THE INVISIBLE MARKET THE TRILLION DOLLAR AFRICAN OPPORTUNITY
THE PERCEPTION: THE WAY MANY PEOPLE THINK ABOUT AFRICA 2
THE REALITY: AFRICA IS VERY BIG PLACE – WITH LOTS OF OPPORTUNITY Macro trends • World’s fastest -growing population … 500 million more people by 2030 … Africa will account for 40% of global population growth over the next 40 years • Rising digital usage … 52% of urban Africans online; 25% daily … Internet access numbers in line with Russia/Brazil – ahead of India • Healthy urbanization … 50 cities over 1 million, 66 by 2016 … more urbanized than India … Urban driven consumer consumption expect to account for a $185 billion opportunity by 2020 • Optimistic, emerging middle class … 50% of households with discretionary income … 84% believe they will be better off in 2 years • Religious Diversity … >400 million Africans are Muslim SOURCE: IFC/Worldbank MSME database 2011, McKinsey & Co research, Ovamba Research, Wikipedia, CIA world factbook, the Economist 3
THE REALITY AFRICA IS CRITICALLY UNDERSERVED DESPITE ATTRACTIVE FUNDAMENTALS Credit Demand is significant and growing 35 $368 $1.5 16% million Billion Trillion units SME’s served Annual African Aggregate Credit Gap Housing Unit by banks SME credit gap (Consumer / SME) Gap Marketplace Lenders who specialise in Africa are growing quickly - US Co: Venture Backed - Rocket - Purchased by - Angel Backed SME only – short term funding - Barclays Internet - Consumer Only - Serves 6 countries - Leading South - S.Africa only - Nigeria focused - Sharia certified financial firm Africa Platform - Expanding geographically Only 4 significant commercial players in a 1.1 Billion Person Market Source: Company websites, Expert Interviews, IFC Website, Mckinsey & Co – expert interviews, Press search, Mondato 4
THE REALITY LOCAL CAPITAL IS AVAILABLE – BUT HIGHLY REGULATED AFRICAN INSTITUTIONS HAVE CASH RESERVES OF OVER $450 BILLION THAT THEY STRUGGLE TO DEPLOY • African Insurers • African Pensions (top six countries) “We are the leading pension with political pressure to invest locally, but we can’t find liquid proven assets in country” - CIO at government pension fund $60B $200B “We are one of the biggest insurers in Nigeria. We are investing locally in real estate only. That’s the only asset class we can invest in that provides yield. - Investment officer at large Nigerian insurer $60B $131B • Local sovereign • Africa based private wealth funds and wealth managers DFI’s Marketplace Lenders leverage global institutional and local retail capital to grow 5
THE REALITY HISTORIC MODELS OF TECHNOLOGY ADOPTION USE AMERICA AS A BASELINE… Rates of adoption of new technologies An evolutionary approach to the spread of technology and technology adoption by the population 6 http://time.com/2966515/landline-phones-cell-phones, Mstat Mobile solutions, LIBERUM
THE REALITY … HOWEVER AFRICAN TECHNOLOGY ADOPTION CYCLES ARE FASTER AND HOUSEHOLD ADOPTION MORE COMPLETE ONCE ADOPTED Telecommunications: Telecommunications: Households Access Households Access • • 41% wireless only 98% wireless only • • 75% post-paid plans 98-99% pre-paid plans CASE STUDY: M-Pesa launched in 2007 Note: US Mobile phone based payments – Kenya: Mobile payment solution estimated at 10% of US Penetration: mobile phone user Ubiquity (67% of adult population) population in 2016. 67% of national payments (by volume) done via m-pesa CORE LESSONS: AFRICAN MARKETPLACE LENDERS HAVE A CHANCE TO OWN ENTIRE FINANCIAL SHARE OF WALLET SOURCE: Africa.upenn.edu, Ovamba research, world bank, population pyramid, cia world factbook, http://time.com/2966515/landline-phones-cell-phones/ 7
OUR EXPERIENCE IN WHAT IT TAKES TO BUILD A GREAT AFRICAN MARKETPLACE LENDING BUSINESS DEEP LOCAL BUILD YOUR OWN KNOWLEDGE IS CULTURE MATTERS INFRASTRUCTURE CRITICAL YOU ARE ENGAGE SYSTEMICALLY STAKEHOLDERS IMPORTANT EARLY IT’S A MARATHAN NOT A SPRINT 8
QUESTIONS / COMMENTS EMAIL / TWITTER MARVIN.COLE@OVAMBA.COM @MARVINRRC VIOLA.LLEWELLYN@OVAMBA.COM @OVAMBAP2P 9
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