Have left its promise unfulfilled . For the next hour, youll find out on the africa opportunity. In africa, the optimism is infectious. The Natural Resources seem limitless. The population is young, growing, and educated. Yet today, the africa rising narrative is in doubt. Squeezed and Foreign Investors are pulling back. Is there a bull case to be made for africa . That is one of the questions we sought to answer in cape town. President ald caprica, of the African Development bank and now advises pdg, and sudanese billionaire. It is tough to make decisions for some countries, but africa has been there before. People misunderstand what has been happening with this continent. 1990 was known as the lost decade or 10 years of mayhem and decline occurred. 0 two today, african economies are larger. Now that is not going away because of the crisis. Example, the an fourth fastestgrowing countries in africa today have no fiscal dependence on commodities. There are a number of countries that have to make decisions on economic status. There are adjustments. That adjustment you see right now. Erik why be so confident that they will make those adjustments because those opportunities to adjust have come and gone before but have not been made . A good policy is like a triangle. It has to be politically feasible. Solutions, technical but from that point of feasibility, their issues everywhere. Erik he is hardly alone. Is bullish view on africa widely shared by industry and government as i found out on the first panel of our business and economic summit in cape town. What excites me about africa today is their acknowledgment that we need to do things differently, that we need to move a lot faster, that our populations are growing. We have a young population that is aspiring and ambitious and once in the economy and the opportunity to grow that economy is here and that is what excites me about africa. Our own governments are beginning to accept that we need to indeed turn the corner and looking into the past and anding colonialism imperialism is old stuff. The young generation wants to see a growing economy. Thats what excites me. Africa is increasingly stable. Its increasingly democratic and its increasingly willing to work with the private sector and create reform that is good for the Business Environment in africa is a continent, not a country, so there are wide variations on what i just said. But this is an agency that is focused on partnering with african countries and countries around the globe that are committed to governments and are willing to undertake these reforms. For example, we are working in ghana and cote divore. Theres infrastructure on the continent over a decade and increasingly working in energy under president obamas power africa initiative. Partners, weto our are seeing tough reforms. I mentioned the idea that we need cap more transparency, independent regulators, for. Xample, and the energy space we are seeing movement on this. What we are trying to help country by country is to develop data sets they need to make a compelling argument for foreign direct investment, to help them create Capital Market efficiencies, infrastructure and technology to grow their Capital Markets, and basically facilitate greater visibility through our Bloomberg News team writing the kind of stories about the leadership and the economic challenges that opportunities that exist on the african continent. We have been here for a time,vely short period of but as we look to the future, we look at africa as a very important longterm growth opportunity. We also look from the perspective that we have about 400,000 users of our product every day. They want to know what is going on in africa the same way they want to know whats going on in china and russia, brazil, and lots of other places. We are the conduit for that information and the facilitator for people to get that data they need to make important Investment DecisionsGoing Forward. Years,ver the past 55 slightly more than half a century, Subsaharan Africa has grown in population at a dramatically faster rate than the world. Look at that. Pretty remarkable the statistics. We have heard of these figures before, but here they are for everybody to see. Patrick, you are the insurance guy, right . For arguments sake, youre the actuary among us. Point ofhe actuarial view. How important are demographics to the gross story of africa . If you look at it, urbanization is the key here. Africa at a much slower pace then china where its driven from the center. The organization of africa generally speaking is an enormous trend. You look doubling of the population between now and just short of 2050. This is a very exciting market. The average size of families i was looking at this yesterday by 62 a family. This is back to what the irish were about six years ago and you know what they did. Excitinga, its a very thing. Its not true across all of africa. You have to be selective. And 17mple growth rates of the Subsaharan African are 5 plus. You have to pick the ones you want to go after. The urbanization is not kind of urbanization or you just drive into lagos and its like a teeming anthill in many ways. People are working and making money, but not living in the way and that perhaps that we are used to seeing the west. We have to tap into that and it will not be the traditional means of branched networks or ifas or direct sales force is maybe in some of those countries. We have talked about what its going to take for africa to education,ll case, infrastructure, further diverse location of economic base, and you and i have talked about this. Erik your concern is implementation coul. Why . We dig africa. Literally, figuratively, we dig africa. [laughter] one thing i find challenging is that most of these african countries all have