21 SCN 38-595

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38-595

Suggested by Clive Tasker

THE FIVE TRENDS POWERING AFRICA'S ENDURING ALLURE

TREND 3: LEAPFROGGING THROUGH TECHNOLOGY

by

Simon Freemantle From: “Africa Macro - Insight & Strategy”, Standard Bank, September 23, 2011.

http://ws9.standardbank.co.za/sbrp

Reproduced by The European House-Ambrosetti for the Forum “Developing the Regions of Africa and Europe”, Taormina, October 6 and 7, 2011.

2 Africa Macro

Insight & Strategy — 23 September 2011

Leapfrogging through technology

Insight & Strategy — 23 September 2011

3 Africa Macro

Across the world, technological enhancements are funda-

mentally altering the way human beings connect, communi-

cate and transact, providing new sources of commercial

nutrition. Consider that, where in 2000 there were approxi-

mately 360 million (mn) internet users worldwide, by 2011

this number had swelled to over 2 billion (bn). According to

the International Telecommunications Union (ITU), by the

end of 2010 there were an estimated 5.3 bn mobile cellular

subscriptions worldwide, including 940 mn subscriptions to

3G services (Figure 1). Staggeringly, in 2010 alone, roughly

200,000 text messages were sent globally every second,

which, assuming an average cost of USD0.07 per message,

would have generated USD840,000 in revenue for mobile

operators each minute (and over USD1.2 bn per day). More

recently, social media has captured the imagination—and

enabled deeper communication on an unprecedented scale.

Importantly, these developments have included, indeed are

increasingly being led, by participants in the developing

world. At present, access to mobile networks is available to

90% of the world‟s population, and 80% of those residing in

rural areas. Three-quarters of the world‟s mobile subscribers

are found in the developing world, up from half in 2005; in

2010 alone India and China added an estimated 300 mn

mobile subscriptions.

Unlike in the past, Africa has not been left stranded. The

continent‟s population has vigorously embraced technology

in general, and telecommunications in particular, as a

means to enhance socio-economic prosperity. This

„revolution‟ in Africa is allowing the continent to leapfrog

traditional stages of development, contributing to the forging

of a new, and more appropriate, economic course. Ulti-

mately, in many ways, technological advancements, and the

manner in which they have been absorbed in Africa, are

assisting in gradually narrowing the persistent gap between

Africa‟s and the rest of the developing world‟s developmen-

tal trajectories.

Mobile telephony has been transformative

In no area has the terrain altered more seismically than in

mobile telephony. Much of the importance of mobile phones

in the African context rests in the manner in which they al-

low Africans to sidestep pervasive infrastructure constraints,

share information more freely, thus making markets more

efficient, and stimulate and support entrepreneurial verve.

Where in 2000 there were only 15 mn mobile subscriptions

on the continent, by the end of 2010 there were believed to

be over 500 mn (Figure 2). Accounting for multiple subscrip-

tions (many people hold more than one sim card), it is likely

that around one in three Africans currently subscribe to one

of the continent‟s mobile service providers. As such, consid-

ering mobile penetration rates in excess of 100% in much of

the advanced world, substantial room remains for continued

growth in the African mobile phone industry (Figure 3).

Sources: ITU, Standard Bank Research

Sources: ITU, Standard Bank Research

Sources: ITU, Standard Bank Research

Figure 1: Telecommunications connecting a flatter world

Figure 2: Africa’s mobile phone revolution

Figure 3: Still, penetration remains comparatively low

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Insight & Strategy — 23 September 2011

