Delivered by Dr Andrew Shaw, during the 2015 annual SAAFF Congress for freight forwarders in Durban, South Africa.

1. Transport and Logistics
Business in Africa
October 2015
The South African
Association of Freight
Forwarders
“New Frontiers”
Durban
15th October 2015

2. PwC
Africa’s Outlook
2
Transport & Logistics in
Africa
Africa – The
drive for
Infrastructure
Africa - Trade
1
2
4
3

3. PwC
Africa’s Outlook
3

4. PwC
Mega Trends
4
The five megatrends are a primary driver of growth and opportunity for CP&I
investment in Africa
Transport and Logistics Business in Africa
4

5. Where are we today in sub-Saharan Africa?
5
SSA Globally, infrastructure spend set to
grow by 10% each year – spend to
reach US$180 billion per annum by
2025 from US$60 billion in 2013
Worldwide investment will reach
$9trillion per annum (by 2025)
Total spend between 2014 and 2025 $78
trillion
Forecast annual GDP growth for sub-Saharan expected to continue at the
rate of +/- 5% pa
SSA population is 13% of
global population
270m
(2000)
940m
(2013)
The SSA population is forecast to nearly double to
over 1.75 billion by 2040
Every $ spent on capital projects
generates economic return of 5%-
25% p.a.
Transport and Logistics Business in Africa

6. Where are we today in sub-Saharan Africa?
6
Africa wide, the cost of
fuel for back up
power was $1b in
2013
Less than 8% of
Africa’s trade is
with itself - between
30-60% in other
regions
30% of global
O&G discoveries
in the last 5 years
have been made in
SSA
Only 290m out of
940m people (31%)
have access to
electricity in SSA
Only 10% of hydro-
power potential being
used in SSA
Poor T&L
infrastructure
increases costs of
goods by 60% for
landlocked countries in
Africa
Transport and Logistics Business in Africa

7. PwC
Transport & Logistics in
Africa
7

8. Africa Gearing Up - 10 Countries in profile
DRC
Angola
South
Africa
Mozam-
bique
Tanzania
Kenya
Egypt
Algeria
Nigeria
Ghana
Africa is the next place-to-be for
doing business The lions
follow the tigers:
• 6 of the top ten fastest
growing economies 2001-
10 were in Africa
• Between 2010 and 2016 it
will be another 6
• Africa is home to 1 billion
people
• By 2035, Africa’s labour force
will be larger than China’s
Growing demand offers
huge potential for T&L
companies
Transport and Logistics Business in Africa 8

9. PwC
‘Sizing up’ the growth potential
The size of the bubbles represents the size of the economy (GDP 2012)
Sources: World Bank, International Monetary Fund
Algeria
US$ 209bn
Angola
US$ 115bn
DRC
US$ 17bn
Egypt
US$ 257bn
Ghana
US$ 40bn
Kenya
US$ 41bn
Mozambique
US$ 14bn
Nigeria
US$ 270bn
South Africa
US$ 384bn
Tanzania
US$ 28bn
0
20
40
60
80
100
120
140
160
180
200
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
GDP annual growth estimates for the period 2012-2017 shown as a % for each country
EstimatedpopulationasatmidOctober2013(Millions)
Transport and Logistics Business in Africa 9

10. PwC
10 Economies - Current state
10
Demographic
& Resources
Economics Business
Environment
Trade &
Logistics
Transport
Infrastructure
Algeria
Angola
DRC
Egypt
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Attractive Average Unattractive
Transport and Logistics Business in Africa 10

11. PwC
5 Years forward
Strong Improvement Expected
Stagnation / marginal change expected 11Some Improvement Expected
Demographic
& Resources
Economics Business
Environment
Trade &
Logistics
Transport
Infrastructure
Expected
Growth
(GDP 2012-2017)
Algeria 3,6%
Angola 5,7%
DRC 8,6%
Egypt 3,4%
Ghana 5,9%
Kenya 6,2%
Mozambique 8,0%
Nigeria 6,8%
South Africa 3,0%
Tanzania 7,0%
Attractive Average Unattractive

