AFRICA’S GREENFIELD OPPORTUNITY

Global tendencies unearthed and analysed point out that the chemical compounds sector is increasingly being driven by Environmental, Social, and Governance (ESG) issues. It also signifies that decarbonisation is usually a key rationale behind the investments (and divestments) within the sector, apart from Africa the place investments understandably lagged again this year.
These are the findings of the most recent Chemicals Executive M&A Report for 2022 released by world management consulting agency Kearney, now in its ninth version.
“The reasoning for this is because there are simply not that many enticing goal companies with appropriate ESG credentials available to accumulate for chemicals organizations trying to invest and consolidate on the continent,” explains Prashaen Reddy, Partner on the firm.
As the least industrialized continent, the place up to 600million people nonetheless reside without electrical energy, Africa’s chemical industry is emergent, and its markets are immature in comparison to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemicals sector is a key part of Africa’s economy. เกจวัดแรงดันดิจิตอล complicated business, with various sub-sectors, Africa’s chemical business is intrinsically interlinked with other sectors – fuels, prescription drugs, plastics, and manufacturing, to name a couple of.
The sector is liable for key outputs and essential commodities along a quantity of industries’ entire value chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for round 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 deals within the global chemicals sector have resulted in a strong investor appetite for M&A targets with good ESG credentials, permitting Africa’s chemical companies that embrace ESG to place themselves to draw funding.
“Although realistically Africa will still need to harness its plentiful hydrocarbon-based power reserves to remain economically aggressive, there are proven strategies to make even fossil-fuel burning facilities cleaner and more sustainable, leading to significant reductions in carbon emissions, corresponding to using low-carbon gasoline, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical substances sector thereby has a possibility 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 choices by way of technologies like carbon capturing and sequestration (CCS).
Echoing world developments, African National Oil Companies (NOCs) continue to feature prominently in the chemical business M&A house.
“Chemicals M&A exercise has been comparatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and more recently Namibia, who have traditionally focussed on the extraction, manufacturing, and provide of crude oil products, are now considering the diversification of their product portfolios as a half 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 products further along 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 approaching years. These acquisitions would operate synergistically alongside their current oil and gas-focussed strategies,” he says.
There are indicators that Africa is decided to take ownership of beneficiation and manufacturing and turn out to be a net exporter of chemical compounds, well-poised to supply the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemicals sector companies must navigate the mega-trends of speedy population expansion, 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 chemicals sector leading the cost in direction of an environmentally and socially sustainable chemical compounds trade worldwide.”

For extra data, go to www.kearney.com

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