20 SCN 38-596

SCN 38-596

Suggested by Clive Tasker

THE FIVE TRENDS POWERING AFRICA'S ENDURING ALLURE TREND 2: AFRICA'S TRANSFORMATIONAL URBAN SWELL by Simon Freemantle

From: “Africa Macro - Insight & Strategy”, Standard Bank, September 21, 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.

Insight & Strategy — 21 September 2011

Africa’s transformational urban swell

2 Africa Macro

Insight & Strategy — 21 September 2011

Africa’s population is not only rising (see Africa Macro: Trend 1: A larger, younger, and more affluent population—12 September 2011) , but rapidly urbanising, adding further depth to positive economic growth and consumer spending assertions. Indeed, enticed by the promise of economic prosperity, millions of Africans are converging on the continent’s ballooning urban nodes. At present, around 40% of Africans reside in urban areas, making the continent comparatively more urbanised than India—and only modestly less urbanised than China (Figure 1). Yet, given the unprecedented pace at which urbanisation is occurring in Africa, this balance is expected to alter substantially within the coming decades.

Indeed, 2030 will be the tipping point whereby more Africans will reside in urban than rural areas for the first time in the continent’s history (globally, this tipping point was reached in 2009). Further ahead, by 2050, according to United Nations (UN) Habitat, more than 60% of Africa’s population will be urbanised (Figure 2). Recalling that, by this time, Africa’s total population will exceed 2 billion (bn), these estimations suggest that around 800 million (mn) Africans will either migrate to, or be born in, urban areas within the next four decades. In Africa’s most populous nation, Nigeria, around 80 mn people currently reside in urban areas. Yet, at an average annual urban growth rate of 2.8% for the next forty years the urban population will amount to 220 mn by 2050, by which stage three out of every four Nigerians will live in the countries mushrooming cities, up from one in two today.

Unequivocally, no region in the world has embraced urbanisation as rapidly as Africa has (Figure 3). Whereas in 1950, less than 5% of the world’s urban population resided in Africa, today this figure stands at around 12%, and by 2050 will reach 20%—effectively meaning that, by this stage, one in five urban dwellers worldwide will reside in Africa. In some countries this shift is likely to be even more dramatic; by 2050 eight in ten Angolans, Nigerians and South Africans will live in these respective countries’ cities, up from five in ten (for Nigeria) and six in ten (for Angola and South Africa) in 2010. By 2050, 14 African countries will have urbanisation rates of over 80%, and a further 23 countries will have urbanisation rates of between 60% and 80%, indicating a seismic alteration of today’s portrait (Figure 4).

Importantly, while rural-urban migration is undoubtedly a driving force, the majority of urban population growth will be through natural increase. According to Tannerfeldt and Ljung (2006), around 60% of urban population growth in the developing world is natural growth, 30% the effect of net migration, and 10% the result of changed boundaries and other administrative measures. These figures are broadly accurate for Sub-Saharan Africa (SSA) as well, though in the initial phase of particularly accelerated urban growth that the continent is currently undergoing, rural-urban migration is likely to account for a larger share of the growth of the continent’s cities than natural increase.

Figure 1: Currently, 40% of Africans live in urban areas

100%

75%

50%

25%

0%

India

Africa

China Europe Latin North America America

Rural population

Sources: United Nations (UN), Standard Bank Research

Figure 2: By 2050, two in three Africans will live in cities

100%

75%

50%

25%

0% 1950 1965 1980 1995 2009 2020 2035 2050

Rural population

Africa Macro

Urban population

Sources: UN, Standard Bank Research

Figure 3: No region has urbanised swifter than Africa

6

Urban growth rate, %

4.5 3 1.5

0 1950

1965

1980

1995

2010

2025

World

Africa

Asia

Europe

LatAm & Caribbean

North America

Sources: UN, Standard Bank Research

3

Urban population

2040

Insight & Strategy — 21 September 2011

As of last year, Africa had a total of 49 million-plus cities (up from 30 in 2000), compared to 42 in the US, 21 in Brazil, 48 in India and 110 in China. Yet, these estimates, at least with regards to African cities, are likely to be substantially understated. For example, where UN Habitat believes Lagos’ population will equal 15.8 mn in 2025, making it the world’s 12th most populous city, other unofficial estimates suggest that the cities population will have easily eclipsed 20 mn within the next decade given the current pace of expansion (to be sure, anecdotal evidence suggests that Lagos’ population may already have breached this figure).

