007
Main project: Saltinbo Dam
Cost: USD 60 mn
Congo-Kinshasa
Date of agreement:2008
Main project: Grand Inga Dam
Cost: USD 50-80 bn
Power Generation: 39,000-50,000 MW
Company: Three Gorges Corporation
Funding: World Bank; AFDB; European Investment
Bank; MagEnergy
Top 10 Recipients
Received more than 1 percent of China’s Africa commitments
More than half a percent
Less than half a percent
No financial assistance
Select Recipients of Chinese Aid for Hydro Projects in Africa (2000 – 2012)
China’s aid
to Africa
62
China is now also seeing Africa as a preferred destination for labour-intensive manufacturing, mainly to tap into the fast-growing consumer markets
Source: Various; The Beijing Axis Analysis
Select Chinese Companies with Plants in Africa (2013)
Nigeria
Ethiopia
Kenya
Egypt
Senegal
South
Africa
Zimbabwe
Uganda
Tunisia
Algeria
Tanzania
Mali
Cameroon
Haier (Consumer Electronics)
Haier (Consumer Electronics)
Yuemei (Machinery)
Yuemei (Machinery) Chery (Automobiles)
Yuemei (Machinery) Haier (Consumer Electronics)
Yto Group (Machinery)
Cailei (Textiles)
Ancheng (Pharmaceuticals) Dadi (Tires)
Geely (Automobiles) Changan (Automobiles)
FAW (Automobiles) Perfect (Software)
Hisense (Consumer Electronics)
Jinniu (Machiner)
Holley-Cotec (Pharmaceuticals) Tesley (Pharmaceuticals)
Foton (Automobiles) Lifan (Automobiles)
Aucma (Consumer Electronics) Changhong (Consumer Electronics)
Holley-Cotec (Pharmaceuticals) ZTE (Electronics)
New Hope Group (Agribusiness)
Holley-Cotec (Pharmaceuticals) Foton (Automobiles)
Orient (Cement) Changcheng (Packaging)
Yema (Automobiles) Lifan (Automobiles) Huajian (Footwear)
Localised
manufacturing
63
African Countries Visited by Chinese Heads of States Per Year (2003-2013)
Source: Various; The Beijing Axis Analysis
China is making a huge effort - Africa has seen an increasing number of high level political visits and meeting at ministerial level
“Chinese experts on
international relations said
on Sunday that President
Xi Jinping's first foreign
trip as head of state has
strengthened relations
with … Africa”
- Xinhua
“Old friends or new, Xi's
visit has shown the world
that the "deep traditional
friendship" between China
and Africa is advancing
with the times.”
- Xinhua
X Represents number of Africa trips by the head of state in a given year
Political
engagement
0 2 4 6 8 10 12
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
China
1
1
2
1
1
2
2
1
64
Indian investment in Africa takes a different approach
• Mostly private firms with a wider scope of investment (information technology
and telecommunications for example)
• Enter mostly through acquisitions of established businesses
• Lower levels of vertical integration (sometimes preferring to procure inputs
directly from the African market)
• Source much fewer inputs from Indian suppliers in the home market (and
increasing purchases in international markets)
• Far greater local sales engagement with private entities than with government
agencies
India model
65
0 5,000 10,000 15,000 20,000
Resources
Electrical Equipment & Machinery
Textiles and Footwear
Metal & Products
Others
15,000 10,000 5,000 0
Nigeria
South Africa
Angola
Egypt
Kenya
Algeria
Tanzania
Morocco
Libya
Mozambique
India’s trade relationship with Africa is also characterised by imports of resources from Africa and the exports of a variety of finished goods
Exports to India Imports from India
Source: UN Comtrade; The Beijing Axis Analysis
India’s Trade with its Top 10 African Trading Partners (USD mn, 2012)
India’s trade
with Africa
66
0 50 100 150 200 250 300
OthersTunisiaGhana
EthiopiaSeychelles
TanzaniaUgandaZambia
MozambiqueIvory Coast
EgyptMoroccoSenegal
South AfricaNigeriaKenyaGabon
LibyaLiberiaSudan
India’s OFDI Stock to Africa (USD mn, 2012)
0 500 1,000
Others
Pharmaceuticals
Agriculture
Gems and Jewellery
Food and Beverage
Textiles
Electronics
Machinery
Metals
Other Services
Transport
Transport Services
Financial Services
Rubber and Plastics
Software
Gas and Petroleum
Chemicals
Source: RBI; The Beijing Axis Analysis
India’s OFDI Flows to Africa by Sector (USD mn, 2012)
India’s investments in Africa have been diverse both in terms of destinations and sectors
Mauritius accounts for 70%
of India’s FDI flows to Africa.
