AFRICA’S GREENFIELD OPPORTUNITY

Global trends unearthed and analysed indicate that the chemical compounds sector is increasingly being pushed by Environmental, Social, and Governance (ESG) considerations. It additionally indicates that decarbonisation is often a key rationale behind the investments (and divestments) within the sector, apart from Africa where investments understandably lagged once more this year.
These are the findings of the newest Chemicals Executive M&A Report for 2022 released by international management consulting agency Kearney, now in its ninth version.
“The reasoning for it is because there are merely not that many attractive goal companies with suitable ESG credentials obtainable to accumulate for chemical substances organizations trying to invest and consolidate on the continent,” explains Prashaen Reddy, Partner on the agency.
As the least industrialized continent, where up to 600million people still reside without electrical energy, Africa’s chemical business is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemicals sector is a key part of Africa’s economy. A large complex business, with various sub-sectors, Africa’s chemical business is intrinsically interlinked with other sectors – fuels, prescribed drugs, plastics, and manufacturing, to name a couple of.
The sector is responsible for key outputs and crucial commodities along a quantity of industries’ complete value chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for around 25% of manufacturing gross sales. (Chemical and Allied Industries’ Association: https://home.kpmg/za/en/home/industries/chemicals.html)
ESG and decarbonisation more and more being the dominant rationales behind M&A deals in the global chemicals sector have resulted in a strong investor urge for food for M&A targets with good ESG credentials, permitting Africa’s chemical companies that embrace ESG to position themselves to draw funding.
“Although realistically Africa will still have to harness its ample hydrocarbon-based power reserves to remain economically aggressive, there are proven methods to make even fossil-fuel burning amenities cleaner and more sustainable, leading to significant reductions in carbon emissions, similar to the use of low-carbon gasoline, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemicals sector thereby has a chance to leap ahead of the curve, by building sustainability and green design rules into new chemical facility developments from the outset, and by working to decarbonise current offerings via applied sciences like carbon capturing and sequestration (CCS).
Echoing international trends, African National Oil Companies (NOCs) proceed to feature prominently within the chemical business M&A space.
“Chemicals M&A activity has been comparatively quiet in Africa over the previous 12 months. Africa’s oil-rich nations’ corresponding to Nigeria, Angola, and more lately Namibia, who’ve traditionally focussed on the extraction, manufacturing, and provide of crude oil products, are now considering the diversification of their product portfolios as a part of their future-proofing efforts. This should start to show results in the medium-term,” explains Reddy.
These new alternatives arising are in downstream beneficiation of energy merchandise further along the worth chain.
“We might therefore see a spate of acquisitions of services that produce petrochemicals, ammonia, and fertilisers, for instance, by these NOCs over the approaching years. เกจวัดแรงดันแบบแห้ง would function synergistically alongside their present oil and gas-focussed strategies,” he says.
There are indicators that Africa is determined to take ownership of beneficiation and manufacturing and become a net exporter of chemicals, well-poised to produce the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemical compounds sector businesses should navigate the mega-trends of rapid inhabitants expansion, climate change, digitisations and decarbonisation. Traditional chemical and vitality giants, and NOCs, are repositioning themselves to remain related in a greener future. We hope to see Africa’s emergent chemicals sector main the cost towards an environmentally and socially sustainable chemical substances industry worldwide.”
For more info, go to www.kearney.com
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