Even by conservative estimates Kinshasa, Lagos and Cairo are expected to be the 11th, 12th, and 13th most populous cities in 2025 (Figure 6).

Indeed, Africa’s urban sprawl is occurring on such a scale that many cities are merging, forming urban corridors or “mega-regions”. Already, Egypt’s two largest cities, Cairo and Alexandria, are increasingly interconnected, as are Pre-

Sources: UN, Tannerfeldt & Ljung (2006), Standard Bank Research

Figure 5: Africa’s commercial centres are swelling

Mn people

Percent

16

5 4

12

3

8

2

4

1

2010

2020

Accra

Dakar

Johannesburg

Dar es Salaam

Nairobi

Addis Ababa

Abidjan

Khartoum

0

Luanda

0

Kinshasa

Meanwhile, Dar es Salaam, Nairobi, Ouagadougou, Cairo, Abidjan, Kano and Addis Ababa will all see their populations increase by more than 1 mn people within the next decade (Figure 5). For some cities, this alteration will be particularly meaningful. For instance, Ouagadougou’s population will swell by almost 80% from 1.9 mn to 3.4 mn within the next decade. Indeed, excluding South Africa, all of SSA’s large cities (defined as those with populations of more than 1 mn) are expected to expand by an average of more than 30% by 2020.

2050

2010

Cairo

Unsurprisingly these trends are leading to the mushrooming of Africa’s prominent commercial capitals. Indeed, the scale of expansion in certain more populous nations is leading to the growth, or emergence, of so-called African “megacities”, large urban commercial centres such as Lagos, Cairo and Kinshasa, each with populations of over 10 mn, and growing rapidly. Recent data suggests that population density (measured as the number of people per square kilometre) in Africa’s mega cities is 3,621, compared to 1,482 in intermediate cities, and 35 in rural hinterlands. Indeed, according to UN Habitat, Kinshasa will be Africa’s fastest growing city in absolute terms in the next decade: though Kinshasa’s population has already effectively doubled since 2000, it is expected that a further 4 mn inhabitants will either migrate to or be born in the city in the next decade, amounting to a 50% increase from its current estimated population of almost 9 mn. Lagos will be the continent’s second-fastest growing large urban centre, with an estimated 3.5 mn new residents by 2020. Since the turn of the century, Luanda has been one of the fastest growing cities in the world, expanding at an annual average rate of 6%. Alarmingly, the city, originally intended for around 500,000 inhabitants, is now home to almost 5 mn.

Figure 4: By 2050 14 countries will be more than 80% urban

Lagos

Africa’s mushrooming urban nodes

Growth rate RHS

Sources: UN Habitat, Standard Bank Research

Figure 6: World’s largest cities in 2025, mn inhabitants

0

10

20

30

40

Tokyo Mumbai Delhi Dhaka Sao Paulo Mexico City New York Kolkata Shanghai Karachi Kinshasa Lagos Cairo Beijing Buenos Aires Los Angeles Rio de Janeiro Jakarta Istanbul Guangzhou Sources: UN Habitat, Standard Bank Research

4 Africa Macro

Insight & Strategy — 21 September 2011

First, given the benefits of agglomeration and economies of scale, urban-based enterprises are generally more productive, and thus contribute a more substantial share of GDP, than rural equivalents. Elevated accessibility to large and relatively diversified pools of labour also positively influences productivity. Meanwhile, a broader local market enables easier access to the benefits of scale in production, facilitates enhanced access to suppliers and specialised services, and reduces transaction costs (Tannerfeldt and Ljung, 2006). Urban employees also tend to earn significantly higher wages than rural workers, enabling a greater swelling of the consumer base (Figure 9).

