AFRICAN RENAISSANCE: Africa's Fastest Growing Economies Of 2016 - Dangote Group On The Economic Opportunities In Africa!

Future Kigali.

April 1, 2016 - AFRICA - Africa is bestowed with young, fast-growing population. This population has been credited with the current economic boom all over the continent. We have compiled a list of six countries in Africa with the highest projected compounded annual growth rate (CAGR). The data comes from World Bank’s Global Economic Prospects (G.E.P).

Growth in Africa is projected to slow to 4.2 percent on average in 2015 from 4.6 percent in 2014. This is a downward revision of 0.5 percentage points relative to January 2015 GEP. Growth will then pick up in the coming year to an average of 4.6 percent. An increase to 5.0 percent is expected to be witnessed in 2017. This growth increase will be fuelled by domestic demand, continuing infrastructure investment and private consumption driven by lower oil prices.

6. Rwanda

It is mostly a rural country where 90 percent of the population depend on subsistence agriculture and some mineral and agro-processing. Tourism, minerals, coffee and tea are the main sources of foreign exchange. The 1994 genocide severely damaged the fragile economy. However, Rwanda has made substantial progress in stabilizing the economy to and further than pre-1994 levels.

GEP projection for Rwanda: 2015 GDP +7.00% / 2016 GDP +7.00% / 2017 GDP +7.50%
2014-2017 GDP CAGR +7.12%

5. Tanzania
The conduct of the recent general elections in Tanzania has gone on to keep strengthening the investor confidence The country has largely completed its transition to a market economy though the government retains a presence in sectors such as telecoms, banking, energy and mining.. It has recently experienced high growth rates owing to gold production and tourism. The economy is also strengthened by telecommunications, banking, energy, mining and agriculture. Agriculture still accounts for more than one-quarter of GDP and provides 85 percent of exports and employs 80 percent of the country’s workforce.

GEP projection for Tanzania: 2015 GDP: +7.20% / 2016 GDP: +7.10% / 2017 GDP: +7.10%
2014-2017 GDP CAGR: +7.15%

Tanzania.

4. Mozambique
Mozambique has attracted large investment projects in natural resources translating to continuation of the country’s high growth rates. Mozambique grew an average annual rate of 6-8 percent in the decade up to 2014. One of Africa’s strongest performances. It is a country rich in natural resources. Revenues from these vast resources, including natural gas, coal, titanium and hydroelectric production could overtake donor assistance within five years.

GEP projection for Mozambique: 2015 GDP: +7.20% / 2016 GDP: +7.30% / 2017 GDP: +7.30% 2014-2017 GDP CAGR: +7.30%

Mozambique is set to become one of the world's largest producers of natural gas.

3. Cote D'Ivoire

It is a country highly dependent on agriculture. Agricultural activities engage roughly two-thirds of the population. It is the world’s largest exporter of cocoa beans. The economy is highly sensitive to fluctuations in international prices and climatic changes. The end of a more than a decade of civil conflict in 2011 introduced a new era of a boom in foreign investment and economic growth.

GEP projection for Côte d’Ivoire: 2015 GDP: +8.00% / 2016 GDP: +7.70% / 2017 GDP: +7.50% 2014-2017 GDP CAGR: +7.80

Abidjan, Ivory Coast.

2. Democratic Republic of Congo (DRC)
DRC is abundant is natural resources, however, it fails to achieve the economic potential presented by this due to corruption, conflict and political instability. Despite the hurdles it continues to grow. Renewed activity in the mining sector which is the source of most export income has boosted DRC’s GDP growth in recent years.

GEP projection for DRC: 2015 GDP: +8.00% / 2016 GDP: +8.50% / 2017 GDP: +9.00%|
2014-2017 GDP CAGR: +8.62%

DRC.

1. Ethiopia

Coffee is the major export crop in an economy largely based on agriculture. The government is putting a major effort in diversification to manufacturing, textiles and energy generation. It issued its first sovereign bond in 2014 generating $1 billion revenue for a 10 year note. The only downside is that per capita income remains one of the lowest in the world despite the continuous high GDP growth.

GEP projection for Ethiopia: 2015 GDP: +9.50% / 2016 GDP: +10.50% / 2017 GDP: +8.50% 2014-2017 GDP CAGR: +9.70%

Addis Ababa resembles a huge construction site.

