Companies Traded on ’s Stock Exchanges The interactive map is available at map.isoko-institute.org

mature financial sector is sub-Saharan Africa’s largest nies according to industry sectors. is crucial to any mod- and one of the world’s 20 biggest Additionally, there is an additional Aern economy. Financial exchanges. And yet like Africa’s “layer” that outlines where the systems provide capital to entre- countries, the size and performance stock exchange states are located. preneurs, encourage individual of the exchanges varies consider- savings, minimize risk and increase ably. Rwanda’s stock exchange, As Africa continues to push for- liquidity. Stock markets in partic- still in its infancy, trades only five ward, many hope that its image of ular support economic growth by companies. old will be cast aside. According to improving domestic savings and Ernst & Young’s Africa Attractive- increasing both the quality and In 2012, ISOKO Institute mapped ness Survey the “time for Africa quantity of foreign and domestic all of the companies currently trad- is now” but “we need to bridge investment. Moreover, companies ed on stock exchanges in sub-Saha- this perception gap by telling new can raise capital at a lower cost ran Africa. As users zoom in, they stories about Africa, stories of without having to rely on financing can see where the companies are economic growth and opportunity.” from a bank. clustered to an increasing level of This map is an attempt to help close detail. Users can filter the compa- that perception gap. Today sub-Saharan Africa has 15 active stock exchanges. In 1989 there were only five. Some of these exchanges are still in their infancy; nevertheless, the proliferation of stock exchanges and the growing number of companies being traded on them is a bellwether of prog- ress being made on the continent. As investors from Brazil, China, the Middle East and increasingly the West consider the sub-Sahara as part of their portfolio, African countries have risen to the chal- lenge by developing more sophisti- cated financial systems to accom- modate investments.

Sub-Saharan Africa’s exchanges are comprised of 22 countries and INDEX NAME PRICE RETURN 5 YR ANN. RETURNS S&P Africa Frontier BMI [US Dollar] 1,478.49 4.31% feature some of the world’s top performing exchanges, including The S&P Africa Frontier is a comprehensive benchmark including stocks from Botswana, Cote d’Ivoire, , Kenya, Mauritius, Namibia, Nigeria and Zam- Kenya, Tanzania and Botswana. bia. The five-year annual return is near 5% while the one year return is 27% The Stock Exchange and the three year is 10%.

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Global Reports Map South and West Clusters It’s apparent that most of the 1025 companies traded on Africa’s stock exchanges are clustered in South Africa, and West Africa. Still, the map displays that there are other companies located in Canada, Europe, Australia and the Arabian Peninsula.

Financials Consumer Goods Despite the repeating narrative that most of the continent’s economic activity centers around primary resource commodities, the three maps above show a different narrative. As can be seen, financials and consumer goods are sectors that are more widely traded than basic materials.

Report Level Stock Exchange States The map bridges the macro and micro story of the companies Africa is home to 15 active stock exchanges, which are outlined traded on Africa’s exchanges. Users can zoom in down to the in the on the map above. While most exchanges are centered individual company and pull up its report. Eventually, each report on one country, the BVRM is a regional exchange comprised of will contain historic, biographical and performance information eight participating countries. for companies.

30 | AMERICAN OUTLOOK Special Edition AMERICAN OUTLOOK | 31 90 million African households have joined the consuming class in just over a decade 382 million in Africa’s workforce 37 million new jobs created over the last decade 42% employed outside of agriculture 253 million mobile phone users as of June 2013 5% GDP growth 2007 extractive industries represented 8% of FDI projects and 26% of capital invested in Africa 2012 mere 2% projects and 12% capital

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Source: McKinsey Global Institute; Ernst and Young Photo: Mark Darrough DOING BUISNESS IN AFRICA Africa’s New Marketplace: from Donor Target to Investment Opportunity

Historically, the West has viewed due to its high growth markets. And nomic reforms tamed inflation and Africa as little more than a target for according to the Wall Street Journal, opened economies to international philanthropy. Even today sub-Sa- U.S. companies invested more than trade.” In 2007, Nigeria’s former fi- haran Africa continues to be the $48.5 billion in Africa in the decade nance minister Ngozi Okonjo-Iwea- largest recipient of aid from the through 2011, more than companies la echoed Collier’s assessment in a OEDC and the largest recipient of from any other nation did. TED Talk, saying that there has been U.S. foundation money, according to a clear upward trend in governance the Hudson Institute’s Index of Global This recent activity has come about in 28 African countries and that Philanthropy and Remittances. But while thanks to increased political and the good intentions behind these economic stability in the region. Ac- The key thing is . . . the great charitable flows may be laudable, cording to Oxford economist Paul “ growth story of Africa. their impact has been less than Collier, Africa’s situation began to ” desirable. Fortunately, thanks to Dr. Kamal, Bhattacharya, change in 1995 when, “macroeco- Director of IBM Research – Africa real changes taking place in Africa, the continent’s narrative has shifted from donor target to investment opportunity.

