Deloitte SA Blog

Icon

Opportunities created by emerging “new” African economies

New Economies in Africa

“Investing in Africa” is a common phrase these days, yet, the question begs, how does one approach a continent of 54 countries with a diverse array of economic, sociocultural, political, and environmental landscapes for investments. The investment opportunities offered by each country also differ substantially, a fact often not recognised.

The recent rise of regional hubs across the continent has been garnering attention as countries acknowledge that full integration within these regional hubs is key to improving the often-reported difficulties of conducting cross-border business on the continent. In addition, full integration brings with it the potential for increased investment flows into the continent through economies of scale, enabling Africa to participate in the world economy as a truly global competitor.

The purpose of this paper is to focus on opportunities created by the emerging “new” economies and cross-border trade within these regional hubs; namely Central Africa, East Africa, North Africa, Southern Africa, and West Africa.

There is a rise in cross-border purchases within the continent, whether formal or informal, which are essential features of market economies. Cross-border consumers visit other countries for short periods, with shopping as their main purpose. The goods they buy range from clothes to car engines and are generally on-sold in their home countries or taken back to their families. Cross-border trade has the ability to have positive macro-economic and social ramifications. These include food security and income creation, particularly for rural populations on the continent that would otherwise suffer from social exclusion.

Click here to download Deloitte on Africa – The New Economies in Africa which discusses each regional hub individually

For more information relating to business opportunities in Africa, contact Anushuya Gounden (Partner – Head of Africa Nerve Centre) at angounden@deloitte.co.za or Taki Nkhumeleni (Manager – Africa Nerve Centre at  tnkhumeleni@deloitte.co.za

We welcome you to subscribe to the Deloitte newsletter where we introduce Deloitte articles prepared by our industry and subject matter specialists on a weekly basis.

 

Opportunities and risks for investors wanting to join the African construction boom

Construction in Africa

Physical infrastructure backlog in most of Africa is widely known and acknowledged. For example, road access rate is only 34%, compared with 50% in other parts of the developing world, and subsequently, transport costs are higher by up to 100% (PIDA, 2011).

For many years there have been rumblings about Africa lacking adequate paved roads, reliable power grids, retail shopping malls, formal housing for all its peoples, modern office space, decent airports and efficient ports.

It was only a matter of time before investors began to realise that the massive infrastructure deficit on the African continent represents a significant and potentially lucrative investment opportunity.

The global financial crisis can in part be credited with changing perceptions of Africa as an investment destination. With the United States, Europe, the United Kingdom, Japan and other first world economies falling into recession, and many global markets consequently suffering losses, Africa’s positioning changed from risky to a lucrative and relatively safe investment destination.

Seven of the World’s ten fastest growing economies are currently located in Africa. In a short space of time, the continent suddenly resembles a massive construction site with real estate markets faring well.

By way of illustration, in the first quarter of 2012, the value of prime property in the world’s key cities fell by 0.4% while that in Nairobi rose by 24% making it, globally, the strongest performer (Knight Frank, 2012). This is, however, not just due to perceptions of Africa as a better investment destination compared to the West in light of the global crisis.

This performance is underpinned by good governance, institutional reforms and tightened monetary policy which has, amongst other things, kept inflation at bay. By the end of September 2012, Kenya had recorded 10 consecutive months of dropping inflation rates and, in parallel, a drop in lending rates too.

So, for those wanting to join the African construction boom, what are the opportunities, the risks and the overall trends?

CLICK HERE  to download the full article

If you require a more detailed discussion around the survey results, contact Andre Pottas at apottas@deloitte.co.za, Anushuya Gounden at angounden@deloitte.co.za or Taki Nkhumeleni at tnkhumeleni@deloitte.co.za

How will mineral beneficiation affect your business?

This paper, prepared by Ebrahim Takolia of Deloitte Consulting, South Africa, is aimed at all decision-makers, across all industries. I have provided an introduction below and welcome you to download the full paper which is very comprehensive and highlights challenges, opportunities and the effects mineral beneficiation will have on businesses. If you have any questions or require additional information, you may contact Ebrahim Takolia at etakolia@deloitte.co.za. Click Here to download the Deloitte Mineral Beneficiation paper.

Positioning for mineral beneficiation – Opportunity knocks

Mineral beneficiation is a priority for governments of resource rich countries that would like to leverage the potential of mineral beneficiation to create local employment and drive economic growth. Many governments are developing strategies for domestic mineral beneficiation.

South African President, Jacob Zuma, has said that mineral beneficiation is a priority for his government and will finalise and adopt a beneficiation strategy as its official policy. In June 2011, government released a strategy that identified a number of instruments such as policies, legislation and incentives that can be put in place to enable beneficiation.

A mining company will typically be in one of the following assessment phases with respect to beneficiation:

Strategic Assessment: an analysis of the strategic considerations as well as risks and opportunities for mineral beneficiation, particularly focusing on the business case and taking into consideration government incentives and social imperatives like job creation;

Feasibility Assessment: the beneficiation opportunities have been identified and feasibility studies need to be undertaken to determine the viability of such initiatives; or

Implementation: the feasibility of an initiative has been determined and an implementation plan and schedule needs to be developed.

This paper is the first in a series about beneficiation and will be updated as legislation and incentives come into effect, which assesses the merits of beneficiation.

Download the full article . . . . Positioning for mineral beneficiation – Opportunity knocks

We welcome your feedback on this interesting and topical subject!

Subscribe to our blog

Subscribe to our newsletter

We share topical, role specific thought ware no more than once a week.

  • Click here to subscribe
  • Download our apps

    You can keep up to date with all the thought leadership and insights posted on this blog via our mobile apps.

  • iPad
  • Android
  • iPhone
  • Subscribe to our RSS Feeds

    Switch to our mobile site