Africa cities rising Forecasting data and analysis from the EIU September 18th 2012 © Economist Intelligence Unit Contact us to learn more about how we can help your company plan your Africa strategy: AfricaCities@ eiu.com Africa’s economy is growing fast Real GDP growth (2012-2016 forecast) Above 10% 7.5% to 10% 5% to 7.5% 2.5% to 5% Below 2.5% By 2012, of the world’s 20 fastest growing economies will be African GDP growth 12 10 2011 2012 2013 Western Europe -2 US Brazil Russia Sub-Saharan Africa India China Sub-Saharan Africa ex South Africa Africa’s growth story has always revolved around commodities But Africa’s growth story is now more diverse The ‘peace dividend’ – After years of armed conflict and military rule, democracy is the latest wind of change sweeping across the continent Urbanisation - Half of all Africans are under 20, and are rapidly moving to cities: more than 40% of Africans now live in urban areas Improved governance – Greater accountability comes hand-inhand with democracy and the slow strengthening of institutions Trade, not aid – Europe is still Africa’s largest trading partner, but China’s share of trade has exploded in the last decade The rise of technology – The number of mobile subscribers in Africa exceeded the 0.5 billion mark in 2010, allowing companies greater access to consumers Infrastructure investment – Chinese companies are building roads and upgrading railways, ports and airports Even though challenges for companies remain • Katherine Changes in Transparency International’s corruption rankings for African countries since 2005 25 23 Poor roads – and not enough of them either Poor skill base Bribery & corruption Congested ports Inefficient border posts Inadequate railway networks Uninviting airports Companies are showing more interest than ever in expanding into Africa A recent survey conducted by The Economist Group of 217 global companies based in 45 countries revealed that expansion in Africa is a priority for two thirds of them within the next decade Does your company operate in … South Africa Plans to expand in the next to years… South Africa Elsewhere in Sub-Saharan Africa 56% 140% 54% 120% 52% 100% 50% 80% 48% 60% 46% 40% 44% 20% 42% 0% Yes * Economist Corporate Network survey, 2012 Elsewhere in Africa No Existing Planned Companies need Africa city-level data and analysis Companies looking to expand into Africa want to concentrate their strategy where growth and demographics are most favourable – in major cities It is not enough to plan a strategy around nationally forecasted growth, but rather to have critical forecasting and business information on a particular city In response to increasing inquiries from companies to understand African growth, the EIU has developed a tool to forecast key demographics and indicators for 25 of the fastest growing and most important cities Consumption in Africa is much greater in urban than rural areas Source: World Bank Why these African cities? Algiers Tunis Alexandria Casablanca Based on key economic drivers, client feedback and a survey of Corporate Network members, the EIU identified 25 African cities (across 19 countries) that are of particular interest Tripoli Cairo Khartoum Dakar Kumasi Abuja Douala Abidjan Accra Lagos Addis Ababa Kampala Nairobi Mombasa Dar es Salaam Luanda Lusaka Jo’burg Maputo Durban Cape Town These cities represent some of the best opportunities for growth, but up until now data has been lacking to support the case, and strategy, for market entry Introducing the EIU’s Africa Cities tool for city-level analysis View an in-depth profile of a city Compare indicators across all 25 cities Compare two cities head-to-head 10 The Africa Cities tool indicators Population and demographics • • • • • • • • • • • • • • • • • • • • Total population Number of households Total male/female population Population aged 0-4 Population aged 5-9 () Population aged 10-14 Total population aged 15-19 Total population aged 20-24 Total population aged 25-29 Total population aged 30-34 Total population aged 35-39 Total population aged 40-44 Total population aged 45-49 Total population aged 50-54 Total population aged 55-59 Total population aged 60-64 Total population aged 65-69 Total population aged 70-74 Total population aged 75-79 Total population aged 80 11 Business demographics & lifestyle indicators Income and expenditure • • • • • • Total expenditure per annum Expenditure per capita Expenditure per household Expenditure by category Median income %/Number/Total income/of people earning >$2,000 pa • %/Number/Total income of people earning >$5,000 pa • %/Number/Total income of people earning >$10,000 pa • %/Number/Total income of people earning >$15,000 pa • %/Number/Total income of people earning >$20,000 pa • %/Number/Total income of people earning >$30,000 pa • %/Number/Total income of people earning >$40,000 pa • • • • • Internet users % Mobile phone subscriptions Number of salaried employees Number of businesses Number of businesses with turnover: - 25m LCU • Number of businesses with turnover: $10 - 50m • Number of businesses with turnover: $50 - 100m • Number of businesses with turnover: $100 - 250m • Number of businesses with turnover: $250 - 500m • Number of businesses with turnover >$500m • Number of businesses with 19 employees • Number of businesses with 20 99 employees • Number of businesses with 100 - 499 employees • Number of businesses with 500 - 999 employees • Number of businesses with 1,000 - 4,999 employees • Number of businesses with > 5,000 employees Cost of living index • Customised cost of living index for the 25 cities, comparing the costs of: • Food and non-alcoholic beverages • Alcoholic beverages and tobacco • Clothing and footwear • Housing, water, electricity, gas and other fuels • Furnishings, household equipment and maintenance • Health • Transport • Communication • Recreation and Culture • Educations • Restaurants and Hotels • Miscellaneous goods and services Our methodology The Team EIU project managers, analysts & an on-theground network of African contributors Interviews with local statistical bodies as well as data collection from household and labour force