【Pre-Event for TICAD VI: Public Symposium】

The prospects of the industry forthe transformation of economic
structure in Africa
Mami Indo
Senior Executive Director Daiwa Institute of Research Ltd.
Vice chairman of Japan-African relations committee
Japan Association of Corporate Executives ( Keizai Doyukai )June 30, 2016

Curriculum Vitae of speaker
Mami INDO is Senior Executive Director of Daiwa Institute of Research Ltd. since2016. After she started to work at Daiwa Securities Co. Ltd. in 1985, she spent hercareer as an analyst on electric industry and management strategy.
From 2002 to 2007, she worked at the investment banking division of Daiwa
Securities SMBC Co. Ltd. and provided strategic consulting services to businessindustries in areas of business, management, financial, and M&A strategy.
From 2007 to 2009, she was Deputy Executive Officer of Daiwa Institute of ResearchLtd. from 2009 to 2012, Senior Managing Director, and from 2013 to 2015 Executive
Managing Director.
She is the chairperson of the Secretariat of Supervisory Commission for Public-Privateand Private-Private Competitive Tenderings, and a member of the Japan Associationof Corporate Executives (Keizai Doyukai), the Legislative Council of the Ministry ofJustice, and others.

Professional Qualification
Chartered Member of the Securities Analysts
Association of Japan
Education
B.A. in Law from Hitotsubashi University,
Tokyo in Japan in 1985
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

1

Today’s agenda
１．The present conditions of the African economy～Upcoming the new stage after rapid growth～
２．Problem of the African economy from the view pointof Japanese private sector
３．Prospects of African economy from the view point ofJapanese private sector
４．Africa’s priority for the solution to development
problems
５．Expectation toward TICAD Ⅵ（Proposal from Keizai Doyukai）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

2１．The present conditions of the African economy～Upcoming the new stage after rapid growth～3

Change of the oil price and the economic scale in Sub-saharan Africa (SSA)

Total of GDP in SSA and Oil price180

China's Slowdown
Europe's Sovereign Crisis

150
120

Oil price ($/barrel : Left axis)

1800
1500

Lehman Crisis
1200

Total of GDP in SSA (billion $ : Right axis)
90
60

900
China's accession to the WTO
Asian Currency Crisis

30600
300

IT Bubble Burst00Source : UNCTAD statistics (2016)
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

4

Change oil price and the economic growth rate in SSA

GDP growth rate in SSA and Oil price120
Oil price ( $/barrel：left axis)
100

8China's Slowdown

7

GDP growth rate（％ comparison with theprevious year ：right axis）

6
580

Lehman Crisis

460

3

China's accession
to the WTO

40

2

Europe's Sovereign Crisis
1
020

2015

2013

2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

Asian Currency Crisis
1971

0-1

IT Bubble Burst-2Source : UNCTAD statistics (2016)
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

5

Progress of the urbanization in SSA ①
Urban population in SSA ( % of total population )
50
45
40
35
30
25
20
15
1051950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028

0Source : World Bank statistics (2016)
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

(e)6Progress of the urbanization in SSA ②
Transition of cellular phone subscribers and penetration
1000

100

900

90

Cellular phone subscribers (million people : left axis)

800

80

Penetration ratio ( % of population :right axis)

700

70

600

60

500

50

400

40300

30

200

20100

1000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source : Telegeography (2014)
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7

Improving Business Ranking

Botswana
Côte d'Ivoire
Kenya
Mauritius
Nigeria
Seychelles
South Africa
UgandaYear

Ease of Doing Business Rank

2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016

72
72
145
142
129
108
31
32
170
169
104
95
69
73
135
122

Source : World Bank “Doing Business 2016” , “Doing Business 2015”
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

8

The big expectation on the Population Bonus

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92. Problem of the African economy from the view point ofJapanese private sector

10Change of the industrial structure in Africa
Breakdown of the GDP in Africa
CY 1960

37.6

38.1

CY 2010

22.4
Agriculture
Industry
Services

49.8

24.3

27.8

（Source ：de Vries, Timmer, and de Vries, (2013), “Structural transformation in Africa: Static gains, dynamiclosses”）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

11

Change of the employment structure in Africa
Breakdown of the work force in Africa
CY 1960

CY 201018.0
Agriculture

9.3

36.8

Industry

72.7

49.8

Services

13.4（Source ：de Vries, Timmer, and de Vries, (2013), “Structural transformation in Africa: Static gains, dynamiclosses”）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

12

Change of export and import in SSA, intraregional trade
Manufactured goods ( billion $ )

300
250

Export200

Import400

Export300

150

Import

200

100

2014

2013

2012

20112010

2009

2008

20072006

2005

2004

2003

2002

20012000

1999

1998

1997

1996

2014

2013

2012

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

2011

Intraregional trade in 2012 ( % of total trade )All food items ( billion $ )

