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Africa Micro | Key Sector Trends and Outlook

November 2011

Africa 2012: Emerging Giants HIGHLIGHTS Africa is under-banked. Only 20% of the population has access to banking services and the commercial sector has limited access to credit. Notwithstanding, total assets of Africa’s largest 200 banks amounted to almost a trillion US dollars in 2010 with significant growth potential. Communications through cell phones has exploded throughout Africa as inexpensive smart phones that allow access to the internet and in some countries access to online banking. Despite the explosive growth in recent years, cell phone use remains below that of other major emerging market economies thus suggesting there is still a great deal of room for growth. Computer, internet penetration, and broadband use in Africa is very low when compared to the major industrial countries because of inadequate electricity supply, high connection charges, and the high costs of computers. Great efforts have been made to improve Africa’s infrastructure, particularly with the assistance of China. Airports have been modernized to accommodate increased business and tourist arrivals. In addition to airports, ports have been improved in response to the rising exports of raw materials such as minerals and timber and increased imports of the consumer goods, and railway infrastructure. There are new roads are being constructed that will reduce travel time and reduce shipping costs for freight transport. Africa’s growing middle class will be an attractive market for consumer product companies and retail companies. Reflecting growing international interest in the African market, Walmart paid $2.4 billion for a 51% stake in the South African discount giant Massmart Holdings, which it will use to spearhead its entry into other African markets. Africa has enormous agricultural potential given its large amounts of arable land. The agriculture sector, however, has not lived up to its potential and as a result, most African nations are net food importers in large part because of the lack of modern farming techniques. Africa is rich in hydropower, which is being used to increase the inadequate supply of electricity. China has been especially active in building hydro-power plants. Africa’s has abundant mineral resources. It has 40% of the world’s gold reserves, 77% of the world’s platinum production, and significant amounts of other precious metals and minerals used in industrial production. Africa is also rich in oil and natural gas. About one-third of all the new oil discoveries in the world since 2000 have been in Africa. Tourism is one of the most promising sectors in Africa. It could potentially spur economic growth and be a large source of employment. With continued investment in infrastructure against a backdrop of improved political and economic conditions, the tourist sector in most African nations will benefit. Major hotel chains and airlines are planning to expand their presence in Africa.

Joab’s Technologies and Research, Natu Court Flat B.

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Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

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