energy: the lifeblood of africa’s economic development1.5 1.5 libya 48 tunisia 0.4 south sudan 3.5...

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



The Inter-dependence of Power and Economic Development

Africa’s Energy Challenge & Potential

Suppressed Energy Demand


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


Correlation Between Electric Power Consumption and GDP Per Capita

Energy is key to GDP growth

Electric Power Consumption (kWh per capita)

GDP (USD bn)


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


Correlation Between Electric Power Consumption and Sanitation Facilities

Energy is key to improvements in sanitation and reduction in infant mortality


Infant Mortality Rate (per 1,000 live births)


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


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


HDI Value


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


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


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


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)


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)


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




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


Main project: Hrane Dam

Cost: USD 50 mn

Company: Sinohydro


Ethiopia


Main project: Tekeze Dam

Cost: USD 224 mn


Dates: 2002-2007

Company: CWHEC


Sudan


Main project: Merowe Dam

Cost: USD 2 bn

Power Generation: 1,250 MW

Company: Sinohydro


Zambia


Main project: Lower Kafee Gorge Dam

Cost: USD 600 mn


Company: Sinohydro


Mozambique


Main project: Mphanda Nkuwa Dam

Cost: USD 2 bn


Dates: 2006-2014

Company: Sinohydro


Botswana


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


Main project: Grand Poubara Dam

Cost: USD 622 mn


Dates: 20-year term

Company: Sinohydro


Nigeria


Main project: Mambilla Dam

Cost: USD 1.4 bn


Dates: 2007-2013

Company: Gezhouba Group Corporation; China

Geo-Engineering Corporation


Ghana


Main project: Bui Dam

Cost: USD 600 mn


Dates: 2007-2012

Company: Sinohydro


Guinea Bissau


Main project: Saltinbo Dam

Cost: USD 60 mn

Congo-Kinshasa


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)


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



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


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


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



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


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



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


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


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

COPYRIGHT© Quantum Power 2013. Complied in conjunction with The Beijing Axis. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Quantum Power

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

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