However, due to its status as
a preferred investment
destination, it is not included
India’s investments
in Africa
67
Asian countries such as India, Malaysia, and Indonesia are increasingly establishment utilising the labour pool and capturing the consumer market
Wipro (IN)
Mapping of Selected Indian, Malaysian and Indonesian Firms in Africa (2012)*
Note: Key for country names – ‘IN’: India, ‘MY’: Malaysia, ‘ID’: Indonesia
Source: Various; The Beijing Axis Analysis
Nigeria
Kenya
Egypt
Senegal
South
Africa
Botswana
Uganda
Wipro (IN)
Wipro (IN)
Wipro (IN)
Airtel (India)
Airtel (India)
Chad
Burkina
Faso
DR
Congo
Airtel (IN)
Airtel (IN)
Airtel (IN)
Airtel (IN)
Airtel (IN)
Madagascar
Airtel (IN)
Ranbaxy (IN)
Ranbaxy (IN)
Ranbaxy (IN)
Cameroon Ranbaxy (IN)
Ranbaxy (IN)
Morocco
Ranbaxy (IN)
Tata Motors (IN) Namibia
Tata Motors (IN)
Tata Motors (IN)
Ranbaxy (IN)
Petronas (MY)
Petronas (MY)
Petronas (MY)
Zimbabwe
Sime Darby (MY)
Liberia Sime Darby (MY)
Petronas (MY)
Tanzania
UEM (MY)
Education Malaysia (MY)
Pacific Interlink (MY)
Godrej (IN)
Godrej (IN)
Zee TV (IN)
Marico (IN)
Marico (IN)
Vedanta (IN)
Vedanta (IN)
Zambia
Vedanta (IN)
Ghana
Sinar Mas (ID)
Bakrie Sumatera (ID)
Dabur (IN)
Dabur (IN)
Localised
manufacturing
68
0 10,000 20,000 30,000 40,000 50,000
Resources
Electrical Equipment & Machinery
Textiles and Footwear
Metal & Products
Others
20,000 15,000 10,000 5,000 0
Nigeria
Algeria
Libya
South Africa
Angola
Egypt
Morocco
Tunisia
Eq. Guinea
Ghana
Europe is well positioned due to the existing colonial relationship with several African countries. However, engagement strategy towards partnering is developing
Exports to EU Imports from EU
Source: UN Comtrade; The Beijing Axis Analysis
EU Trade with its Top 10 African Trading Partners (USD mn, 2012)
EU trade
with Africa
69
0 5,000 10,000 15,000 20,000
Resources
Electrical Equipment & Machinery
Textiles and Footwear
Metal & Products
Others
20,000 15,000 10,000 5,000 0
Nigeria
South Africa
Algeria
Angola
Egypt
Morocco
Libya
Chad
Gabon
Eq. Guinea
The US trade relationship with Africa is characterised by the import of resources from Africa and the export of finished goods such as electrical equipment and machinery
Exports to US Imports from US
Source: UN Comtrade; The Beijing Axis Analysis
US Trade with its Top 10 African Trading Partners (USD mn, 2012)
US trade
with Africa
70
0 5,000 10,000 15,000 20,000
Others
Cameroon
Tunisia
Kenya
Tanzania
Morocco
Mozambique
Liberia
Angola
Eq. Guinea
Libya
Ghana
South Africa
Algeria
Mauritius
Nigeria
Egypt
US FDI Stock in Africa (USD mn, 2012)
Source: OECD; Eurostat; The Beijing Axis Analysis
EU FDI Stock in Africa (USD mn, 2012)
EU and US relationship with Africa is deep and long standing. However, strategy towards partnering is developing
0 20,000 40,000 60,000 80,000
Others
Kenya
Ghana
Mozambique
Eq. Guinea
Ivory Coast
Angola
Liberia
Mauritius
Libya
Tunisia
Cameroon
Algeria
Morocco
Nigeria
Egypt
South Africa
US and EU’s
investments in Africa
71 Source: Various; The Beijing Axis Analysis
US approach is engaged but reserved
"While many people on the
streets and callers to local radio
programmes have expressed
excitement at the coming of the
first American leader with
African roots, there is also a
competing amount of
skepticism, even cynicism”
- CBS
African Countries Visited by American Heads of States Per Year (2004-2013)
X Represents number of Africa trips by the head of state in a given year
“Without a more aggressive
push on Africa, the United
States also risks falling even
further behind China in the fast-
growing region. China has
expanded its role significantly
while the United States has
seemed distracted”
- New York Times
Political
engagement
0 2 4 6 8
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
US
1
2
2
72
0 2 4 6 8 10 12
2013
2011
2010
2009
2008
2007
2006
2004
China US
Source: Various; The Beijing Axis Analysis
China has taken a more proactive approach to engagement with Africa than others
“Chinese experts on
international relations said on
Sunday that President Xi
Jinping's first foreign trip as
head of state has strengthened
relations with … Africa”
- Xinhua
"Without a more aggressive
push on Africa, the United
States also risks falling even
further behind China in the fast-
growing region. China has
expanded its role significantly
while the United States has
seemed distracted”
- New York Times
0
0
0
1
1 0
1
2
1
1
2 2
African Countries Visited by Heads of States Per Year* (2004-2013)
X X Represents number of Africa trips by Chinese head of state in a given year
Represents number of Africa trips by American head of state in a given year
Political
engagement
2 0
1 2
73
Africa is a Partner of Choice
•
• Africa is in its own rights an attractive destination and a partner
• Energy and its related infrastructure offer tremendous opportunity and unlock
development
• A mutually beneficial partnership with Africa will ensure we get ‘The Africa we
Want’ for the next 50 Years
Conclusion
Quantum Power Information Pack
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Dr. J. Louis van Pletsen
Founding Partner, Quantum Power
28-29 Dover Street, London W1S 4NA
E-mail: [email protected]
Tel: +44-20-7290-3402