AFRICA’S GREENFIELD OPPORTUNITY

เพรสเชอร์เกจน้ำ unearthed and analysed indicate that the chemicals sector is more and more being driven by Environmental, Social, and Governance (ESG) concerns. It additionally signifies that decarbonisation is usually a key rationale behind the investments (and divestments) in the sector, apart from Africa the place investments understandably lagged again this 12 months.
These are the findings of the most recent Chemicals Executive M&A Report for 2022 launched by global administration consulting firm Kearney, now in its ninth version.
“The reasoning for it’s because there are merely not that many enticing target corporations with appropriate ESG credentials available to accumulate for chemicals organizations seeking to invest and consolidate on the continent,” explains Prashaen Reddy, Partner at the agency.
As the least industrialized continent, the place up to 600million individuals still live with out electrical energy, Africa’s chemical trade is emergent, and its markets are immature in comparability to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemicals sector is a key component of Africa’s economic system. A large complex business, with various sub-sectors, Africa’s chemical business is intrinsically interlinked with different sectors – fuels, prescription drugs, plastics, and manufacturing, to name a couple of.
The sector is responsible for key outputs and essential commodities along several industries’ whole value 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 in the world chemical compounds sector have resulted in a strong investor urge for food for M&A targets with good ESG credentials, allowing Africa’s chemical corporations that embrace ESG to place themselves to attract funding.
“Although realistically Africa will nonetheless must harness its plentiful hydrocarbon-based energy reserves to stay economically aggressive, there are confirmed methods to make even fossil-fuel burning facilities cleaner and extra sustainable, leading to significant reductions in carbon emissions, similar to the use of low-carbon fuel, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical compounds sector thereby has a chance 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 present offerings via technologies like carbon capturing and sequestration (CCS).
Echoing world developments, African National Oil Companies (NOCs) continue to function 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 extra recently Namibia, who have traditionally focussed on the extraction, production, and supply of crude oil products, at the second are considering the diversification of their product portfolios as a part of their future-proofing efforts. This ought to begin to show leads to the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of vitality products additional along the worth chain.
“We might subsequently 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 operate synergistically alongside their current oil and gas-focussed methods,” he says.
There are indicators that Africa is decided to take ownership of beneficiation and manufacturing and turn into a internet 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 companies must navigate the mega-trends of rapid population enlargement, climate change, digitisations and decarbonisation. Traditional chemical and vitality giants, and NOCs, are repositioning themselves to remain relevant in a greener future. We hope to see Africa’s emergent chemical substances sector leading the cost towards an environmentally and socially sustainable chemical substances industry worldwide.”
For extra data, go to www.kearney.com
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