4 Africa Macro

Supporting these future growth projections, Informa Tele-

coms & Media has estimated that over the next five years

east and central Africa will enjoy the highest mobile sub-

scription growth rates in the world, with Ethiopia (the conti-

nent‟s second most populous nation) Eritrea and Madagas-

car expected to see subscriber numbers increase by more

than 100% by 2015. Further projections suggests that mo-

bile subscriptions in Africa will reach 800 mn by 2015—three

-quarters of this increase is expected to come from eight

countries (Nigeria, Egypt, Tanzania, Sudan, the Democratic

Republic of Congo (DRC), Uganda, Angola, Kenya, and

Ghana). Indeed, at current and anticipated growth rates,

mobile penetration rates are expected to reach 100% by

2020 (Figure 4) - implying a real penetration rate

(considering again the prevalence of multiple sim card hold-

ers) of around 60%. Unsurprisingly, Nigeria has rapidly ele-

vated to become one of the developing world‟s most dy-

namic telecommunications markets. At present, there are

estimated to be over 90 mn mobile subscribers in Nigeria,

making it the world‟s tenth-largest mobile market.

Naturally, mobile phone operators ahead of the curve have

prospered. South Africa‟s MTN, the United Kingdom‟s Voda-

fone and India‟s Bharti Airtel (since purchasing the African

assets of Zain for USD10.7 bn in 2010) have carved out

meaningful shares in most of Sub-Saharan Africa‟s (SSA)

core markets (Figure 5). Bearing in mind the projections for

mobile phone user growth above, as well as the fact that

mobile phone operators in Africa make twice as much off

each subscriber than firms in countries such as India, corpo-

rate activity in this sector is likely to remain robust.

More Africans are connecting to the internet

As of March 2011, there were approximately 120 mn inter-

net users on the continent (it is more accurate to consider

internet users rather than individual subscriptions in Africa

as the users-to-connections ratio is often, as in key West

African markets, upwards of 20-1), implying a relatively low

penetration rate of 12% (Figure 6). Out of 100 inhabitants on

the continent, 9.6 are internet users, compared to 21.9 in

Asia Pacific and 65 in Europe. Only around 6% of the

world‟s internet users are in Africa, a disproportionately

moderate figure. Yet, the growth in African internet users

has been scintillating. Between 2000 and June 2011, inter-

net usage on the continent grew by 2,527%, compared to a

world average of 480% (706% for Asia and 353% for

Europe).

Naturally, these growth patterns are influenced by the low

originating base, yet a positive trend is clear and increas-

ingly inclusive. Indeed, in some countries, growth has been

particularly profound; over the course of the past decade

Algeria has seen internet users increase from just 50,000 in

2000 to 4.7 mn in 2011, Morocco from 100,000 to 13.2 mn,

Nigeria from 200,000 to 44 mn, Kenya from 200,000 to 3.9

Sources: Institute for Security Studies, Standard Bank Research

Sources: MTN, Bharti Airtel, Vodafone, Standard Bank Research

Sources: ITU, Standard Bank Research

Figure 4: Growth in ICT is expected to be strong

Figure 5: Mobile operators have expanded aggressively

Figure 6: Africa lags the world in internet usage

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Mobile access Broadband access

Access per 100 people

Insight & Strategy — 23 September 2011

5 Africa Macro

mn and Sudan from 30,000 to 4.2 mn.

Mobile telephony has clearly inspired growing internet us-

age in Africa. Consider that, globally, in 2013 mobile phones

are anticipated to overtake personal computers as the most

common web access device in the world. Given at times

tremendous infrastructure constraints, fixed broadband

penetration rates in Africa are remarkably low (less than

1%), compared to mobile broadband penetration rates of

almost 4% (which compare more favourably with the devel-

oping world average) (Figure 7). In the area of mobile

broadband, growth projections are stellar—by 2015 it is be-

lieved that there will be upwards of 250 mn mobile broad-

band subscriptions in Africa. Considering alternative met-

rics, and as outlined in Figure 4, it is expected that, where in

2010 only 6 out of 100 Africans had access to broadband,

by 2020 this ratio will have elevated to 22.