Lionized as the last investment frontier and one of the fastest-grow- ing economic regions in the world, Africa is breaking from its tumultu- ous past. Western businesses have historically avoided investing in African markets, deterred by pover- ty, corruption, and conflict. But the winds seem to have changed. Driven by systemic changes and favorable economic trends, businesses the world over are taking notice of opportunities in Africa. Proctor and Gamble, Cummins, IBM, General Motors, and General Electric are all expanding their operations in Africa

32 | AMERICAN OUTLOOK Special Edition AMERICAN OUTLOOK | 33 With Africa at about 2% of to Asia, and its robust growth rates growth rates at or above 6 percent “our industrial revenue, I think are now higher than the OECD with 60 percent holding rates of that points to an opportunity. average. GDP levels continue to rise over 4 percent. Among sub-Sa- But there’s a different context with projections likely to approach haran Africa’s top performers are to consider. Africa for GE is 6 percent growth in the near future Republic of Congo, Ethiopia, bigger today than China was and 10 years out are expected to Botswana, Mozambique, Nige- 10 years ago. top $2.6 trillion. ria, Tanzania, Malawi, Ghana, Rwanda, Zambia, Uganda, and Jeff Immelt, GE CEO in African” Business Magazine 2012 Most of this growth has been Seychelles. Regionally, West Africa fueled by Nigeria and South Africa, has seen the highest growth rates at the number of civil conflicts had which account for 56 percent of 6.5 percent followed by East Africa declined from the 1990s dropping sub-Saharan Africa’s GDP and at 6.4 percent. Such robust growth from 12 to three or four. More re- are growing at 6.5 and 2.5 per- rates remain competitive with (and cently, the 2013 Mo Ibrahim Index cent respectively. Still, McKinsey in some cases outperform) the of Africa Governance reported that Global Institute pointed out that 28 BRICs. 94% of people living in sub Saha- percent of countries have achieved ran Africa live in a country where governance has seen an improve- ment since 2000. Consequently, the continent has gained upward economic mo- mentum at 5 percent average growth. The African economy even remained remarkably resil- ient through the global recession. African growth slowed briefly to 2 percent growth before recover- ing to pre-recession levels. Today, Africa is the second fastest-growing economic region in the world next

Africa offers Siemens vast “ opportunities for growth, –Siemens President and CEO Löscher,” 2010

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We are very bullish about the “ African continent . . . the continent will soon have a billion people, and while admittedly income levels are very low, they are rising. – Frits van Dijk, Executive VP Nestlé” in Bloomberg, 2011