fantastic visions. They are very clearly articulated whether its a National Development plan or vision 2056. It doesnt matter if it they all have them. My dad used to say if you want your dream to come true, just make sure you do not oversleep. That is what i see in most of these cases. We see the strategy. We know what we need to do. We do nothing about it. I think those countries we see getting up and doing it are succeeding. Ethiopia, and, kenya. Those that are getting off their butt are showing the world it is possible. Countriesllenge our and our governments is lets get up and just do it. For every bull case, there is a bear case. That is next on the africa opportunity. Rising remains a ing cry for bowles, but theres been a plunging in currencies and something growth in china, a trading partner for many african nations. At the Bloomberg Africa business and economics summit, bloomberg editor anthony squatting led a discussion on africas challenges and potential solutions. The africaabout rising narrative and we need to ask the question now is africa rising dead . Whats going on . What can we expect . I used to say there were four drivers for africa rising. Cycle, commodities for the other was politics and policies, urbanization and demographics could i think this cycle is gone. You now need the policies to address them. That is probably what you not getting in some of the places. This is really the key thing Going Forward the policies that governments will put in place to address that. I think the entrepreneurship is still there and we have everything to still have a very Bright Future in terms of business and development. Antony youve done a lot of research on the relationship between china and africa. Economyhink the african in china are they doing anything to find new markets . We talk about headwinds and china is certainly an incredible gale force tailwind for the continent. Something ive been looking out chinasld has been resource gross model has been impending african growth. We have seen from 2000 to now is this parallel growth between Subsaharan Africa and china at about 3. 5 differential. Correlation and now theres causation. Use as anna if i may example, about a year ago, looking at the continent, things were good. They were very strong seminaries and parallels between the mass economic status of Subsaharan African countries as you mentioned and southeast asia. Now we are seeing eye divergence on the economic side and are part of the world and policy reform structural reform. Its politically difficult to do some reform in some economies. Antony do you see a lot of potential for stronger relations between the u. S. In terms of orde and africa opportunities elsewhere for africa to be building new partnerships . Only 1 of u. S. Exports find their destination in Subsaharan Africa. It is about 6 of the export banks portfolio. We have much more engagement here. Thats not surprising that Capital Markets are not as deep. There are less options. I think there are a lot more opportunities here than u. S. Companies have taken advantage of. Have been active in power and transportation and infrastructure. But theres still a lot more opportunities in every one of those areas. Trip isur goals of this to encourage more u. S. Companies to participate here and tap into it. It goes back to what miguel said. The policy changes are what will be needed to attract companies here. Its not an easy place to do business. And companies have a lot of other options. In commodityhange prices is a unique opportunity because it encourages and may hasten they moved to some of these reforms and policy changes that have been needed for quite some time. Antony we were talking earlier about how africa and your organization would be involved in that. We talked about the slower than anticipated and limitation because of bureaucratic hurdles. Is that what youre talking about . Power africa is an Important Initiative that president obama launched here in 2013, committing 7 billion worth of capital for Power Projects here. That has been slower than we would like. We just have not seen the deals come through. I think part of that issue goes back to what miguel said. In terms of permitting and licensing and power purchase beenments, they have not as easy to put in place in a number of countries and i think that has impeded some of the Power Generation here. Antony perhaps you can speak to that. Youre dealing with a lot of people trying to invest in africa. Are they frustrated . Our african government starting to tear down bureaucracy . There are some challenges. I dont really think it is bureaucracy which is Holding Things up. I think its really at the end of the day basically two things. Its the lack of progression on infrastructure side. And this is the really serious one to me, which is the longterm one. On the shortterm one, you have some very wrong policies which have dramatic effects. If you do not have some certainty on the effect, even if it is a progressive devaluation, but if you have an official nearly out of the black market, it goes nowhere coul. That affects the ability to invested i thin. I think investors still want to come. Let me tell you the three investors i see want to come to africa. You have strategic investors, multinationals, still on africa because they see the fundamentals and demographics. Issue is ae effects minor problem and some say they can live with that. On the opposite side, you have Institutional Investors that buy stock leases. Those are off africa. The worst thing you can do is buy one stock today and then the following day have 20 devaluation. Those are definitely out of africa. Asy actually look at africa one, which is very sad and very wrong, but thats how it works. In the middle, you have financial investors, private equities. They