AFRICA’S GREENFIELD OPPORTUNITY

Global tendencies unearthed and analysed indicate that the chemicals sector is more and more being pushed by Environmental, Social, and Governance (ESG) concerns. It additionally signifies that decarbonisation is commonly a key rationale behind the investments (and divestments) within the sector, except for Africa where investments understandably lagged again this year.
These are the findings of the newest Chemicals Executive M&A Report for 2022 launched by international administration consulting agency Kearney, now in its ninth version.
“The reasoning for it’s because there are merely not that many engaging goal corporations with appropriate ESG credentials available to acquire for chemical compounds organizations seeking to invest and consolidate on the continent,” explains Prashaen Reddy, Partner on the agency.
As the least industrialized continent, where as a lot as 600million folks 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 chemical compounds sector is a key element of Africa’s financial system. A large advanced trade, with diverse sub-sectors, Africa’s chemical trade is intrinsically interlinked with other sectors – fuels, prescribed drugs, plastics, and manufacturing, to call a couple of.
The sector is answerable for key outputs and crucial commodities alongside a quantity of industries’ complete value chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for around 25% of producing 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 offers within the international chemical substances sector have resulted in a robust investor appetite for M&A targets with good ESG credentials, allowing Africa’s chemical companies that embrace ESG to position themselves to draw funding.
“Although realistically Africa will still must harness its ample hydrocarbon-based energy reserves to stay economically competitive, there are confirmed methods to make even fossil-fuel burning facilities cleaner and extra sustainable, leading to important reductions in carbon emissions, corresponding to the use of low-carbon fuel, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical substances sector thereby has a possibility to leap forward of the curve, by constructing sustainability and green design principles 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 world developments, African National Oil Companies (NOCs) proceed to characteristic prominently within the chemical trade M&A space.
“Chemicals M&A activity has been relatively quiet in Africa over the previous 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and more lately Namibia, who have historically focussed on the extraction, production, and supply of crude oil products, at the second are considering the diversification of their product portfolios as a half of their future-proofing efforts. เกจวัดแรงดัน300psi ought to begin to show leads to the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of power merchandise additional along the worth chain.
“We might due to this fact see a spate of acquisitions of amenities that produce petrochemicals, ammonia, and fertilisers, for instance, by these NOCs over the approaching years. These acquisitions would operate synergistically alongside their current oil and gas-focussed strategies,” he says.
There are indicators that Africa is set to take possession of beneficiation and manufacturing and turn into a web exporter of chemicals, well-poised to supply 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 fast inhabitants growth, local weather change, digitisations and decarbonisation. Traditional chemical and power giants, and NOCs, are repositioning themselves to stay relevant in a greener future. We hope to see Africa’s emergent chemical compounds sector leading the cost in course of an environmentally and socially sustainable chemicals industry worldwide.”
For extra data, visit www.kearney.com
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