politics, develop its economy, and strengthen its society is creating impressive results. In 2009, govern- ment-led efforts to improve business conditions enabled Rwanda to surge 76 spots up the World Bank’s Doing Business ranking. Moreover, this small, landlocked, and densely Looking forward, economists be- Prior to 2003, a single Nigerian populated country has sustained lieve that Africa’s growth levels will telecom firm was able to develop economic growth levels around 7 continue to rise and rival even the only 4,500 landlines during its percent from 1999-2009. Asian Tigers. However, in order to entire existence, but after liberaliz- sustain these growth rates, Africans ing reforms were implemented the Today, Africa offers high rates of will have to continue to build infra- number of GSM landlines jumped return and exciting opportunities structure, implement responsible to 32 million. Today, Nigeria’s tele- for investors with the future offering nd economic policies, foster political com market is the 2 fastest grow- long-term paybacks accentuated stability, and curb disease as well ing in the world next to China’s by recent trends. And while Africa as poverty. Nevertheless, Africa’s and is attracting $1 billion a year in may not be the place for conserva- recent economic growth has helped telecom investments. tive investors, returns in Africa do prime an environment ripe for outweigh the risks. Africa’s mar- business. Nigeria has made headway with its ketplace not only satisfies investor fiscal policy as well. The coun- appetites, but also increases and According to a 2013 report by try detached its budget from the distributes much needed capi- Ernst and Young, sub-Saharan volatile oil prices, and as a result, tal across the continent. African Africa’s global share of FDI in- Nigeria increased its monetary entrepreneurs and foreign investors creased from 3.2% in 2007 to 5.6% reserves. In fact, the country was alike will face obstacles alongside in 2012. It should also be noted able to save $27 billion. Moreover, the continent’s coming prosperity, that Africa now ranks ahead of five Nigerians have since reduced their but investments in Africa offer other regions (former Soviet States, inflation rate from 28 percent to 11 returns unlike anywhere else in the Eastern Europe, Western Europe, percent. world (65-70 percent higher than the Middle East and Central Amer- Asia by some estimates). And in this ica) in terms of investor perceptions Another top reformer in Africa case, the investments are not only according to the same report. is the Western business darling, economic, but social as well. These encouraging numbers must Rwanda. This Land of a Thousand be approach with some caution, Hills, has been hailed by Foreign however. Each of Africa’s countries, Policy as the “world’s best-kept “But, possibly for the first time in according to Johannesburg banking secret for business.”1 Overcom- Africa’s history, the continent has executive Euvin Naidoo, “have a ing incredible odds, Rwanda is a chance to achieve transforma- unique value proposition—You can emerging as a leading model for tive growth that is widely shared. make money; you can lose money.” economic development in Africa. It is now up to Africa’s leaders, Rwandan president Paul Kagame’s both public and private, to seize One particularly promising pros- commitment to stabilize Rwanda’s this opportunity. - McKinsey Global Institute,” 2012 pect is Nigeria, which has emerged 1 http://blog.foreignpolicy.com/posts/2009/04/10/ as one of Africa’s top reformers. the_world_s_best_kept_secret_for_business_rwan- da

34 | AMERICAN OUTLOOK Special Edition AMERICAN OUTLOOK | 35 Photo by Mark Darrough In Focus: A Fortune 500 Company Finds Consumers in Africa Procter & Gamble—the World’s Largest Consumer Products Company—Shifts Focus to Emerging Markets By Mark Darrough Procter & Gamble has traditionally sold its huge array ble its sales ($80 billion in 2009) over the next 15 years. of consumer products in US and European markets. To accomplish this feat P&G readjusted its strategy But when the global recession stalled growth rates and to sell new products to new, lower-income consumers lowered consumer demand in developed countries, by using “reverse engineering” to first research what P&G shifted its global strategy to emerging markets. consumers could afford, then adjusting the features and In South America, India, Russia and Africa hundreds manufacturing processes to meet pricing targets. P&G of millions of untapped consumers represented a new also began producing smaller package sizes to make frontier for P&G to maintain its ambitious growth their products more affordable. Moreover, they invested targets. heavily in R&D to understand a new type of consum- er—the low-income, high frequency shopper. CEO looks to emerging markets Of course, P&G’s emerging market sales were already When Bob McDonald became CEO of the 172-year- on the rise. In 2004, emerging markets accounted for old company in 2009 he said, “We’re going to focus $13 billion of its annual sales. By 2009 that number had even more on winning with consumers in emerging risen to $27 billion or 34 percent of annual sales. P&G markets . . . There’s no question that the basic de- has forecasted that by 2020, half of its revenue would mographics are going to take the center of gravity of come from these markets. our business to Asia, to Africa—where the people are, where the babies are being born.” Even amid worsening P&G targets Africa’s low-hanging fruit performance in its traditional markets, P&G announced “the most ambitious expansion plan in company histo- Although a dominant leader in its developed markets, ry”—to add 1 billion new consumers by 2015, and dou- P&G has lagged behind its European competitor, Uni-