These estimations, based on global precedent, hold true in

Port Ogbomosh Harcourt o Maiduguri Zaria

Lagos

Kano All other urban areas

Kaduna Illorin Ibadan Benin City

Abuja

Sources: UN, Standard Bank Research

Figure 9: Urban incomes are substantially higher 800

Monthly household budget (USD/month)

600 400 200 0

National

Rural

Middle income

There is a clear and mutually enforcing relationship between economic growth and urbanisation. While, for the most part, urbanisation supports socio-economic development (indeed, institutions such as the World Bank and UN have suggested that sustained economic growth and rapid social development cannot be achieved without urbanisation), it is also true that economic growth inspires more rapid rural-urban migration. Evidence is unambiguous in displaying a clear correlation between the economic success of nations and the prosperity of their cities. Indeed, when coupled with the economic growth, urbanisation is able to introduce several profound gains:

Figure 8: Nigeria’s urban distribution

Low-income, coastal

The economic importance of urbanisation

Sources: UN Habitat Standard Bank Research

Low-income, landlocked

Yet, the most rapid acceleration in urbanisation is taking place in Africa’s smaller secondary and intermediate cities.

For instance, between 1990 and 2006, Nakuru in Kenya and Dire Dawa in Ethiopia grew at average annual rates of 16.6% and 7.8%, respectively. Such towns and cities are proving to be the nexus of urban transformation in Africa, soaking up the majority of the newly urbanised population.

Indicatively, according to UN Habitat, 70% of all African urban population growth will take place in smaller cities within the next two decades. Consider that, of Africa’s total urban population, only 35% reside in the 58 cities with populations of over 750,000. In the case of Nigeria, 34% of urban residents live in the country’s 11 large cities, meaning that over 50 mn people live in smaller intermediate and secondary cities (Figure 8).

Figure 7: New African mega-cities and mega-regions

SSA

toria and Johannesburg (including Vereeniging and Ekhurhuleni) in South Africa. As Figure 7 displays, the concentration of large million-plus cities in West Africa, in particular, has the potential to forge sweeping urban systems. Where in 2000 Nigeria had 4 million-plus cities, by 2020 it will boast 11. Many assert that, supported by planned large-scale infrastructure projects, it is ultimately feasible for Lagos to link through Benin and Togo to Ghana’s capital city Accra in a vast 600 km urban chain, with a combined population of between 30 mn-50 mn.

Urban

Sources: Foster and Briceño-Garmendia (2010), Standard Bank

5 Africa Macro

Insight & Strategy — 21 September 2011

Indeed, the role of large cities in the ongoing rebalancing of the economic globe from the west towards new poles of influence in the developing world continues to be profound.

According to Khanna (2011), the rise of global commercial hubs in Asia has been a far more important factor in the reconfiguration of global influence between West and East than the more muted growth of Asian military power. As the vigour of the nation-state continues to subside, cities will continue to underline their role as fundamental determinants of global politico-economic power.

Africa. For instance, recent data in Tanzania shows how the urban population, which accounts for around one-quarter of the country’s total population, generates over half of total GDP. Across the board, it is estimated that urban household incomes in Africa are more than twice as high as rural incomes. Naturally, socio-economic wellbeing is affected as well—currently urban poverty rates in Africa stand at around 35%, compared to 52% for rural areas. According to Farvacque-Vitkovic et al. (2008), the average productivity in African urban areas could be at least three times that of rural areas.

The shift from rural to urban employment on the continent has the ability to account for between one-fifth and half of total productivity growth, and a recent UN report found that a key feature of Africa’s burgeoning middle class is the manner in which its members earn their income—the majority of which is accumulated through non-farming activities, and almost exclusively in urban, or coastal, areas rather than in the rural hinterland. Urbanisation also adds support to elevation of commercial services, such as banking, thus allowing more fluid access to the formal economy. As indicated in Figure 10, urbanisation rates substantively affect the penetration of financial services across core markets in Africa.

