AFRICA’S GREENFIELD OPPORTUNITY

Global trends unearthed and analysed indicate that the chemical substances sector is more and more being pushed by Environmental, Social, and Governance (ESG) concerns. It also indicates that decarbonisation is often a key rationale behind the investments (and divestments) in the sector, apart from Africa where investments understandably lagged again this yr.
These are the findings of the newest Chemicals Executive M&A Report for 2022 launched by global management consulting firm Kearney, now in its ninth edition.
“The reasoning for it’s because there are simply not that many engaging goal firms with appropriate ESG credentials available to acquire for chemicals organizations trying to invest and consolidate on the continent,” explains Prashaen Reddy, Partner at the agency.
As the least industrialized continent, where as a lot as 600million individuals still live without electrical energy, Africa’s chemical trade is emergent, and its markets are immature in comparison to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemicals sector is a key element of Africa’s economy. A large complicated business, with diverse sub-sectors, Africa’s chemical industry is intrinsically interlinked with other sectors – fuels, pharmaceuticals, plastics, and manufacturing, to call a few.
The sector is answerable for key outputs and crucial commodities along a number of industries’ complete worth chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for round 25% of manufacturing 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 offers within the international chemicals sector have resulted in a strong investor appetite for M&A targets with good ESG credentials, permitting Africa’s chemical corporations that embrace ESG to place themselves to draw funding.
“Although realistically Africa will nonetheless must harness its abundant hydrocarbon-based power reserves to remain economically aggressive, there are proven methods to make even fossil-fuel burning services cleaner and extra sustainable, resulting in important reductions in carbon emissions, corresponding to the utilization of low-carbon fuel, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemicals sector thereby has an opportunity to leap forward of the curve, by building sustainability and green design rules into new chemical facility developments from the outset, and by working to decarbonise present offerings through technologies like carbon capturing and sequestration (CCS).
Echoing world developments, African National Oil Companies (NOCs) proceed to characteristic prominently within the chemical industry M&A house.
“Chemicals M&A activity has been comparatively quiet in Africa over the previous 12 months. เกจวัดแรงดันน้ำ4หุน -rich nations’ such as Nigeria, Angola, and more lately Namibia, who have traditionally focussed on the extraction, production, and provide of crude oil products, are now considering the diversification of their product portfolios as a part of their future-proofing efforts. This ought to begin to show leads to the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of power products additional along the value chain.
เกจวัดแรงดันไฟฟ้า might therefore see a spate of acquisitions of facilities that produce petrochemicals, ammonia, and fertilisers, for example, by these NOCs over the coming years. These acquisitions would function synergistically alongside their current oil and gas-focussed strategies,” he says.
There are indicators that Africa is set to take ownership of beneficiation and manufacturing and turn into a internet exporter of chemical substances, well-poised to provide the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemicals sector companies must navigate the mega-trends of rapid population growth, local weather change, digitisations and decarbonisation. Traditional chemical and energy giants, and NOCs, are repositioning themselves to remain relevant in a greener future. We hope to see Africa’s emergent chemical substances sector leading the cost in course of an environmentally and socially sustainable chemicals trade worldwide.”
For more information, visit www.kearney.com
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