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AFRICA DARK HOLE OR ROUGH DIAMOND ?

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

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AFRICA DARK HOLE OR ROUGH DIAMOND ?

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  1. AFRICADARK HOLEORROUGH DIAMOND ?

  2. Hiroshima 1945

  3. In 1945 Detroit was experiencing prosperityIf you were investing in 1945: Would you have chosen Detroit ahead of Hiroshima

  4. Detroit 2010

  5. Hiroshima 2010

  6. Are we expecting Africa to overtake the world ?

  7. GDP in $ Billions (PPP) 2007 2010 2020 ? • SA 467 505 • Algeria 227 253 • Angola 96 115 • Morocco 125 146 • Liberia (excl BHP) 1.5 2.5 • USA 14 256 • China 8 765

  8. It is difficult to grow a business in the USA or China • Tight margins • Fierce competition • Strict regulation • High labour cost • Lengthy paperwork • Lots of lawyers

  9. What caused Africa’s problems • FEAR, GREED What is driving the GROWTH • GREED

  10. FEAR FOR AFRICA CONSIST OF: • Violence, law enforcement • Uncertainty of numbers • Political, legislation • Financial viability • Malaria, climate • Staff willingness to venture to go there • Infrastructure ?: Transport, health, shops Did the last 10 years reduced these fears ?

  11. Fact or Fiction: • Continent with biggest % of new tarred roads over last 10 years • Continent with biggest % of new rail tracks in last 10 years • Greatest potential for expansion in next 10 years

  12. Massmart, Woolies, Foschini, Edgars (< 10%) • Shoprite 15% of sales, 20% of profit. • African Bank, Capitec • Sanlam, Metropolitan • The big 4 banks • Illovo, Tongaat operates on land 3 times the size of Belgium • Omnia, Afgri, Astral • Big construction contracts, materials • Transport, logistics, Car dealers, Tourism • Mining, mining, mining

  13. Small Developments • Transnet privatising more rails • China offering to build railways rather than pay for mining rights • Current CHEAP cost of capital

  14. Things to look for: • Income level of top 5% of population • Technology • Big investments: Eg. BHP into DRC, Liberia • Population categorisation: - Regional identity. Manage small chunks - ID numbers, other individual detail - Credit history - Better econ stats measurement

  15. Conclusion: Whatever rating we give Africa at the moment, we are likely to give it a better rating in 10 years time. Question: Is it time to invest in Africa?

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