AFRICA’S GREENFIELD OPPORTUNITY

Global developments unearthed and analysed point out that the chemical substances sector is increasingly being driven by Environmental, Social, and Governance (ESG) issues. It additionally signifies that decarbonisation is often a key rationale behind the investments (and divestments) within the sector, apart from Africa the place investments understandably lagged once more this yr.
These are the findings of the latest Chemicals Executive M&A Report for 2022 launched by world administration consulting agency Kearney, now in its ninth version.
“The reasoning for this is because there are merely not that many engaging goal companies with appropriate ESG credentials obtainable to amass for chemical compounds organizations trying to invest and consolidate on the continent,” explains Prashaen Reddy, Partner on the firm.
As the least industrialized continent, the place as much as 600million individuals still live without electricity, Africa’s chemical trade is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemicals sector is a key component of Africa’s economy. A giant advanced business, with numerous sub-sectors, Africa’s chemical business is intrinsically interlinked with different sectors – fuels, pharmaceuticals, plastics, and manufacturing, to call a quantity of.
The sector is liable for key outputs and crucial commodities alongside a number of industries’ whole value chains.
In เกจวัดแรงดันแก๊สอาร์กอน , the continent’s most developed chemical market, the sector accounts for round 25% of manufacturing sales. (Chemical and Allied Industries’ Association: https://home.kpmg/za/en/home/industries/chemicals.html)
ESG and decarbonisation increasingly being the dominant rationales behind M&A offers in the international chemical compounds sector have resulted in a powerful investor urge for food 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 have to harness its plentiful hydrocarbon-based power reserves to remain economically competitive, there are proven strategies to make even fossil-fuel burning amenities cleaner and more sustainable, resulting in 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 substances sector thereby has an opportunity to leap forward of the curve, by building sustainability and green design ideas into new chemical facility developments from the outset, and by working to decarbonise present choices via applied sciences like carbon capturing and sequestration (CCS).
Echoing global tendencies, African National Oil Companies (NOCs) proceed to feature prominently in the chemical business M&A house.
“Chemicals M&A activity has been comparatively quiet in Africa over the previous 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and extra recently Namibia, who have traditionally focussed on the extraction, production, and supply of crude oil products, are now contemplating the diversification of their product portfolios as part of their future-proofing efforts. This should start to show leads to the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of power products additional along 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 operate synergistically alongside their current oil and gas-focussed strategies,” he says.
There are signs that Africa is set to take possession of beneficiation and manufacturing and turn into a net 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 growth, climate change, digitisations and decarbonisation. Traditional chemical and vitality giants, and NOCs, are repositioning themselves to stay relevant in a greener future. We hope to see Africa’s emergent chemical compounds sector main the charge towards an environmentally and socially sustainable chemicals industry worldwide.”
For more data, visit www.kearney.com
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