AFRICA’S GREENFIELD OPPORTUNITY

Global developments unearthed and analysed indicate that the chemical compounds sector is more and more being pushed by Environmental, Social, and Governance (ESG) concerns. It also indicates that decarbonisation is commonly a key rationale behind the investments (and divestments) within the sector, apart from Africa where investments understandably lagged again this 12 months.
These are the findings of the newest Chemicals Executive M&A Report for 2022 launched by global administration consulting agency Kearney, now in its ninth edition.
“The reasoning for it is because there are simply not that many enticing goal corporations with suitable ESG credentials out there to accumulate for chemicals organizations trying to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner on the agency.
As the least industrialized continent, the place up to 600million individuals nonetheless live with out electrical energy, Africa’s chemical business is emergent, and its markets are immature in comparability to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemicals sector is a key element of Africa’s financial system. pressure gauge 4 นิ้ว complicated trade, with various sub-sectors, Africa’s chemical business is intrinsically interlinked with other sectors – fuels, pharmaceuticals, plastics, and manufacturing, to call a couple of.
The sector is answerable for key outputs and crucial commodities along a number of industries’ whole value 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 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 firms that embrace ESG to position themselves to draw funding.
“Although realistically Africa will nonetheless need to harness its plentiful hydrocarbon-based vitality reserves to remain economically aggressive, there are confirmed strategies to make even fossil-fuel burning amenities cleaner and extra sustainable, resulting in vital reductions in carbon emissions, such as the use of low-carbon fuel, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical compounds sector thereby has a possibility to leap forward of the curve, by building sustainability and green design ideas 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 international trends, African National Oil Companies (NOCs) continue to function prominently in the chemical industry M&A house.
“Chemicals M&A activity has been comparatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and more just lately Namibia, who’ve historically focussed on the extraction, manufacturing, and supply of crude oil products, are actually contemplating the diversification of their product portfolios as part of their future-proofing efforts. This should begin to show results in the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of power products additional along the value chain.
“We could subsequently see a spate of acquisitions of facilities that produce petrochemicals, ammonia, and fertilisers, for example, by these NOCs over the approaching years. These acquisitions would function synergistically alongside their present oil and gas-focussed methods,” he says.
There are signs that Africa is set to take ownership of beneficiation and manufacturing and turn into a web exporter of chemical substances, well-poised to supply the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemical compounds sector businesses must navigate the mega-trends of fast inhabitants growth, climate change, digitisations and decarbonisation. Traditional chemical and energy giants, and NOCs, are repositioning themselves to stay related in a greener future. We hope to see Africa’s emergent chemical substances sector leading the cost in path of an environmentally and socially sustainable chemical substances industry worldwide.”
For extra data, visit www.kearney.com
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