Second, given the immense challenges posed by inadequate infrastructure (particularly power and transport) in Africa, urban conglomerations allow greater and more immediate benefit for public spending on key infrastructure

32

% of total population

Per 100,000 adults

80

Highly urban

24

60 Highly rural

Commercial bank branches

Ethiopia

Burkina Faso

Uganda

Lesotho

Senegal

Togo

0

Benin

0

Zambia

20

Algeria

8

Gambia

40

South Africa

16

Tunisia

Urbanisation trends in Africa are in step with large and important global structural shifts as the “global city” (Sassen, 2000) entrenches its role as the pivotal force of international commerce and, thus, political influence. Wealth-generating large cities already shape, as much as are shaped by, the national policies of the countries in which they are located.

Between 1950 and 2004, more than two-thirds of all global population growth occurred in cities. Currently, just forty cityregions account for over two-thirds of the global economy, and the world’s largest 40 mega-regions, while covering a small portion of the habitable surface of the earth, and accounting for only 18% of the world’s population, are responsible for 66% of all economic activity, and 85% of all technological and scientific innovation (UN Habitat, 2010).

Figure 10: Financial access is elevated in urban areas

Cape Verde

Text box 1: The rise of the “global city”

Urbanisation rate

Sources: International Monetary Fund, CGAP, UN, Standard Bank

Figure 11: Access to infrastructure by location

80

Percent of population

60

40

20

0 Landline Cell phone Improved Improved Electricity sanitation water

Rural

Urban

Sources: Banerjee at al. (2008), Standard Bank Research

Figure 12: Agricultural productivity and urban proximity

80

USD per capita

% of total

160

60

120

40

80

20

40

0

0 Less than 1.7 hours

1.7-7.6 hours

More than 7.6 hours

Area

Population

Crop production

Per capita production) RHS

Sources: Dorosh et al. (2008), Foster and Briceño-Garmendia (2010)

6 Africa Macro

Insight & Strategy — 21 September 2011

projects supporting economic growth. As a result, urban inhabitants have greater access to basic infrastructure services, providing profound support to relevant commercial aspirations (Figure 11).

Moreover, with high user volumes, infrastructure projects in large cities become more economically viable, and are thus more likely to be able to attract private funding. The World Bank has estimated that a basic package of household infrastructure becomes unaffordable, and thus unviable, where population density is below 10,000 people per square kilometre. In highest density urban areas, the cost of a bundle of high-quality services is USD325 per capita, while the same bundle would cost USD665 for medium-density cities, USD2,837 for the rural hinterland, and USD4,867 for isolated rural areas (Foster and Briceño-Garmendia, 2010).

Unsurprisingly, therefore, of the approximately USD26 bn a year spent on infrastructure in Africa, around 50% is allocated to exclusively servicing the urban space, with 20% allocated to rural areas.

Indeed, incorporating the full spectrum of household services, urban convergence rates are between 5 and 10 times those in rural areas. According to the World Bank, every year since 1990 has seen an additional 0.9% of the urban population gain access to improved water and 1.7% to improved sanitation, compared to 0.3% and 0.4% of the rural population, respectively. Meanwhile, electricity services have been expanded to an additional 3% of urban residents, but to only 0.8% of rural residents. Banerjee et al. (2008) further found that 76% of urban households in Africa had access to at least one modern infrastructure service (piped water, flush toilet, power, and landline telephone), compared to only 15% of all rural households.

