AFRICA’S GREENFIELD OPPORTUNITY

Global tendencies unearthed and analysed point out that the chemical substances sector is more and more being driven by Environmental, Social, and Governance (ESG) issues. It additionally signifies that decarbonisation is often a key rationale behind the investments (and divestments) in the sector, aside from Africa the place investments understandably lagged again this yr.
These are the findings of the newest Chemicals Executive M&A Report for 2022 launched by international management consulting firm Kearney, now in its ninth version.
“The reasoning for it is because there are simply not that many engaging goal corporations with appropriate ESG credentials out there to accumulate for chemical substances organizations trying to invest and consolidate on the continent,” explains Prashaen Reddy, Partner at the agency.
As the least industrialized continent, the place as much as 600million folks nonetheless live without electricity, Africa’s chemical industry is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical substances sector is a key element of Africa’s economic system. A massive complicated industry, with numerous sub-sectors, Africa’s chemical industry is intrinsically interlinked with different sectors – fuels, pharmaceuticals, plastics, and manufacturing, to name a number of.
The sector is responsible for key outputs and crucial commodities alongside a number of industries’ complete worth chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for around 25% of producing 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 within the world chemical substances sector have resulted in a robust investor appetite for M&A targets with good ESG credentials, permitting Africa’s chemical companies that embrace ESG to place themselves to attract funding.
“Although realistically เกจวัดแรงดันน้ำประปาราคา will nonetheless have to harness its plentiful hydrocarbon-based power reserves to remain economically competitive, there are confirmed methods to make even fossil-fuel burning amenities cleaner and more sustainable, resulting in important reductions in carbon emissions, similar to the usage of low-carbon gas, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical compounds sector thereby has an opportunity to leap ahead of the curve, by constructing sustainability and green design principles into new chemical facility developments from the outset, and by working to decarbonise present choices by way of applied sciences like carbon capturing and sequestration (CCS).
Echoing world trends, African National Oil Companies (NOCs) continue to feature prominently within the chemical business M&A area.
“Chemicals M&A activity has been relatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ similar to Nigeria, Angola, and more just lately Namibia, who’ve traditionally focussed on the extraction, manufacturing, and supply of crude oil products, at the second are considering the diversification of their product portfolios as part of their future-proofing efforts. This should start to present leads to the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of vitality merchandise further alongside the value chain.
“We may therefore see a spate of acquisitions of facilities that produce petrochemicals, ammonia, and fertilisers, for instance, by these NOCs over the coming years. These acquisitions would function synergistically alongside their current oil and gas-focussed strategies,” he says.
There are signs that Africa is determined to take ownership of beneficiation and manufacturing and turn out to be a net exporter of chemical substances, well-poised to provide the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemical substances sector businesses must navigate the mega-trends of fast population enlargement, climate change, digitisations and decarbonisation. Traditional chemical and energy giants, and NOCs, are repositioning themselves to stay relevant in a greener future. We hope to see Africa’s emergent chemical substances sector main the charge towards an environmentally and socially sustainable chemical compounds industry worldwide.”
For more information, visit www.kearney.com
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