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Consumption grew more in Africa than in India or Brazil over the last decade
Africa today is more urbanised than India, and just below China
Productivity growth was widespread and jumped to 2.7% p.a. across the continent
Africas economic growth accelerated after 2000, making it the worlds third-fastest growing region
African annual GDP, 2010 $ billion
Compound annual growth rate, %
Compound annual real GDP growth, 200010 %, Emerging Asia Middle East Africa Central and Eastern Europe Latin America World 4.7 4.7 4.3 3.1 2.6 1.5 7.2
3.3
1,654
5.6
1,580 1,549
5.5
1,483 1,400
4.9
1,323 1,258
1,191 2.4 1.9 1,144 4.2 1,067 1,108 839 694 461
1970 1980 1990 2000 01 02 03 04 05 06 07 08
3.6
Resources Wholesale and retail Agriculture Transport, telecommunications Manufacturing Financial intermediation Public administration Construction Real estate, business services Tourism Utilities Other services2
24 13 12 10 9 6 6 5 5 2 2 6
7.1 6.8 5.5 7.8 4.6 24 3.9 7.5 5.9 8.7 7.3 6.9
1 In 2005 dollars. Includes 15 countries that account for 80 percent of Africas GDP: Algeria, Angola, Cameroon, Egypt, Ethiopia, Kenya, Libya, Morocco, Nigeria, Senegal, South Africa, Sudan, Tanzania, Tunisia, Zimbabwe. 2 Education, Health, Social Services, Household Services. SOURCE: Global Insight; Arab Monetary Fund; African Development Bank; McKinsey Global Institute
4
198090
19902000
200008
3.1
2.8
2.2
-0.2
2.7
2.6%
2.6%
4.9%
1 Used working-age population (15-64) as a proxy for labor force. SOURCE: Conference Board World Economy database; McKinsey Global Institute
-1.8
8.0
+60%
1990s
2000s
1990s
2000s
-4.6
1990s
2000s
SOURCE: World Bank World Development Indicators; Political Risk Services; McKinsey Global Institute
Trade with other developing countries accounts for half of trade with subSaharan Africa
Composition of sub-Saharan African1 trade by trading partner, 1990-2009 Percent 100 1 2 3 Other 90 80 70 60 50 40 30 20 10 0
1 Includes Sub Sahara Africa
16
17
13
North America
30 39 52
4 7 3 7 2 3 12 30 14 20 13 14
121
Asia
122
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
7
SOURCE: International Monetary Fund Direction of Trade Statistics; McKinsey Global Institute
Chinas infrastructure commitments in sub-Saharan Africa have surpassed the World Banks on a yearly basis since 2005
Infrastructure financing in sub-Saharan Africa $ billion
World Bank1 China
Chinese investment by country, 200107 %, $ billion 100% = $16 billion Other Sudan Ethiopia Angola 28
7.1
4.5
8
10 20
2003
2004
2005
2006
2007
1 Annual commitments for energy and mining; water and sanitation; transportation; and information and telecommunications. SOURCE: World Bank, Building bridges: Chinas growing role as infrastructure financier for sub-Saharan Africa, 2008; World Bank annual reports; McKinsey Global Institute
Private foreign capital flows to Africa have risen sharply since 2003, surpassing aid and remittances
African financial inflows $ billion
90 80 70 60 50 40 30 20 10 0 -10 1980
Official Development Assistance Remittances Private capital inflows 1
86
91
96
01
06
09
1 Private capital inflows are defined as net foreign direct investment (FDI), purchases of African equity and debt securities, loans, and other flows into Africa from foreign investors. SOURCE: OECD-QWIDS; World Bank, McKinsey Global Institute Capital Flows Database
9
10
Africa is almost as urbanized as China and has as many cities of 1 million people as Europe
Share of rural vs. urban population by region, 2010 %, million 100% = 1,219 1,032 1,351 830
27
594
21
349
18
Rural
70
60
55
79
82
Africa 52
China 109
Europe 52
Latin America 63
North America 48
11
By 2020, more than half of African households will have discretionary spending power
Share of households in each income bracket %, millions of households 100% = Discretionary income 163 6 11 196 8 14 244 12 17 Household income brackets $ PPP1 2005 Globals (>20,000) Consuming middle class (10,00020,000) Emerging consumers (5,00010,000) Basic consumer needs (2,0005,000) Destitute (<2,000)
18 21
23 29 32
Basic needs
29 34 24
2008 85
18
2020F 128