100

0

1995

100

500

Primary commodities ( billion $ )Export80

Import60
40

Source (Export & Import) : UNCTAD statistics

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

0

1995

20

Source : World Bank statistics

Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

13

Food self-sufficiency in African countries
Food self-sufficiency ratio

10090
80
70
60504030
20
100Kenya

NigeriaSouth Africa

The self-sufficiency ratio (SSR) is defined as:
SSR = production x 100/(production + imports - exports).
Source : World Bank , FAO (2007)
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

14

Change of unemployment rate in SSA
Unemployment rate in SSA (% of total labor force)

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

9.4
9.2
9
8.8
8.6
8.4
8.2
8
7.8
7.6
7.4
7.2

Source : UNCTAD statistics (2016)
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

15

Problem of the African economy from the view point of Japanese private sector

Five problems that African economy faces
１． Transformation to independent economic growth
２． Acceleration of the regional economy integration
３． Acceleration of the infrastructure construction
４． Expansion of the intraregional trade in SSA
５．Fosterage and developing abilities of young human resourcesthat play important roles in the transformation(DIR)
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

16

３．Prospects of African economy from the view point ofJapanese private sector

17Potential of economic growth in Africa

Source : 在アフリカ進出日系企業実態調査（JETRO、2016年）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

18

Localization of Japanese companies ①

Source : 在アフリカ進出日系企業実態調査（JETRO、2016年）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

19

Localization of Japanese companies ②

Source : 在アフリカ進出日系企業実態調査（JETRO、2016年）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

20

The evaluation and risk to depend on investment environment ①

JETRO アフリカ進出日系企業2015年度版
P２５ 投資環境にかかる評価（メリット）P２６ 投資環境にかかるリスク

Source : 在アフリカ進出日系企業実態調査（JETRO、2016年）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

21

The evaluation and risk to depend on investment environment ②Source : 在アフリカ進出日系企業実態調査（JETRO、2016年）
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

22

４．Africa’s priority for the solution to development problems

23

The development plan that African countries themselves decided

Agenda 2063 (AU)・"A global strategy to optimize use of Africa's resources for the benefits of all
Africans "・The Heads of State and Government of the African Union (AU) in its 50thAnniversary Solemn Declaration, while acknowledging past successes andchallenges, rededicated itself to the continent’s development and technologicaltransformation.
・It attached to the agenda enforcement plans of the span for ten years.

High Fives (AfDB)・The tool for tracking progress on the African
Development Bank（AfDB）’s development priorities
・African Development Bank President Akinwumi
Adesina laid out the five priority areas that theBank will focus on to advance Africa’stransformative agenda over the next 10 years.
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

(AU, AfDB)
24

From the view point of Japanese private sector...

Two urgent problems

１. Infrastructure construction
２．Regional economic integration(DIR)
Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

25

５．Expectation toward TICAD Ⅵ （Proposal from Keizai Doyukai）

26

Proposal from Keizai Doyukai ( Japan Association of Corporate Executives )Proposal to meet a variety of needs for sustainable
development of Africa （ excerpt ） Cooperation of Japanese assistance and the growth strategy inAfrican countries
 Support for the regional economy integration andconstruction of multi-layer-like relations in Africa
 Dialogue between Japan and African government for theeconomic cooperation and improvement of the investment
environment
 Transformation of TICAD for the platform which
supports African development
 Contribution for human resources development（Keizai Doyukai）
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27

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28

Slow down of world trade (1)World Trade Volume(2005=100）
160

LehmanCrisis140

China's
Slowdown

120

IT Bubble Burst

100

Europe's
Sovereign Crisis

80

China's accession tothe WTO

60

Asian Currency Crisis
2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

40

Source: CPB Netherlands Bureau for Economic Policy Analysis

Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

29

Slow down of world trade (2)
世界輸出数量World世界輸出数量の推移
Trade Volume(YOY％）
20

Asian Currency

IT Bubble Burst
Lehman Crisis

15

China'sSlowdown

10

5

0

Europe's
Sovereign Crisis-5-10

China's accession to theWTO

-15

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

-20

Source: CPB Netherlands Bureau for Economic Policy Analysis

Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

30

Slow down of world trade (3)
世界輸出数量
世界輸出数量の推移
WorldExport Price(2005=100）
160

Lehman Crisis

China's Slowdown

140

120

100

Europe'sSovereign Crisis

IT Bubble Burst

80

Asian Currency
60

China's accession to theWTO
2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

40

Source: CPB Netherlands Bureau for Economic Policy Analysis

Copyright © 2016 Daiwa Institute of Research Ltd. All rights reserved.

31

Comparison of the labor cost

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32