12. PwC
Africa – The
drive for
Infrastructure
12

13. Sub-Saharan Africa
13
Nearly 70-80% of infrastructure expenditure expected to be in transport
and utilities sectors
• Electricity production and
distribution will experience
substantial growth in annual
spending from $15bn in
2012 to $55bn by 2025
• Transportation and
communication account for
a large portion of investment
in most countries.
• The social infrastructure,
spending is expected to
increase for both healthcare
and educational facilities
because of public health
problems—notably HIV/
AIDS—and growth in the
school-age population.
Infrastructure spending by type 2013
Transport and Logistics Business in Africa

14. Sub-Saharan Africa
14
Robust growth in the region is likely to drive infrastructure investment
• The Sub-Saharan Africa’s (SSA)
infrastructure market is
dominated by two major
regional economies—South
Africa and Nigeria. These two
account for over two-thirds of
infrastructure investment
• The upcoming 2015 version of the
“Outlook to 2025” may indicate a
moderation in short term
growth driven by recent political
and economic shifts
• Prospects in other countries
remain strong as the robust
growth in the region will fuel
infrastructure spending
Composition of Sub-Saharan Africa Infrastructure
market - 2013
Transport and Logistics Business in Africa

15. Sub-Saharan Africa
15
Only Nigeria and Ethiopia have some room to accrue debt
• Debt burdens are lower as a proportion of
GDP in most African economies than in
“advanced” economies or even middle-
income countries
• But with a lower tax-take relative to GDP
(generally 15-20% across Africa,
compared to 25% in Argentina, 35% in
Brazil, and even higher in Europe), as well
as a poorer credit history than richer
countries, financial market perceptions of
sustainable debt loads in African
economies tend to be much lower
Government Debt in Sub-Saharan Africa - 2013
Transport and Logistics Business in Africa

16. Assessing the global transport infrastructure
market: Outlook from 2015 to 2025
16
Roads will likely remain the
biggest area of investment,
especially for growth such as in
Africa. This is partly due to the rise
in prosperity and, hence, car
ownership and also the large
volumes of freight now moving on
Africa’s roads.
Although the smallest overall spend
on infrastructure Sub-Saharan
Africa is the fastest growing
regional infrastructure market, with
a projected average increase in
transport spending of over 11% per
year from 2015 to 2025. Most of
this growth is expected in roads and
ports.
Cumulative transport Infrastructure Investment to 2015
Transport and Logistics Business in Africa

17. PwC
Africa - Trade
17

18. PwC
Africa Trade
• A notable trend is the growth in south-south trade globally up from 8% in 1990 to 24%
in 2011,
• Africa’s export growth of 6.1% in 2012 was the highest of any region the world .
• Africa’s top exporters (2012) - Nigeria ($116 bill), SA ($87 bill), Angola ($74 bill),
Algeria ($72 bill), Libya ($62 bill),
• Africa’s top importers (2012) – South Africa ($124 bill), Egypt ($69 bill), Nigeria ($51
bill), Algeria ($47 bill), Morocco ($45 bill),
• Africa’s agricultural exports grew by 14% between 2005 and 2011,
• China increased its share of Africa exports from 3.2% in 2000 to 13% in 2011,
• Trade between African states remains comparatively low, but is growing at 13.5%
(2000 to 2010),
18
“Investment in improved transport, information
technology and financial services allow service
providers to play a bigger role in global value chain
networks. [African] … firms have become increasingly
reliant on efficient logistics. This includes multi-
modal transport, freight and cargo handling, storage
and warehousing as well as supply-chain management ”
Source: AfDB, OECD, UNDP (2014) African Economic Outlook
Transport and Logistics Business in Africa

19. Africa - Port Cargo Analysis
Djibouti (2009)
Accra, Ghana (2014)
Abidjan, Ivory Coast (2012)
Mombasa, Kenya (2009)
Lagos, Nigeria (2012)
Durban, South Africa (2014)
Dakar, Senegal (2013)
8.7
7.3
3.0
20.3
10.2
7.5
6.8
11.1
12.1
12.2
19.1
0.8
Luanda, Angola (2012)
Lome, Togo (2013)
Pointe-Noire, Congo (2012)
Dar es Salaam, Tanzania (2009)
Maputo, Mozambique (2007)
Beira, Mozambique (2007)
Lobito, Angola (2010)
Nacala, Mozambique (2007)
1.9
43.8
21.7
Cargo Traffic Volume
(Tons million)
Source: Port Management Association, Lloyd’s List Ports of The World, Port Authority of each port
Above
15m
Tons
10 to
15m
Tons
Below
10m
Tons
Transport and Logistics Business in Africa 19