Third, there is a clear link between urban and rural prosperity. Urban centres (which generally have enhanced infrastructure) provide concentrated primary markets for agricultural products, generating income that flows back to rural households. Indeed, proximity to cities is a critical determinant enabling the adjustment from subsistence to commercial agriculture, for increasing rural incomes, and for ensuring the convergence of rural-urban living standards (Foster and Briceño-Garmendia, 2010). Research has shown that rural areas located between two and eight hours travel time from cities with at least 100,000 inhabitants account for more than two-thirds of agricultural supply, generating a surplus which is used to satisfy rising urban demand (Figure 12) Farmers located nearer to cities also tend to make greater use of productivity-enhancing technologies and equipment, as well as higher-quality fertilizers and pesticides. Meanwhile, migrants generally remain linked to their rural families, and provide support in the form of remittances, transferred through increasingly sophisticated means (for example, mobile money transfers in countries such as Kenya and Uganda).

7

Africa Macro

Fourth, urban concentration supports more robust development of viable civil societies, which in turn allows more effective mobilisation for necessary, and economically supportive, political and social change. Recent protests in Cairo and Tunis, for instance, were more pointed, attracted more attention, and ultimately exerted greater influence than more dispersed rural dissension. Across the globe, cities act as the fulcrum of political and economic change.

The challenges of urbanisation However, while the benefits of urbanisation are clear, and supported by precedent, the pace of change occurring in Africa is placing immense strain on existing urban infrastructure systems, exacerbating an already prevalent shortfall in infrastructure investment requirements across the continent.

Until infrastructure systems are enhanced they will continue to place strain on urban productivity. Poor urban planning is also mounting pressure on commercial hubs, adding to congestion, and hindering the provision of basic services to urban inhabitants. A common feature of Africa’s mushrooming cities is the swelling, or creation, of informal settlements.

Generally speaking, living conditions in these informal settlements are poor, usually well below rural conditions. It is estimated that around 70% of SSA’s urban population reside in informal settlements—Davis (2004) estimated, for instance, that over 90% of urban residents in Ethiopia and Chad lived in informal settlements. And, in Kenya’s largest informal settlement, Kibera, infant mortality rates (as measured in 2004) were exceedingly high at 106 deaths for every 1,000 births, compared to a rural Kenyan average of 76/1,000 births.

Meanwhile, the environmental impact of rapidly growing informal settlements is also acute.

The above factors serve to underline the manner in which inequality in Africa is rising, creating new frictions amongst the continent’s emerging aspirants. To be sure, while the ability to mobilise for social change has its clear positive dividends, cities also provide potential hot beds for destabilising social revolt. Scenes of food and fuel price riots in certain African cities in recent years are a harbinger of these challenges—particularly if adequate means for expression and employment are denied of Africa’s large and youthful populace. Moreover, smaller urban centres, which are absorbing the majority of overall urban growth, are inferior to larger centres in their ability to accommodate and provide services to new entrants.

Conclusion Urbanisation is both important and inevitable. If leveraged effectively, and supported by enhanced institutions, the swelling of Africa’s large, intermediate and secondary cities can be a profoundly relevant tool in the elevation of socioeconomic wellbeing across the continent. African cities will

Insight & Strategy — 21 September 2011

be the pivotal means for the continent to raise productivity, enhance economic output and relevance, and adjust social and economic inequality. Pointed reforms have, for instance, reduced the proportion of people living in informal settlements in Ghana, Senegal, Uganda, Rwanda and Guinea by 20% since 2000. To be sure, agglomeration and economies of scale add support to the commercial ambitions of Africa’s rising, and youthful, urban workforce. Yet, while many of the benefits of urbanisation are inherent, substantial support will be required to effectively benefit from these alterations. As Africa nears the tipping point at which more than half of the continent’s population will be urbanised, countries approaching this trend with pragmatism, cognisant of the potency of potential, will thrive.

tion.

UNDP. 2010. Human Development Report 2010.

The Real Wealth of Nations: Pathways to Human Development. 2010.

UN Habitat. 2010. State of the World’s Cities 2010/2011: Bridging the urban divide. United Nations Human Settlements Programme.

World Resources Institute. The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid. Co-publication of the World Resources Institute and International Finance Corporation.