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lever, in emerging market sales. More than half of Uni- P&G’s Three-Region Focus lever’s sales come from emerging markets. To compete in markets like Africa, P&G Global Vice Chair Dimitri Plants and distribution points in East, West and South Panayotopoulos says it will first target “low-hanging Africa currently represent the core focus of P&G’s Afri- fruit”—that is, it will introduce products in categories can operations. Strategies are fine-tuned for a different that its competitors don’t dominate before bringing in set of challenges in each region. competing products. The $50 million Kempton Park Plant in South Africa P&G has also adapted its core strategies to tap the epitomizes P&G’s “low-hanging fruit” strategy. P&G unique potential of a growing African market: originally entered South Africa with hair, beauty and hygiene products because Unilever had already domi- • The continent’s middle class is growing (an African nated the laundry detergent market. The new plant will Development Bank study found 1 in 3 Africans to expand its market share in the same way. Along with be middle income). These consumers are the focus Pampers diapers (which has a 40 percent market share of P&G’s sales strategy. in South Africa), it will also manufacture products in • P&G also targets the aspiring middle class by com- categories that competitors have yet to capture. bining street-level marketing, public health educa- tion, and word-of-mouth promoting. In West Africa, P&G established a plant 75 miles from one of the world’s fastest growing cities in Lagos, Nige- • The products are developed according to the ria. This plant serves at the hub for P&G’s West African African environment. Ariel detergent, for instance, is expansion. Oil-rich Nigeria is quickly developing, and designed to lather quickly and cuts out one step of a second plant is being planned in order to supply the the washing process. This is a necessity for consum- demands of the region’s ballooning middle class. ers with a limited water supply. Moreover, P&G is looking to improve the lives of P&G launched a fighter brand in the East African people through health education while educating them detergents segment in 2010, Ariel, signaling its intention on how to use their products. Always sanitary pads are to capitalize on the region’s growth opportunities. The helping solve a problem found in Africa: girls typical- rapid projected growth rates signal a powerful reason ly skip school while menstruating. P&G’s Protecting to compete with Unilever’s established Omo line of Futures program demonstrates the superior protection detergents. of the Always brand while providing menstrual hygiene education. Furthermore, P&G’s hospital programs and As a final word Panayotopoulos recently told CNN that mobile clinics demonstrate the superiority of Pampers in Africa’s “ . . . population is growing, the economies keeping babies dry through the night while educating are getting more and more stable, so [there are] huge mothers about infant health. opportunities here.”

36 | AMERICAN OUTLOOK Special Edition AMERICAN OUTLOOK | 37 Zain Latif, TLG Capital Q&AOn Investing in African Markets By Mark Darrough By 19, Zain Latif had graduated from Cass Business School ALatif: It goes down to the perception issue. When people with a Masters of Finance. Then with HSBC in London he think of measurements of wealth, or when they think spearheaded an effort to bring Nigeria’s first bank to the inter- about how rich a country is or how big the middle class national market. At 23, he became VP of emerging markets at is, they look at a very oft-used statistic called GDP per Merrill Lynch and quickly engineered a number of groundbreaking capita. GDP per capita is not an accurate measure of deals in sub-Saharan Africa. Soon after he joined Goldman Sachs wealth in Africa. Look at Ghana, which is a leading as executive director in the emerging markets division, where he led economy in West Africa. Ninety percent of Ghana’s the bank’s focus on sub-Saharan Africa. In 2009, Latif founded workforce is in the informal economy. And in Ugan- TLG Capital – a private equity fund dedicated to the belief that da, less than five percent of the people have a bank commercial and social returns go hand-in-hand in frontier markets. account. So you have a situation where all the informal activity of a nation simply isn’t captured in those official QDarrough: Explain your initial involvement in figures. Therefore, if a country has a GDP per capita of African markets and the creation of TLG Capital. $500 per year, you have a feeling that they won’t be able to afford many of the consumer products that we in the ALatif: My initial involvement in sub-Saharan Africa West take for granted. (SSA) came about eight years ago. I was at HSBC at the time, and there was this great opportunity in SSA Now let’s take a look at something that is very fascinat- where investors were looking for higher yielding assets. ing: the telecom revolution. In 1995, Africa had fewer Through my work at HSBC, and later at Merrill Lynch mobile phones than . Fifteen years later, and Goldman Sachs, I became quite successful in the continent had as many phones as North America. bringing large-scale African corporations to these west- This incredible, world-leading growth came from a ern capital markets. But such capital-heavy banks are population that many thought could not afford mo- focused on the top-tier segment of the market. They’re bile phones. In a place like Nigeria for instance, a low focusing on those companies or sovereigns that can GDP per capita says that Nigerians can’t afford mobile actually absorb over $100 million of financing. phones. Yet there are over 60 million mobile subscribers Now, if you take away Nigeria, and possibly Kenya in Nigeria. Obviously something doesn’t add up. and Ghana if you’re really stretching it, there are very few businesses in SSA [excluding South Africa] that So our philosophy is that there is a huge demand for can sustain that sort of capital. And if you take out consumer-driven industries; industries like information traditional sectors like oil and gas, mining, and infra- technology, health care, water bottling, and agro-pro- structure, you find very few opportunities in the more cessing. But the demand exists only if you can provide mainstream consumer-driven industries. I think this is a the right price and the right quality – the two strategies very lucrative space in these markets. And that was how that made the telecom industry so successful. TLG was born. TLG was born of the idea that there is a whole segment of consumer-driven industries that has QDarrough: How do you compare the rewards of not been able to attract the necessary level of capital, Africa to the rewards of more advanced emerg- despite an overwhelming demand that I believe exists. ing markets, markets like India and China? QDarrough: What has created this demand for ALatif: In India and China you’re paying for the growth investment in consumer-driven markets? that has already taken place. Most Chinese and Indian