20. SADC countries (Excl SA) with domestic freight volumes in excess
of 20 Mill tons per annum
12%
49%
DRC
12%
Kenya
Mozambique
Tanzania
Angola
Zambia
Uganda
Zimbabwe
Manufacturing
Mining
Agriculture
Source: Transnet Long Term Planning Framework 2014
38% growth
to 2043
21% growth
to 2043
15% growth to 2043
24% growth to 2043
21% growth
to 2043
23% growth
to 2043
14%
growth to
2043
16% growth
to 2043
20
10 Mill Tons

21. PwC
Foreign Direct Investment (FDI) into Africa
21Transport and Logistics Business in Africa
• FDI into Africa increased by 64 percent to
$87bn in 2014, while the number of FDI
projects declined by 6 percent to 660 in 2014,
• Coal, Oil & Natural Gas is by far the top FDI
sector in Africa,
• Manufacturing was the top business function
by capital investment in FDI accounting for
33 percent
• 13 percent of global FDI in 2014, was
destined for Africa,
• Between 2010 and 2014, FDI peaked in 2014
at $87bn.
Coal, Oil & Natural
Gas
Real Estate
Alt/Renewable
Energy
Chemicals
Communications
Building & Cons
Material
Metals
Textiles
Warehousing &
Storage
Food & Tobacco
Other
FDI by Value ($US Bill)
Egypt $17.9
Angola $16.1
Nigeria $10.7
Mozambique $8.8
Morocco $4.6
Ghana $4.4
South Africa $3.8
Zambia $3
Ethiopia $2.8
Kenya $2.2
Other $12.4
Source: The Africa Investment Report 2015– An FDI Destination on the Rise, FDI Intelligence, 9%
2%
2%
2%
3%
5%
7%
8%
11%
14%
38%The Africa Investment Report 2015
indicates that:
“The jump in manufacturing investment
activity in a region that has long been an
exporter of raw materials without much value
added activity is particularly exciting” Adrienne
Klasa (Editor)

22. PwC
A Brief Summary of the Key Points
• Infrastructure investment in Africa will outpace other regions but remains small next to investment in south
east Asia,
• Coal, Oil and Gas are the primary driver of investment and economic growth in Africa,
• Nigeria remains the fastest growing larger economy in Africa. Other large but smaller economies such as
Angola, Kenya, Ghana, Tanzania are also experiencing significant growth. Large economies such as South
Africa , Egypt and Algeria are lagging behind,
• The transport and logistics market is well paced to keep up with growth in most African countries but is
constrained by poor infrastructure, particularly at ports and in respect of the quality of roads,
• 70-80% of African infrastructure expenditure is expected to be in the transport and utilities sector,
• South Africa and Nigeria dominate the investment in infrastructure in sub-saharan Africa,
• Although Government debt levels in Africa are low only Nigeria and Ethiopia have some room to accrue new
debt,
• Africa’s export growth of 6.1% is the highest of any region in the world,
• Although commodity exports continue to dominate there is evidence of significant growth in agriculture and
manufacturing activity,
• Africa’s growth is more and more dependent on efficient and high quality logistics services with inter-
country trade growing by 13.5%,
• FDI’s flows into Africa are growing substantially and are dominated by coal oil and natural gas investments,
• Increasingly FDI is beginning to focus on manufacturing, metals, textiles and warehousing
22

23. PwC
Thank you
PwC Advisory Services
No. 2 Eglin Road, Sunninghill, 2157
Private Bag x36, Johannesburg, 2000
South Africa
T: +27(0) 11 797 5395
F: +27(0) 11 209 5395
M: +27(0) 82 941 6257
Andrew.Shaw@za.pwc.com
Andrew Shaw
Director

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