DOING BUSINESS IN TODAY’S AFRICA: ENDURING CHALLENGES, NEW OPPORTUNITIES Hennie Bester, Webber Wentzel, South Africa Apr

1. DOING BUSINESS IN TODAY’S AFRICA: ENDURING CHALLENGES, NEW OPPORTUNITIES Hennie Bester, Webber Wentzel, South Africa April 29, 2009 Washington, D.C.

2. Africa overview

3. Africa overview

4. Africa overview

5. Africa overview A large continent 54 countries, 922 million people enormous variety of cultures, industry sectors, business drivers, trading partners, historical connections, religions and politics. Thus: NOT a one size fits all approach

6. Africa overview Different opportunities / challenges Africa’s development – benefit of already developed technology Market competition – often low, while demand may be high = higher margins Corruption / bureaucratic / governance issues

7. Africa overview • Recent years: strong growth for number of countries • Average GDP growth: 5%+ over last 5 years • Top nations in 2007: • Mauritania at 19.8% • Angola at 17.6% • Sudan at 9.6% • Mozambique at 7.9% • Malawi at 7.8%

8. Africa overview Growing global interest… Not just from North America / Western Europe but, Also BRIC countries, especially PRC

9. Africa overview Huge demand for investment Liberalisation of FDI regulatory regimes International investment is being encouraged Infrastructure needs are massive, critical for economic growth / trade Development of regional business trends – e.g. “corridors”

10. Impact of global financial crisis Africa not immune Drop in commodity prices: Dramatic impact on economies dominated by particular commodities E.g. DRC, Zambia BUT: no significant impact on the banking system (South Africa – Barclays Bank / ABSA)

11. Impact of global financial crisis World Bank now predicting economic growth: Slowing to 3.5% this year and May drop to 2.5% in 2010 EIU recent forecast: 7 of the top 10 countries with highest predicted GDP growth for 2009 in Africa IF western governments more focused on domestic issues… Africa to become more dependent on China as major trade and investment partner G20 – anything for Africa?

12. South Africa’s position Remains principal gateway into Africa Continent’s leading economy Sophisticated financial and legal system (e.g. ZAR currency highly traded) Better placed structurally / cyclically than developed countries to weather financial crisis

13. South Africa’s position South African financial system remains intact, no bailout required Government increased commitment on infrastructure spend SA corporates - strong levels of cash and low leverage

14. South Africa’s position Many SA corporates: expanding businesses in Africa, rather than North America / Europe

15. China growing interest China now: - single largest lender to Africa - single largest investor in infrastructure in Africa - second largest trading partner with Africa High level political sentiment towards Africa from Chinese government

16. China growing interest China’s “pump priming” of own economy to benefit Africa Chinese demand for commodities / natural resources to underlie Africa’s growth China continues to invest in Africa – US$5 billion CAD fund How is India responding?

17. Where are the opportunities? Infrastructure Power Telecoms Agriculture Real estate Retail Oil and gas

19. Infrastructure Over 200 power projects in pipeline on continent Number of large infrastructure projects closed since start of 2009 Underwritings / arranging commitments for more than 6 months - difficult to obtain / subject to MAC

20. Infrastructure Resources financing - difficult to raise, even for coal Large number of general infrastructure deals in market right now still huge appetite from private sector but capacity of debt market to absorb all now uncertain DFIs and MLAs finally seem affected by financial crisis Funding abilities appearing to be weakened

21. Telecommunications

22. Telecommunications cont. Some markets now saturated but… Still enormous opportunities to capture subscriber growth Must look at market on country by country basis Some countries: deregulation / liberalisation may have been too quick e.g. Ghana

23. Telecommunications cont. Likely consolidation of big players Number of countries developing into the next phase mobile into provision of wireless broadband Undersea cables up both East and West coasts: to transform bandwidth capacity

24. Governments are opening their doors Increasing recognition by African governments: must become more investor friendly Increase in bilateral investment treaties New regulatory frameworks being developed To encourage and attract international investors

25. Governments are opening their doors Recognition that international finance / skills / know-how are key to continent’s future Africa suffered brain drain / capital drain for decades Growing number of stock exchanges developing across Africa Closer regional co-operation (e.g. “corridors”)

26. Concerns for investors Corruption – perception or reality? A level playing field for international players? Transparency and disclosure issues

27. Concerns for investors Regulators sufficiently independent? Corporate Governance regimes adequate? Due diligence issues

28. Panel Discussion & Questions