can deal with this. They will adjust their valuations and their mechanisms. But they can deal with some uncertainty and they are still present. Over the shortterm, there is some uncertainty, but still very positive that there are projects and opportunities in capital willing. Much more coming up from the Bloomberg Africa business and economic summit. S, a composition with conversation with one of africas rising tech entrepreneurs when the africa opportunity continues. Africa is the worlds second largest landmass after asia and it is home to more than a billion people in 54 countries, who among them, speak as many as 3000 languages. African celebrate their differences. Many investors dont. The did to ring deteriorating Economic Outlook is divesting dollars. The punch by 31 in 2015, but africa is a continent, not a single country. Look at the economies of Subsaharan Africa and thats clear. Nigerias gdp has searched and the financial crisis and so has ethiopias. Africans economy has and sudan has done no better. No countries are likely. Is deadon the dead sea last, worse than venezuela. Progress is crucial. Made an index to track leadership in africa. He says that lie in the heart and improvement of african citizens. The eager human index has stalled since 2011. It is clear that enthusiasm for the africa opportunity has not stopped. Over and over, Business Leaders at the Bloomberg Africa business in a comic summit i express confidence and explain why did. This is a time that we accelerate investment in africa and not pullback. We would be in 1015 countries. Nigeria, we are not a majority yet, so we clearly have more investing to do and we think the timing is very good. I think that the change in Commodity Prices is an enormous opportunity. Economy had to diversify whether its an Saharan Africa are som or Subsaharan Africa. Ultimately, it will not be a sustainable economy, but in many ways, this is good news. It is sooner better than later and i think diversification looking to leverage the five in manufacturing and textiles and other things will make it far more sustainable. Africa,you think about you have to look at it from a longrange view. We go through these cycles whether its a commodity cycle up or down. The key is how people react number one. Number two is how you are able to continue investing for the long haul. I think that is the key. This the great story about africa. If you look at the kinds of returns that we can get on Something Like a wind power investment, a wind farm, exactly, i was there yesterday. They were looking at a gross return of over 20 . Even with a 5 deviation in currency and ignoring a big step down last year against the dollar or sterling, you have to say that that is still net after in expenses returns are well in the double digits. Erik youre still looking at healthy doubledigit returns. You have to be a Patient Capital investor. Theres no way you can come in for just a short period of time. Erik up next, investors dig deep into the clinical challenges facing south africa. Political challenges facing south africa. Erik welcome back. Nowhere does the africa opportunity seem real other than here in south africa. It is the confidents richest country. From everything from a thriving wine industry, the government is in shambles. The government is scrambling to balance its books. We sat down with a panel of Economic Experts to talk about south africas finances and the elephant in the room, the countrys Credit Rating. Obviously difficult times. Chinese growth is slowing. We have seen a plunge in the last couple of years. We have also seen a possible downgrading perhaps i , will just kickoff and asked the representative, conrad. What do you make of the budget . Does it leave south africa and a better or worse position . Conrad if i could get everybody not to use the term downgrade, we call it noninvestment grade. What i would like to do is really look at what our concerns are and contrast it with the budget we have seen today. When you look at the negative outlook would put on our rating in december last year, it was a triple b minus. That is the one that is at risk of dropping noninvestment grade. The key concern we have now is around growth and it is important for us when we look at growth that you have to bear in mind, this is a middle income economy, south africa. Roughly about 6000 u. S. Dollars per capita income. Look at growth around 1 or less than 1 at the moment from a per capita income gross perspective, it looks pretty dismal. How much pain and predicament is selfinflicted and how much is external . That is a good question. There has always been this tendency to look at Global Environments and there is no question it is a very difficult time or emerging markets. A lot of big growth engines in the recent past are increasingly being called into question. I think if your looking at south trajectory,growth this achievement of the very low growth rate, nothing seems to move in the South African economy out of that. That is actually at odds with a lot of what we did see from emerging markets over those crisis years. This seems to suggest the reasons are south africaspecific and i am sure there is not much anyone can do about the Global Environment but if we are looking at the structural rigidity this in south africa, things that are not helped in terms of Investor Confidence, and even allowing the country to generate job growth it desperately needs. There is a lot that is south africa specific and that needs to be taken on board if there is going to be any attempt to fix the issues. Can you sum up what you think is difficult to fix in the South African economy . What have we not dealt with yet . Everybody has been saying it is the structure of the economy. You see a lot of key import into Industrial Production be