Meanwhile, despite rapid growth, access across the conti-

nent is heavily skewed towards a few large countries. At last

count, almost half of all internet users on the continent came

from Nigeria, followed by Egypt, Morocco and South Africa

(Figure 8). In the DRC, despite internet user growth of over

100,000% since 2000, fewer than 0.5% of the population

are internet users. The same is true of Ethiopia, where just

0.4% of the population use the internet.

Africans are embracing social media

Linked again to the success of mobile telecommunications,

Africans are eagerly embracing social media as a new

means of sustaining and building relationships. The youthful

balance of the continent‟s population supports these shifts.

While overall subscriber numbers are comparatively small,

Africa is one of social media group Facebook‟s fastest grow-

ing markets. According to most recent statistics (the pace of

change is so swift that data is substantially altering on a

weekly basis), there are around 32 mn Facebook users in

Africa (up from 10 mn in 2009), 3% of the continent‟s popu-

lation. However, measured against internet users (the so-

called “Facebook Index”), this ratio elevates. In all, more

than one-quarter (27%) of African internet users have Face-

book profiles, compared to 18% of Asian internet users, and

23% of internet users in the Middle East (Figure 9). The

manner in which social media enabled the mobilisation of

dissent in Tunisia and Egypt in early 2011 is an instructive

indicator of its potency. As at 30 June 2011, there were over

14 mn Facebook users in North Africa, with 6.5 mn and 2.4

mn in Egypt and Tunisia, respectively. 23% of all Tunisians

have Facebook accounts. And in the first six months of

2011, around 3 mn Egyptians joined the networking plat-

form, with around 700,000 joining in both Nigeria and South

Africa (Figure 10).

Meanwhile, indigenous social media platforms, such as

Ushahidi, have also emerged, leveraging the growth of mo-

Sources: World Bank, ITU, Standard Bank Research

Sources: ITU, Internet World Statistics, Standard Bank Research

Sources: Facebook, Standard Bank Research

Figure 7: Broadband penetration comparison (2010)

Figure 8: African internet users by country

Figure 9: Africans are uniting through social media

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World Developing countries Africa

Percent of total population

Nigeria, 44%

Egypt, 20.1%

Morocco, 13.2%

South Africa,

6.8%

Algeria, 4.7%

Sudan, 4.2%

Kenya, 4%

Tunisia, 3.6%

Uganda, 3.2%

Zimbabwe, 1.4%

All other, 13.4%

Insight & Strategy — 23 September 2011

6 Africa Macro

bile telephony on the continent. Ushahidi was originally de-

veloped to share and map information related to violence

emerging from Kenya‟s disputed 2007 elections, but has

since swelled to become a non-profit company using the

concept of crowdsourcing for social activism and public ac-

countability. Recently, versions of Ushahidi have been used

to create crisis and recovery maps following earthquakes in

Haiti and Chile, wild fires in Russia, and the tsunami in Ja-

pan.

New fibre-optic cables will raise connectivity

Unlike with fixed line telephony, fixed broadband is likely to

appreciate strongly in Africa in the coming decades as new

fibre-optic cables increasingly link the continent to central

hubs in Europe, the Americas and India. At present, broad-

band costs in Africa are exorbitantly high, due in part to

heavy residual reliance on satellite communications and

microwave networks. According to the ITU, the cost of a

fixed broadband sub basket in Africa in 2010 was 291% of

gross national income (GNI), compared to a developing

world average of 112%, 27% in the Asia Pacific region, and

only 2% in Europe. Last year it was reported that the top five

most expensive places in the world for fixed line broadband

were all in SSA—led by Central African Republic, where the

cost was nearly 40 times the average monthly income of the

population. However, the depth of the commercial opportu-

nity in Africa is inspiring foreign investment (largely private),

increasing competition and allowing the opportunity to lower

the costs for consumers.

This dynamic has already played out in the mobile telecom-

munications space, where fierce competition in voice, and

increasingly data, has led to comparatively low pricing,

which has supported the pace at which subscriptions have

elevated. Indeed, where private funding has been largely

elusive in plugging Africa‟s overall infrastructure deficit, in

the telecommunications sector the majority of annual spend-

ing comes from firms, rather than governments (Figure 11).

