AFRICA’S GREENFIELD OPPORTUNITY

Global tendencies unearthed and analysed point out that the chemical substances sector is increasingly being driven 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 once more this yr.
These are the findings of the most recent Chemicals Executive M&A Report for 2022 launched by world management consulting firm Kearney, now in its ninth edition.
“The reasoning for it is because there are simply not that many attractive goal firms with appropriate ESG credentials out there to amass for chemical substances organizations looking to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner at the firm.
As the least industrialized continent, the place as much as 600million individuals still reside with out 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 part of Africa’s economic system. เครื่องมือใช้วัดความดัน , with various sub-sectors, Africa’s chemical business 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 along several industries’ whole worth 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 global chemicals sector have resulted in a robust investor urge for food for M&A targets with good ESG credentials, allowing Africa’s chemical companies that embrace ESG to place themselves to attract funding.
“Although realistically Africa will nonetheless need to harness its plentiful hydrocarbon-based vitality reserves to remain economically competitive, there are proven methods to make even fossil-fuel burning amenities cleaner and extra sustainable, leading to vital reductions in carbon emissions, corresponding to the usage of 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 constructing sustainability and green design rules into new chemical facility developments from the outset, and by working to decarbonise present offerings through applied sciences like carbon capturing and sequestration (CCS).
Echoing international developments, African National Oil Companies (NOCs) proceed to characteristic prominently within the chemical trade M&A space.
“Chemicals M&A activity has been comparatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ similar to Nigeria, Angola, and more lately Namibia, who’ve historically focussed on the extraction, production, and provide of crude oil merchandise, at the moment are contemplating the diversification of their product portfolios as part 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 power merchandise additional alongside the worth chain.
“We may due to this fact 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 present oil and gas-focussed methods,” he says.
There are signs that Africa is decided to take ownership of beneficiation and manufacturing and turn out to be a web exporter of chemical compounds, well-poised to provide 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 enlargement, climate change, digitisations and decarbonisation. Traditional chemical and vitality giants, and NOCs, are repositioning themselves to remain related in a greener future. We hope to see Africa’s emergent chemicals sector main the charge towards an environmentally and socially sustainable chemicals industry worldwide.”
For extra information, visit www.kearney.com
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