References Banerjee, S; Wodon, Q; Diallo, A; Pushak, T; Uddin, H; Tsimpo, C; and Foster, V. 2008. Access, Affordability, and Alternatives: Modern Infrastructure Services in Africa. Background Paper 2, Africa Infrastructure Country Diagnostic, World Bank, Washington, DC. Davis, M. 2004. Planet of Slums: Urban Involution and the Informal Proletariat. New Left Review 26, Mar-Apr 2004.

Dorosh, P; Wang, H-G; You, L; Schmidt, E. 2008.

Crop Production and Road Connectivity in SubSaharan Africa: A Spatial Analysis. Working Paper 19, African Infrastructure Country Diagnostic, World Bank, Washington, DC. Farvacque-Vitkovic, C; Glasser, M; Mehta, B; Raghunath, M; Kilroy, A; Federico Barra, A; Salooja, R. 2008. Africa’s Urbanization for Development: Understanding Africa’s Urban Challenges and Opportunities. World Bank, Washington, DC. Foster, V and Briceño-Garmendia, C. 2010. Africa’s Infrastructure: A Time for Transformation. Copublication of the Agence Francais de Developpement and the World Bank.

Khanna, P. 2011. When cities rule the world. What Matters (McKinsey & Company), 7 January 2011.

Sassen, S. 2000. The Global City: Strategic Site/New Frontier. American Studies, 41:2/3. Summer/Fall, 2000.

Tannerfeldt, G and Ljung, P. 2006. More Urban Less Poor: an introduction to urban development and management. A Swedish International Development Cooperation Agency (SIDA) and Earthscan publica8 Africa Macro

Insight & Strategy — 21 September 2011

Disclaimer Certification The analyst(s) who prepared this research report (denoted by an asterisk*) hereby certifies(y) that: (i) all of the views and opinions expressed in this research report accurately reflect the research analyst's(s') personal views about the subject investment(s) and issuer(s) and (ii) no part of the analyst’s(s’) compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed by the analyst(s) in this research report.

Conflict of Interest It is the policy of The Standard Bank Group Limited and its worldwide affiliates and subsidiaries (together the “Standard Bank Group”) that research analysts may not be involved in activities in a way that suggests that he or she is representing the interests of any member of the Standard Bank Group or its clients if this is reasonably likely to appear to be inconsistent with providing independent investment research.

In addition research analysts’ reporting lines are structured so as to avoid any conflict of interests. For example, research analysts cannot be subject to the supervision or control of anyone in the Standard Bank Group’s investment banking or sales and trading departments.

However, such sales and trading departments may trade, as principal, on the basis of the research analyst’s published research. Therefore, the proprietary interests of those sales and trading departments may conflict with your interests.

Legal Entities To U. S. Residents Standard New York Securities, Inc. is registered with the Securities and Exchange Commission as a broker-dealer and is also a member of the FINRA and SIPC. Standard Americas, Inc is registered as a commodity trading advisor and a commodity pool operator with the CFTC and is also a member of the NFA. Both are affiliates of Standard Bank Plc and Standard Bank of South Africa. Standard New York Securities, Inc is responsible for the dissemination of this research report in the United States. Any recipient of this research in the United States wishing to effect a transaction in any security mentioned herein should do so by contacting Standard New York Securities, Inc. To South African Residents The Standard Bank of South Africa Limited (Reg.No.1962/000738/06) is regulated by the South African Reserve Bank and is an Authorised Financial Services Provider.

To U.K. Residents Standard Bank Plc is authorised and regulated by the Financial Services Authority (register number 124823) and is an affiliate of Standard 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 investment advisory services. Investment advisory services are provided under an investment advisory agreement between a client and a brokerage 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 contained 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. research 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 trading 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 undertaking 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 solicita9 Africa Macro

Insight & Strategy — 21 September 2011

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 customers 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.

AG/AFMAC/00111

10

Africa Macro