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Photo by Mark Darrough companies are already valued with this growth in mind. What’s fascinating is that in the past 25 years, the World So when you look at a place like Uganda, at places like Bank has only paid out on these guarantees five times. Tanzania and Rwanda, the valuations are far lower So people need to understand that the reality of these simply because there’s not that much access to capital. markets differs from what is portrayed by the interna- At this early stage of the game, your ability to go in tional media. There are very real risks here, but there and determine the valuation is that much higher. Your are also ways in which you can mitigate those risks. ability to go in and say, “This is what we want to do, this And that’s what we try to do, and that’s what I think is is how we want to do it,” is much more flexible. going to be a winning philosophy going forward in these markets. The opportunity, therefore, to get better deals – just on a valuation basis – is simply incomparable to places QDarrough: Reports like Lions on the Move are like India and China. So it depends on the risk-side of showing that SSA has experienced unheralded an investor. In our view we feel that the risks, especially growth in the past decade. Investors now have when compared to India and China, are vastly overstat- the choice of getting in while there are opportu- ed in Africa. We feel that there are businesses here that nities for high returns. What is your final argu- are also much simpler to employ. ment for these potential investors, especially at such a crucial stage of the game? QDarrough: What are such risks that exist in the African marketplace, and how can investors ALatif: When you look at the macroeconomic situation of mitigate these risks? a place like Uganda, where they recently found 2 billion dollars worth of oil, you must recognize the increasing ALatif: Of course there are challenges in Africa, as much interest that will occur over the next 5 to 10 years. With as there are in other emerging markets. The very defini- all the proceeds that will come into the country and tion of an emerging market says that its commercial risk have a trickle-down effect into various sectors, it’s going is as equal to its political and stability risks. And that’s to become much more difficult for an investor to be what makes it different to more developed markets involved. like Europe and the U.S. But you can learn to mitigate those risks using tools that are widely available, tools So the ability to come in now – to understand the situ- like the World Bank’s MIGA risk guarantee. If you do ation, to build those relationships, to figure out where experience some sort of political instability, where the one wants to play in the various sectors that are open government decides to nationalize your assets or does to an investor – is critical. And for us that’s a decision something that is non-contractual, MIGA gives you the we’ve made, that we’re going to enjoy first-mover’s ability to recover your investment. advantage. And we’re going to build our relationships here, so that down the line the people, the countries and

38 | AMERICAN OUTLOOK Special Edition AMERICAN OUTLOOK | 39 the governments will appreciate the fact that we were that needs to change. That will only change when there with them from the beginning. And that to us is very is enough capital to build up dynamic, driven, and sus- important. tainable businesses. For us, and for people who want to see development in Africa, this is where you start. QDarrough: And how can this relate to an overall economic impact? The pharmaceutical plant that we’ve helped finance in Uganda, the Quality Chemicals plant, employs over a ALatif: We’re in this to see strong development. The thousand people both directly and indirectly. That sort ability to impact people’s lives here, with the amount of of job creation gives the people an income, gives them capital that we’re employing, is incredible. Our ability a chance to climb up the ladder, and is something that to give people an avenue for job creation and prosperity, I’m very proud of. That to me is another very important through the private sector, is vitally important. What is reason why Africa cannot be ignored, and why invest- happening right now is when a person graduates from ment in consumer-driven industries should considered college, their best choice is to work for the government. the surest way to ensure prosperity. Not just for the They feel that’s where they can have job security, where community, or the country, or the region; but for the they can probably get their best monetary returns; and entire world.

Today sub-Saharan Africa has 15 active stock DOING BUISNESS IN AFRICA exchanges. Prior to 1989 there were just five. These exchanges boast 1025 listed companies trading in excess of $1.22 trillion USD.

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