The World Bank has estimated that, between 1998 and

2008, as mobile phone subscriptions in Africa swelled from

2 mn to 400 mn, over USD56 bn in investment was attracted

by the industry.

New, mostly privately funded, cables linking Africa‟s eastern

and western coasts to international networks are set to dra-

matically alter overall connectivity (Figure 12). In particular,

African corporate enterprises—large and small—will benefit

from the increasing bandwidth capacity and reduced cost of

internet services. On the east coast of the continent, three

cables are of particular importance: The East African Sub-

marine Cable System (EASSy), which is owned and oper-

ated by a group of 16 African (92%) and international (8%)

telecommunications operators and service providers; The

East African Marine System (TEAMS), which is co-owned

by the Kenyan public-private consortium TEAMs (Kenya)

Sources: Facebook, Standard Bank Research

Source: World Bank, PPI Database, Africa Infrastructure Diagnostic

Sources: Standard Bank Research

Figure 10: Top 20 countries by Facebook users (Jun 11)

Figure 11: Funding for African infrastructure

Figure 12: New cables elevate African connectivity

USD72 bn

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Insight & Strategy — 23 September 2011

7 Africa Macro

Ltd (85%) and Etisalat (15%); and Seacom, a privately-

owned and operated cable system which has already at-

tracted investment of around USD600 mn.

And on the west coast of the continent, the region‟s primary

connection in the past (SAT-3), is being bolstered by the

following cable linkages: MainOne (privately-owned); Globa-

com(Glo)-1, which is owned by the Nigerian mobile operator

Globacom; The West African Cable System (WACS), which

is owned by a consortium of mostly private investors

(including MTN, which has invested USD90 mn in the cable,

allowing it to receive 11% of its initial capacity); and Africa

Coast to Europe (ACE), which is owned by the ACE consor-

tium, led by France Telecom. The capacity and reach of the

various new cables differs substantially, though, importantly,

and in large part as a result of the landing in 2009 and 2010

of some of these cables, Africa‟s international bandwith ca-

pacity has increased 120 times to over 10 terabits per sec-

ond (Tbps) since 2008 (Figure 13).

However, intra-African backhaul networks are essential in

order to distribute the advantages of these new cables and

maximise their anticipated economic gains. At present 88%

of Africa‟s terrestrial backbone infrastructure is wireless,

with the remaining 12% comprising fibre-optic cable. For

mobile operators, 99% of total infrastructure is wireless,

though fixed operators are more balanced with 60% wire-

less and 40% optical fibre. Regardless, in the absence of

substantial investments in elevating current intra-regional

linkages, for large areas, and in particular landlocked coun-

tries, broadband costs will remain excessively high—

consider that backbone optical fibre networks are up to 90%

cheaper and offer significantly higher bandwith (satellite

networks have a maximum capacity of around 10 megabits

per second (Mbps) compared to over 1 Tbps for fibre net-

works). Investment in intra-regional networks is also likely to

focus on areas with high user demand, the majority of which

will be urban.

Africa has pioneered innovative ICT solutions

Much of the growth in information and communications tech-

nology (ICT) access in Africa in recent years has been in-

spired by innovative approaches to challenging market con-

ditions. Infrastructure constraints, exacerbated by geo-

graphical fragmentation, have added particular pressure.

Meanwhile, competition amongst Africa‟s core mobile opera-

tors has been increasingly fierce, particularly as around 95%

of all users on the continent are prepaid, and, as such, more

likely to shift to new operators. Consider that, where aver-

age revenue per user (ARPU) per month in 2009 was

USD57 in Japan, and USD36 in Europe, it was only USD9.8

in Kenya and USD12.7 in Nigeria. Firms such as MTN and

Airtel have used a variety of innovative methods to ensure

profitability, such as outsourcing of back-office operations,

dynamic tarriffing, and borderless roaming.