surveys EIU Worldwide Cost of Living team Cost of EIU Worldwide Living team Construction of a cost of living index for the 25 African cities EIU Economics Unit Estimation and econometric modelling of unavailable data EIU Africa analysts 12 Data gathering and estimation Sense-check of final data Collation and front-end design Design of an interactive Excel workbook with a graphical interface that allows quick comparison of cities Key results – Cities paint a much different picture than nations • • Per-capita expenditure was higher in each of the 25 cities, than in their respective nations Citizens in cities spent 94.4% more, per capita, than their countrymen as a whole • • • Per capita city-level expenditure v national-level expenditure 13 Africa is urbanizing fast and cities are attracting more and more migrants As a result we are witnessing the emergence of “super cities”- each bringing considerable opportunities The demographic profile of these cities can be much different than the national level picture Demographic profile of Lagos v Nigeria Key results – Demographics are favourable • While Africa as a whole has favourable demographics, the Africa cities we measured had notable differences between them: • Cities like Nairobi, Addis Ababa and Mombasa have a glut of their population in the key 2035 age demographic • The largest growth in population from 20122025 will come from Kampala, Dar es Salaam, and Lusaka 14 Key results – Expenditure is growing Expenditure per capita differs markedly across cities, depending on the product in question 15 Key results - Cost of living differs between cities Cities like Luanda feature considerable inequality and official prices are extremely expensive 16 What are companies doing with Africa Cities data? Forecasting sales of their products and services in African cities Benchmarking African cities to find the best opportunities for their products and services Forecasting demand for their products and services Determining wages for staff in various African cities Finding new market opportunities among African consumers 17 Want to learn more about the EIU’s Africa Cities data and analysis? Contact us to learn more about the tools and analysis we have that can help your company plan your Africa strategy: AfricaCities@eiu.com London: +44 (0)20 7576 8181 New York: +1 212 698 9717 Hong Kong: +852 2585 3888 About the Economist Intelligence Unit: The Economist Intelligence Unit’s forecasting and analysis has informed government and industry around the world since 1946, when we were founded as the research arm of The Economist Like The Economist we are independent of all governing bodies and corporations For the last 65 years we have provided focused business insight on any given industry, country and market to help clients take advantage of new opportunities, maximise capabilities and support both tactical and strategic decision making 18 [...]... per capita differs markedly across cities, depending on the product in question 15 Key results - Cost of living differs between cities Cities like Luanda feature considerable inequality and official prices are extremely expensive 16 What are companies doing with Africa Cities data? Forecasting sales of their products and services in African cities Benchmarking African cities to find the best opportunities... for their products and services Determining wages for staff in various African cities Finding new market opportunities among African consumers 17 Want to learn more about the EIU’s Africa Cities data and analysis? Contact us to learn more about the tools and analysis we have that can help your company plan your Africa strategy: AfricaCities@eiu.com London: +44 (0)20 7576 8181 New York: +1 212 698 9717... allows quick comparison of cities Key results – Cities paint a much different picture than nations • • Per-capita expenditure was higher in each of the 25 cities, than in their respective nations Citizens in cities spent 94.4% more, per capita, than their countrymen as a whole • • • Per capita city-level expenditure v national-level expenditure 13 Africa is urbanizing fast and cities are attracting more... witnessing the emergence of “super cities - each bringing considerable opportunities The demographic profile of these cities can be much different than the national level picture Demographic profile of Lagos v Nigeria Key results – Demographics are favourable • While Africa as a whole has favourable demographics, the Africa cities we measured had notable differences between them: • Cities like Nairobi, Addis... & an on-theground network of African contributors Interviews with local statistical bodies as well as data collection from household and labour force surveys EIU Worldwide Cost of Living team Cost of EIU Worldwide Living team Construction of a cost of living index for the 25 African cities EIU Economics Unit Estimation and econometric modelling of unavailable data EIU Africa analysts 12 Data gathering...The Africa Cities tool indicators Population and demographics • • • • • • • • • • • • • • • • • • • • Total population Number of households Total male/female population Population aged 0-4 Population aged 5-9... businesses with 500 - 999 employees • Number of businesses with 1,000 - 4,999 employees • Number of businesses with > 5,000 employees Cost of living index • Customised cost of living index for the 25 cities, comparing the costs of: • Food and non-alcoholic beverages • Alcoholic beverages and tobacco • Clothing and footwear • Housing, water, electricity, gas and other fuels • Furnishings, household ... expensive 16 What are companies doing with Africa Cities data? Forecasting sales of their products and services in African cities Benchmarking African cities to find the best opportunities for... Europe -2 US Brazil Russia Sub-Saharan Africa India China Sub-Saharan Africa ex South Africa Africa’s growth story has always revolved around commodities But Africa s growth story is now more diverse... Determining wages for staff in various African cities Finding new market opportunities among African consumers 17 Want to learn more about the EIU’s Africa Cities data and analysis? Contact us