Dangote Group On The Economic Opportunities In Africa

Dangote Group CEO Aliko Dangote

Dangote Group is one of Africa’s leading industrial conglomerates, with interests in everything from cement to food. Yet one of the most promising ventures, in the eyes of founder, president, and CEO Aliko Dangote, is to develop Nigeria’s natural-gas sector into an export industry. In this interview, with McKinsey’s Rik Kirkland, Dangote explains his plans for the Dangote Group’s oil refinery, his effort to build a company that will outlast him, and why now is the best time to invest in Africa.

Transforming The Company
The big growth opportunities for Dangote Group are mainly on the south side of Africa. We are thinking about how we can take this business from where we are today—with a market cap of about $25 billion—to $100 billion by the year 2020.

Nigeria is very dependent on oil—38 percent of the country’s imports are petroleum products. So we’re asking, “How do we monetize our gas? How do we get gas to other countries?” We’ve looked at what kind of refinery we would need to meet all the domestic demand and also to export to the others in West Africa. The refinery, with an output of 650,000 barrels per day, will be the biggest petrochemical complex in the world in one single location. It will cost $12 billion to build, and will generate a turnover of $24 billion per year. The other businesses that we’re in include sugar, wheat, flour, pasta, and cement; cement is the only business that we do in 16 different countries in Africa. The next sector that we’re planning for is fertilizer—urea and ammonia. We are building two plants: we’ll use some, and some of it we’ll export. In all, we will be making an investment of $16 billion over the next three years.

This will totally transform the Dangote Group. When a country exports raw materials, it actually doesn’t make much money. So what we are trying to do is to change that mind-set: rather than being raw-materials exporters, we’ll now be goods exporters.

Investing in Africa
Africa is the best-kept secret. It’s true, there are risks. But you have to consider how to mitigate the risks and move forward. Africa, as a whole, has been growing by 5.5 percent a year for the past 12 years. And it has been sustainable. This growth, when you look at it, really is without power. With power, we could have double-digit growth. In addition, there has been a lot of political transformation. Various governments in Africa are making life easier, much easier than before. Our government used to change the rules of the game almost on a monthly basis, or even on a daily basis. That’s not happening right now. So investors can actually see what they will get over the next ten years.

Our banks, also are not the same. They, unfortunately, have not reached where they’re supposed to be, but at least you can get some funding. For example, in 2005, they had only about $25 million of capital each; now it’s up to $250 million of capital.

So things change dramatically. My advice is that you better invest now, before it’s too late. The train is about to leave the station.

Building Strong Partnerships
Part of our innovation plan is to make sure that we have great partnerships. We have partnered with Blackstone to invest $5 billion in infrastructure in Africa. What we would normally do is that we would take the whole risk first: Incubate these companies, make them work, demonstrate that they’re good businesses, and then we take the company to the capital market. But these days, before going to the capital market, we get some key investors. Then, together, we’ll make sure everything is in line. After that, we go out and list in Nigeria. Now we’re even thinking about starting to list on the London Stock Exchange.

Another part of our innovation strategy is to reexamine our processes because the processes are very, very important and key in terms of making sure that we compete with the international manufacturing base, both in terms of quality and in terms of producing our goods in the most economical way.
The final aspect of it is increasing the size of our business. Right now, we’re expanding to 16 other countries and we’re looking for more opportunities. The only way for us to do that is to digitize the business. We have a lot of information at our fingertips to make decisions—and to make the right decisions. What I was doing five years ago, if I tried to do that now without the automation that we have today, it wouldn’t happen at all.

Developing Leaders
What really matters is human capital: hiring people who are smarter than you. Because what we need to do is make sure that this company outlives us. We are trying to leave something for posterity. We’ve done quite a lot in terms of hiring and we have a plan for succession. Somebody like me, in the next 25 years, I might want to do something else. I’m not saying that I’m going to retire, but I might want to do something else.

So I have a very, very robust team. Without the right team, I would not be able to deliver the results that we’ve been delivering all these years. So the credit goes to Dangote’s management. We pay more attention to business development today. We develop companies and then we establish them. And now we take them to the market. So the most important thing for me is the development of the company, in terms of processes and people.

- McKinsey&Company | How Africa.

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