1 Purchasing power parity adjusts for price differences in identical goods across countries to reflect differences in purchasing power in each country. SOURCE: Canback Global Income Distribution Database (C-GIDD); McKinsey Global Institute
12
Across the continent, four groups of industries could have combined revenue of $2.6 trillion by 2020
Estimated annual revenue, 2020 $ billion Consumerfacing Resources
540 1,380
110
2%
Agriculture
500
220
5%
Infrastructure
200
130
9%
Total
2,620
~980
4%
1 Took 2030 value of $880 billion and calculated straight line equivalent for 2020. 2 Represents investment. Assumes need remains as same share of GDP through 2020. SOURCE: McKinsey Global Institute
13
The Consumer-Facing sector is about more than food and consumables, nonfood sectors will grow faster as incomes increase
2008 $ billion
Household spending 2008 Food and beverages Housing Nonfood consumer goods Health care Telecom Banking Education Other Total 861 Household spending growth, 200820 Compound annual growth rate, 200820 % 3.3 4.5 4.2 4.2 4.9 6.2 4.9
175 101 62 32 35 30 21 60
4.0 4.0
14
SOURCE: World Bank World Development Indicators; Euromonitor; McKinsey Global Institute
1 Population aged 1564. SOURCE: United Nations World Population Prospect; McKinsey Global Institute
15
Africa represents about 60 percent of the potentially available cropland in the world
Additional available cropland, 20091 Million hectares
970 Others Latin America 80 Brazil Argentina Venezuela 300 Others Sudan DRC Angola Sub-Saharan Africa 590 Zambia Mozambique Central African Republic Tanzania 2009 Others
155 39 31 75
72 66 53 53 49 45 38 216
1 Cropland defined as land producing output greater than 40% of maximum yield under rain-fed conditions, excluding forest areas. SOURCE: World Bank/Food and Agriculture Organization, Awakening Africas sleeping giant; McKinsey Global Institute
16
61 39 61
39
31 21
69 79
51% (15%)
12
88 90
10
1 Figures have been adjusted to remove the impact of Chinese re-exports through Hong Kong. 2 Common Market for Eastern and Southern Africa (COMESA); The Economic Community of West African States (ECOWAS); Arab Maghreb Union (AMU); Economic Community of Central African States (ECCAS); Southern African Development Community (SADC) SOURCE: International Monetary Fund Direction of Trade statistics; McKinsey Global Institute
17
Importantly, Africa is not one country, nature of growth differs across countries
Exports per capita, 2008, $ 10000 Libya Equatorial Gabon Guinea Angola 1000 Congo, Rep.
Size of GDP per capita bubble proportional <$500 to GDP $5001,000 $1,0002,000
$2,0005,000 >$5,000
Mauritius
Algeria
Chad
100
Sierra Leone
DRC
Transition
Ethiopia
Pre-transition
10 20 30 40 50 60 70 80 90 100 Economic diversification Manufacturing and service sector share of GDP, 2008, % NOTE: We include countries whose 2008 GDP is approximately $10 billion or greater, or whose real GDP growth rate exceeds 7% over 200008. We exclude 22 countries that account for 3% of African GDP in 2008. SOURCE: Organisation for Economic Co-operation and Development; World Bank World Development Indicators; McKinsey Global Institute
18
1 2 3 4 5
Business environment: Maintaining macroeconomic and political stability is essential. Also important is continuing microeconomic reforms to enable private sector development, such as streamlining and liberalizing regulations, improving legal code and enforcement, and reducing tax and tariffs Infrastructure: Africas infrastructure lags that of other developing countries and raises cost of products and exports Education: Africa has a rapidly growing working-age population, but adequate education and health are required if Africa is to become the worlds next center for global production and consumption Intra-regional integration: Remains limited due to high transportation costs, trade restrictions, and lack of strong manufacturing. Creation of integrated regional markets is critical for scale Agricultural production: Spurring a transformation of agriculture is critical to raising GDP growth, increasing rural incomes, and achieving food self-sufficiency
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Thank you!
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