The information contained in this document is confidential, for internal use only and may not be distributed outside the

1. The fonts, font sizes, colours & styles have been set according to the guidelines laid down by the Marketing Division. Please do not change any of the above. Economic Resilience in a Turbulent World: What’s driving Africa’s Growth?Janet Proudfoot Senior Manager: Group Media StrategyStandard Bank Group The information contained in this document is confidential, for internal use only and may not be distributed outside the Standard Bank Group.

2. Introduction • The African economy is overshadowed by Asia to the East, and to a lesser degree by S. America to the West. Over the last decade we have seen the economic awakening of Africa. Telecommunications sector has risen to the challenge of a young population with increasing mobility and the increasing usage of mobile phones driving this. Mobile banking: The ability to fit a financial institution on a cell phone and place it in the pockets of future users is an exciting idea.

3. What’s Driving Africa’s growth? • In the aftermath of the Global economic crisis, Africa no longer seems uniquely risky. Rate of return on FDI higher in Africa than other developing regions. X2 pace of 80’s & 90’s • Africa among fastest growing parts of the world. 2001 – 2008 average growth 5.6% pa (4% globally) • 2009 continent’s GDP expanded by 2% while GDP 4% USA, 2.8% European Union, 1.5% Latin America • 5 countries account for 60% of Africa’s GDP: Algeria, Egypt, Morocco, Nigeria, SA

4. What’s Driving Africa’s growth? • Growth stimulated by: • - Commodity boom • - Stable macroeconomic conditions • - Structural reforms • - Privatisation of state-owned enterprises • - Lowered barriers to competition • - Large amts FDI (>tripled last few yrs)

5. What’s Driving Africa’s growth? • SA and Nigeria rec’d most FDI previously • New patterns last 3-4 years in N. and E. Africa in non-resource sectors • - Tourism • - Manufacturing & Retailing • - Financial Services • - Telecommunications • - Construction booming • 2nd tier: Ghana, Namibia, Zambia • FDI diversified - structural reforms to make economies more attractive

6. What’s Driving Africa’s growth? • Africa’s collective GDP $1.6 trillion in 2008, roughly = Brazil or Russia • Continent among most rapidly growing economic regions • Resources & high prices for oil only 1/3 newfound growth • Rest resulted from internal structural changes = stimulated broader domestic economy. • Growth 27/30 largest economies with and without significant resource exports

7. What’s Driving Africa’s growth? • Africa now conducting half its trade with developing regions not reliant on Europe • New forms economic relationships: China bid for 10m tons copper + 2m tons cobalt in DRC = $6b package of infrastructure investments – roads, rail, hospitals and schools • Increasing interest from China, India, Brazil and Middle East for broad-based investment partnerships in Africa

8. What’s Driving Africa’s growth? • Africa was hit by the global financial and economic crisis & growth slowed to 2.5% 2009 • Continent avoided much of the recession felt in developed countries • Impact varied across regions & countries • Allowed for a faster recovery • Southern Africa hardest hit – reliant on exports of resources • Countries with more diversified economies fared better

9. What’s Driving Africa’s growth? • Rise of the African urban consumer: • - Urbanisation • - Expanding labour force • - Rise of middle class African consumer • 1980 28% of Africans lived in cities. Today 40% of 1 billion people do – comparable to China and > India • 2030 = 50% • Urbanisation boosting productivity • Education major challenge – skills for labour force + tertiary

10. What’s Driving Africa’s growth? • March 2010: African Development Bank forecast 4.5% real GDP growth in 2010, and 5.2% in 2011 – in line with global recovery • 15 countries are projected to grow > 5% 2010 • Challenges: • - Low income countries need adequate financial aid timeously& sustainable growth path to narrow income & productivity gaps. • - Per capita GDP growth still lagging behind other developing countries • - Poor infrastructure a major impediment – $93b pa for 10 yrs to fix

11. What’s Driving Africa’s growth? • To sustain Africa’s growth, enhance competitiveness and encourage continued foreign investment inflows, governments must • - Pursue measures for strengthening governance and legal frameworks • - Build financial markets • - Invest in human capital • - Develop infrastructure • - Deepen regional integration – economies of scale and leverage strengths of individual countries. • - Expand intra African trade

12. What’s Driving Africa’s growth? • Economic awakening of Africa = 40 fast-growing African companies with global aspirations: The African Challengers (BCG) • Range in size from $350m - $80b in annual sales. All display • - Strong growth • - International footprint • - Ambitious plans to further expand overseas • 3 countries dominate home of African Challengers: SA (18), Egypt (7), Morocco (6)

13. What’s Driving Africa’s growth? • Industries well-represented • - Financial Services (10) • - Mining & Resources (8) • - Technology, media, telecomms (6) • - Logistics services (5) • - Industrial goods (5) • MTN > 50% share in Nigeria • Standard Bank most valuable banking brand in Africa = 82nd globally and worth $1.3b • Key to success: Local knowledge, global aspirations

14. Mobile Banking: Can elephants and hippos tango? • The ability to fit a financial institution on a cell phone and place it in the pockets of future users can drive growth for both sectors • Telecoms sector doing exceptionally well. Mobile usage is high and empowers the low end of the market – grown from 11m to 246m 2009 in Africa • Mobile banking services & money transfers: • - Secure authentication and data transmission • - Contactless payment options • - Not reliant on internet access

15. Mobile Banking: M-PESA • M = mobile Pesa = money • M-PESA the Kenyan mobile money service seen exceptional growth since introduction in March 2007 by Safaricom a mobile operator. • 9 million customers registered( > half the customer base) • Level of penetration in the mobile base far exceeding any other use other than voice and text messaging • P2P money transfers = $1.6b • Agent network 16 000 retail outlets urban & rural including 600 Bank ATM’s (Equity & DTB)

16. Mobile Banking: M-PESA • M-Pesa facilitates a variety of financial transactions through the mobile phone • Register at an authorised M-PESA retail agent outlet – free. • Get individual electronic money account system managed by Safaricom • Safaricom deposits in a pooled account in a regulated bank (highly liquid). • Use mobile phones to transfer money to registered and non-registered users. • Pay bills, purchase mobile phone credit, check account balances – confirmed via sms

17. Mobile Banking: M-PESA • Demand driven by flow of rural-to-urban migration in Kenya – send money home • Kenyan Diaspora living abroad send money to ancestral families • Safaricom a trusted brand and reflects innovation and modernity • Maintains tight control of the M-PESA customer experience and retail agents – monitors availability of working capital • Each transaction confirmed via sms to both transacting parties = electronic receipt

18. Mobile Banking: M-PESA • M-PESA pricing made transparent and all customer fees subtracted from customer’s account – not via agents • Free deposits, no minimum balance. Min deposit $1.25 (KSh 100) • M-PESA charges only for “doing something” • Can send money to any phone network • Partnership with ATM’s is growing = stronger partnerships with Banks • Not yet a savings vehicle as no interest but could develop.

19. Mobile Banking: M-PESA • Stage set for adoption of mobile banking in SA • Significant pressure from government and competition commission • The winners in the fight for market share, will be those banks with high customer loyalty delivered through greater customer centricity, convenience and low cost processing. Mobile banking enables all three.