Sources: Standard Bank Research

Sources: RIA Household Surveys, Standard Bank Research

Sources: Safaricom, Standard Bank Research

Figure 13: Africa’s connections multiply

Figure 14: Nigeria, household internet access mode

Figure 15: M-Pesa’s success has been engaging

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ADSL, 0.10%Leased

line, 3.00%

Wireless, 18.45%

Mobile phone,

18.89%

Other, 10.52%

Insight & Strategy — 23 September 2011

8 Africa Macro

Yet it is in the area of mobile money transfers where Africa

has been most pioneering, using innovative means to create

new economic opportunities. From a virtually non-existent

base five years ago, it is estimated that there will be up-

wards of 350 mn users of mobile money transfer services in

Africa in 2015. Mobile money offers a swifter, safer and

more cost effective means to transfer money, and has been

revolutionary in the manner in which it has extended finan-

cial services to the informal economy.

Kenyan mobile operator Safaricom‟s M-Pesa service has

led the charge. Since its inception in 2007 M-Pesa‟s growth

has been staggering—as at 31 April this year over 14 mn

Kenyans were served by 27,988 M-Pesa agent outlets

(compared to less than 1,000 bank branches) throughout

the country (Figure 15). In 2010, these 14 mn Kenyan M-

PESA users transferred an estimated USD7 bn, equivalent

to 20% of national gross domestic product (GDP), through

M-Pesa. Perhaps most demonstratively, M-Pesa‟s success

has spawned over 60 similar programmes across the globe.

Some are already showing signs of comparative success.

For instance, since launching mobile money services in

partnership with Stanbic Bank in Uganda, MTN has already

amassed over 3,000 mobile banking agents across the

country. By the end of August 2010, MTN had 1.2 mn mo-

bile money subscribers, transferring a monthly average of

USD60 mn, 60% of which was sent from urban to rural ar-

eas. In 2010, the Bank of Uganda recorded USD400 mn

worth of mobile money transfers, with registered mobile

money customers quadrupling from 552,000 in 2009 to

around 2 mn by the end of 2010.

Beyond mobile money transfers, mobile phone usage has

supported various poverty-alleviation and empowerment

schemes across Africa. For example, in 2009, MTN

Uganda, in partnership with Google and the Grameen Foun-

dation, launched five mobile phone applications aimed at

providing real-time health and agricultural information, and a

virtual marketplace for trading goods and services. Among

the applications are Google Trader, which, through match-

ing buyers and sellers of agricultural produce and commodi-

ties, allows local small-holder farmers to broaden trading

networks and reduce transaction costs. Another application,

Farmer‟s Friend, provides a searchable database through

which users can access agricultural advice and weather

forecasts. And, Health Tips and Clinic Finder provide health-

care support for rural households, the importance of which

is borne out by the assertion that, according to McKinsey

Global Institute research, upwards of 80% of all health is-

sues can be solved by mobile phone, at a cost per capita

that is 90% lower than that of traditional healthcare models.

The economic effects of ICT are profound

Evidence is mounting of the economic gains possible from

elevated ICT access throughout the developing world. Ac-

Sources: Eijkmann et al., Economist (2010), Standard Bank Research

Sources: World Bank, Standard Bank Research

Sources: World Resources Institute, IFC, Standard Bank Research

Figure 16: Ave. daily value of M-Pesa client transactions

Figure 17: Growth effects of ICT

Figure 18: Burkina Faso, BOP spending on ICT

-400

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Fixed Mobile Internet Broadband

High-income countries

Low-and-middle income countries

Economic growth, percentage points

Insight & Strategy — 23 September 2011

9 Africa Macro

cording to the World Bank, for every 10 percentage points

(pps) increase in fixed line access, economic growth is likely

to advance by 0.43 pps in high-income countries, and 0.73

pps in low-and middle-income countries. An even more ro-

bust relationship is evident in mobile, internet and broad-

band access—indeed, a 10 pps increase in broadband

penetration could effect an increase in economic growth of

up to 1.21 pps in high-income countries and as much as

1.38 pps in low-and middle-income countries (Figure 17).

