AFRICA’S GREENFIELD OPPORTUNITY

Global trends unearthed and analysed indicate that the chemical compounds sector is more and more being driven by Environmental, Social, and Governance (ESG) considerations. เกวัดแรงดัน indicates that decarbonisation is commonly a key rationale behind the investments (and divestments) within the sector, aside from Africa the place investments understandably lagged once more this year.
These are the findings of the most recent Chemicals Executive M&A Report for 2022 released by world management consulting firm 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 seeking to invest and consolidate on the continent,” explains Prashaen Reddy, Partner on the agency.
As the least industrialized continent, the place as a lot as 600million folks nonetheless reside without electrical energy, Africa’s chemical business is emergent, and its markets are immature in comparison to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical substances sector is a key component of Africa’s economy. A massive advanced industry, with various sub-sectors, Africa’s chemical business is intrinsically interlinked with different sectors – fuels, prescribed drugs, plastics, and manufacturing, to call a few.
The sector is responsible for key outputs and essential commodities along several industries’ complete worth chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for around 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 offers in the world chemical substances sector have resulted in a powerful investor appetite for M&A targets with good ESG credentials, allowing Africa’s chemical companies that embrace ESG to position themselves to attract funding.
“Although realistically Africa will still need to harness its abundant hydrocarbon-based energy reserves to remain economically competitive, there are proven methods to make even fossil-fuel burning facilities cleaner and extra sustainable, leading to significant reductions in carbon emissions, corresponding to the usage of low-carbon gasoline, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemicals sector thereby has a possibility to leap forward of the curve, by constructing sustainability and green design ideas into new chemical facility developments from the outset, and by working to decarbonise current offerings through applied sciences like carbon capturing and sequestration (CCS).
Echoing international trends, African National Oil Companies (NOCs) proceed to feature prominently in the chemical industry M&A house.
“Chemicals M&A exercise has been comparatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ corresponding to Nigeria, Angola, and more just lately Namibia, who have traditionally focussed on the extraction, production, and provide of crude oil merchandise, at the moment are considering the diversification of their product portfolios as a part of their future-proofing efforts. This ought to begin to present ends in the medium-term,” explains Reddy.
These new alternatives arising are in downstream beneficiation of energy merchandise additional alongside the value chain.
“We may subsequently see a spate of acquisitions of services that produce petrochemicals, ammonia, and fertilisers, for instance, by these NOCs over the coming years. These acquisitions would function synergistically alongside their current oil and gas-focussed methods,” he says.
There are indicators that Africa is set to take ownership of beneficiation and manufacturing and turn out to be a web exporter of chemical substances, well-poised to provide the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemicals sector businesses must navigate the mega-trends of fast population growth, local weather change, digitisations and decarbonisation. Traditional chemical and power giants, and NOCs, are repositioning themselves to remain relevant in a greener future. We hope to see Africa’s emergent chemical compounds sector main the cost in course of an environmentally and socially sustainable chemical substances business worldwide.”
For more data, go to www.kearney.com
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