Tag Archives | emerging market
Digitisation (the migration from analogue to digital technology) will help to bridge the digital divide between emerging and developed markets.
Branchless banking allows the customer to have access to banking services without being reliant on a brick-and-mortar bank branch. Technological advancements and the adoption of a collaborative approach between banking service providers and technology companies are going to forge a new way of doing banking in emerging markets, where transport, electrical and other infrastructure is often underdeveloped.
The Nigerian agriculture minister, Akinwumi Adesina, once stated that “potential is important, but nobody eats potential”, thereby summarising one of Africa’s key problems – unlocking its agricultural potential to allow the continent’s growing population to fully benefit from the available resources. KPMG’s paper aims to provide a glimpse of Africa’s agricultural sector – where it stands, how it got there and what should be changed in order to move forward, knowing that potential alone is not enough to feed a growing population.
Whilst Africa is often perceived as a mysterious, underdeveloped continent, it’s quickly becoming one of the most valuable emerging markets for infrastructure. In fact, infrastructure development – in the form of megacities – is one of the key strategic priorities for senior African leaders. What’s driving infrastructure development in Africa?
Sub-Saharan Africa is expecting a 5% annual growth rate in 2012-2013, and World Bank data show that almost half of Africa’s countries have reached middle-income status. As this growth trend continues, the continent is a potentially attractive destination for domestic and foreign private capital, including private equity investments, which will further boost growth rates.
To many, Africa is a land of mystery and danger; a place where development is needed and investment is scarce; a complex patchwork of countries, cultures and societies. But to a growing number of infrastructure developers and investors, Africa is quickly becoming one of the hottest and most valuable emerging markets for infrastructure in the world.
Coal / Grindrod and Mozambique’s Maputo Port Development Company (MPDC) plan to invest $1.7bn over the next five years to upgrade ports in the country as demand grows, MPDC said on Friday. Capacity would be tripled at the Maputo and Matola ports to 50-million tons by 2020 from 15-million tons. Investment of $355m this year and next year had been approved to boost capacity at the Matola port terminal. The coal terminal will be handling 7.2-million tons by next year, from 6-million tons.
Africa’s private equity (PE) landscape is uncharted and at an early stage of development, however, it is growing steadily and giving good returns. In fact, according to a KPMG survey, a record amount of 25.7 billion rand ($3.03 billion) in PE money from Africa was returned to investors in 2011, up from R18.1 billion in 2010.
According to Dapo Okubadejo, the partner in charge of Corporate Finance & Financial Advisory Services at KPMG Nigeria:
“Africa is now viewed by PE houses and fund managers as a priority investment destination. As growth in other economies have slowed in recent years due to the 2008/9 recession and current crisis in the Eurozone, investors have been looking to emerging markets and economies that will provide higher return rates and Africa is continuously proving its business case for investment.”
KPMG recently hosted a roundtable discussion, lead by its Global Chairman, Michael Andrew, ahead of the Fifth BRICS Summit taking place in Durban this week. This Summit is expected to include a substantial focus on Africa – looking at how the BRICS high growth markets are converging in Africa through investments and partnerships, aiming to leverage the continent’s vast natural resource and mineral reserves for their own continued development.
Africa’s insurance market remains very small when compared to those in developed countries. The market contributes approximately 2% to GDP and caters to less than 5% of the population. Insurance is a grudge purchase and is heavily influenced by income levels. Short-term insurance currently makes up 90% of the African market and life insurance a meagre 10%.
There are currently more than 500-million mobile subscribers on the continent as opposed to 240-million in 2008. Although the African telecommunications market is in its developmental stage, the market is growing at a faster rate than the rest of the world. Various projects are in place to increase Africa’s bandwidth. These projects aim to cut down costs for both the operator and the end-user.
Nigeria is the most populous country on the African continent with approximately 150-million people and is the 32nd largest country with the 41st largest economy in the world.
According to the World Bank, Nigeria is classified as a mixed economy, emerging market. Nigeria has reached middle income status, with well developed financial, legal and transport sectors. Nigeria boasts the second largest Stock Exchange in Africa and enjoys an annual economic growth of 7%.
In a world that is looking for alternative investment destinations, Africa is seen as the next investment and growth frontier. In order for the continent to secure its place in the global economy, properly developed infrastructure – that can support business development across the continent – needs to be established.
Africa is well positioned as an emerging market and is a wealth of opportunity for investment and growth. The world is eager to do business with Africa, however finds it difficult to access the African market especially in the interior, primarily due to poor infrastructure.
In a world that is looking for alternative investment destinations, Africa is well-positioned as an emerging market and represents a wealth of opportunity for investment and growth. The world is eager to do business in Africa. However, in order for the continent to secure its place in the global economy, properly developed infrastructure that can support business development across the continent, needs to be established first. Infrastructure challenges are a deterrent to investment.