Elaborating on these positive linkages, the World Bank has

further found that an extra 10 phones for every 100 people

in an average developing country could boost GDP growth

in the respective economy by as much as 0.8 pps. Further-

more, Booz and Company have found that a 10% increase

in broadband penetration in a specific year is correlated to

1.5% greater labour productivity growth over the following

five years. Considering the room for expansion in the major-

ity of African markets, it is clear that rapid uptake of mobile

telephony is likely to continue to provide substantial support

for wider growth aspirations. Indeed, recent evidence in

Kenya adds credence to these assertions. Without the tele-

communications industry, it is estimated that Kenya‟s GDP

growth since 2000 would have been 0.9 percentage points

lower on average. And, a recent study has also shown how

the incomes of Kenyan rural households have increased by

5%-30% since they began using mobile banking.

Conclusion

Few alterations of Africa‟s macroeconomic vista have been

as noticeable and inclusive as the growth of the continent‟s

ICT sector. Already, Africa‟s base of the pyramid (BOP)

consumers spend USD4.4 bn per year on ICT. As incomes

rise, so too will spending on ICT products and services—for

instance, in Burkina Faso, 1% of household spending in the

BOP500 market is allocated to ICT, whereas 5% of house-

hold spending is allocated to ICT in the BOP3,000 category

(Figure 18). Crucially, Africa has not been a bystander in the

manner in which telecommunications is able to alter lives,

and create new economic opportunities. Increasingly, as

incomes elevate, investment in broadening critical infra-

structure will enhance nascent gains.

Yet, optimism in the ability of ICT enhancements to raise

productivity and growth should not disguise the substantial

impediments which remain. While new cables are likely to

drastically alter the cost and speed of broadband connec-

tions, the majority of Africans will remain locked out of these

improvements should supportive backhaul networks not be

created. Fortunately, private funding for ICT in Africa is con-

siderably less elusive than it is for other infrastructure priori-

ties. Yet, too many markets remain inadequately liberalised

for the gains of telecommunications to effectively percolate

throughout the economy. Quite clearly, those countries

adopting pragmatic and investor-friendly policies in the ICT

space will gain an edge in unlocking the potentially profound

gains ICT is able to generate.

The first two reports in this series dealt with Africa‟s rising,

youthful, and urbanising population. While opportunities

within this demographic and locational shift are lucid, they

are by no means inherent. Institutional support will be of

fundamental importance in order to ensure that a rising

population is able to find the means for economic better-

ment. Supporting and stimulating further advances in ICT

will be a critically important determinant separating those

that triumph and those that falter. The availability and af-

fordability of mobile and broadband services can, as it al-

ready has in key markets, support economic growth and

provide one of the means through which Africa‟s human

capital advantage can become pronounced. The pace of

change is likely to continue to be robust; those actors—be

they firms, development institutions, or governments—

approaching these alterations innovatively will be rewarded.

Through embracing telecommunications with such vigour,

Africans have bridged a gap in the developmental trajectory

with much of the emerging world—creating solutions based

on local market fundamentals, suited to the proclivities and

pockets of African consumers, and geared towards broad-

ening the beneficiaries of nascent socio-economic gains.

References

Cilliers, J; Hughes, B; Moyer, J. 2011. African Fu-

tures 2050: The next forty years. Institute for Security

Studies, Monograph 175. January 2011.

International Telecommunications Union. 2010. The

World in 2010: ICT Facts and Figures.

McKinsey Global Institute. 2010. Africa’s path to

growth: Sector by sector. McKinsey Quarterly, June

2010.

Qiang, C; Rossotto, C; and Kimura, K. 2009. Eco-

nomic Impacts of Broadband: Chapter 3 of the Infor-

mation and Communications for Development 2009:

Extending Reach and Increasing Impact report,

World Bank, Washington, DC.

The Economist. 2009c. Mobile marvels: A special

report on telecoms in emerging markets. Economist

Print Edition, September 6 2009.

Wallis, W; Manson, K; and England, A. 2011. Africa:

Ripe for reappraisal. Financial Times, May 18, 2011.

World Resources Institute. The Next 4 Billion: Market

Size and Business Strategy at the Base of the Pyra-

mid. Co-publication of the World Resources Institute

and International Finance Corporation.

10 Africa Macro

Insight & Strategy — 23 September 2011

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To U.K. Residents

Standard Bank Plc is authorised and regulated by the Financial Services Authority (register number 124823) and is an affiliate of Stan-dard Bank of South Africa. The information contained herein does not apply to, and should not be relied upon by, retail customers.

To Turkey Residents

Standard Unlu Menkul Degerler A.S. and Standard Unlu Portfoy Yonetimi A.S. are regulated by the Turkish Capital Markets Board (“CMB”). Under the CMB‟s legislation, the information, comments and recommendations contained in this report fall outside of the definition of invest-ment advisory services. Investment advisory services are provided under an investment advisory agreement between a client and a broker-age house, a portfolio management company, a bank that does not accept deposits or other capital markets professionals. The comments and recommendations contained in this report are based on the personal opinions of the authors. These opinions might not be appropriate for your financial situation and risk and return preferences. For that reason, investment decisions that rely solely on the information con-tained in this presentation might not meet your expectations. You should pay necessary discernment, attention and care in order not to experience losses.

To Singapore Residents

Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report.

Important Regional Disclosures

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company(ies) within the past 12 months.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors:

The non-U.S. research analysts (denoted by an asterisk*) are not registered/qualified as research analysts with FINRA. The non-U.S. re-search analysts (denoted by an asterisk*) may not be associated persons of Standard New York Securities Inc. and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trad-ing securities held by a research analyst account. Each analyst (denoted by an asterisk*) is a Non-U.S. Analyst. The analyst is a research analyst employed by The Standard Bank Group Limited.

General

This research report is based on information from sources that Standard Bank Group believes to be reliable. Whilst every care has been taken in preparing this document, no research analyst or member of the Standard Bank Group gives any representation, warranty or under-taking and accepts no responsibility or liability as to the accuracy or completeness of the information set out in this document (except with respect to any disclosures relative to members of the Standard Bank Group and the research analyst‟s involvement with any issuer referred to above). All views, opinions and estimates contained in this document may be changed after publication at any time without notice. Past performance is

not indicative of future results. The investments and strategies discussed here may not be suitable for all investors or any particular class of investors; if you have any doubts you should consult your investment advisor. The investments discussed may fluctuate in price or value. Changes in rates of exchange may have an adverse effect on the value of investments. This material is not intended as an offer or solicita-

Insight & Strategy — 23 September 2011

11 Africa Macro

tion for the purchase or sale of any financial instrument. Members of Standard Bank Group may act as placement agent, advisor or lender, make a market in, or may have been a manager or a co-manager of, the most recent public offering in respect of any investments or issuers referenced in this report. Members of the Standard Bank Group and/or their respective directors and employees may own the investments of any of the issuers discussed herein and may sell them to or buy them from customers on a principal basis. This report is intended solely for clients and prospective clients of members of the Standard Bank Group and is not intended for, and may not be relied on by, retail custom-ers or persons to whom this report may not be provided by law. This report is for information purposes only and may not be reproduced or distributed to any other person without the prior consent of a member of the Standard Bank Group. Unauthorised use or disclosure of this document is strictly prohibited. By accepting this document, you agree to be bound by the foregoing limitations. Copyright 2011 Standard Bank Group. All rights reserved.

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