AFRICA’S GREENFIELD OPPORTUNITY

Global trends unearthed and analysed indicate that the chemical substances sector is increasingly being pushed by Environmental, Social, and Governance (ESG) issues. It additionally signifies that decarbonisation is often a key rationale behind the investments (and divestments) in the sector, aside from Africa where investments understandably lagged again this year.
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 edition.
“The reasoning for this is because there are simply not that many attractive target companies with appropriate ESG credentials obtainable to amass for chemical compounds organizations trying to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner at the agency.
As the least industrialized continent, where up to 600million individuals nonetheless reside without electricity, Africa’s chemical trade is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical compounds sector is a key component of Africa’s economic system. A giant advanced industry, with various sub-sectors, Africa’s chemical industry is intrinsically interlinked with other sectors – fuels, prescription drugs, plastics, and manufacturing, to call a few.
The sector is liable for key outputs and crucial commodities alongside a number of 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 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 firms that embrace ESG to place themselves to attract funding.
“Although realistically Africa will still need to harness its abundant hydrocarbon-based power reserves to stay economically aggressive, there are proven methods to make even fossil-fuel burning amenities cleaner and more sustainable, leading to important reductions in carbon emissions, such as using low-carbon fuel, 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 present offerings through technologies like carbon capturing and sequestration (CCS).
Echoing global tendencies, African National Oil Companies (NOCs) continue to characteristic prominently within the chemical industry 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 lately Namibia, who have traditionally focussed on the extraction, production, and supply of crude oil merchandise, are now considering the diversification of their product portfolios as part of their future-proofing efforts. เกจวัดแรงดันnuovafima should start to show leads to the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of power products further alongside the value chain.
“We might due to this fact see a spate of acquisitions of amenities that produce petrochemicals, ammonia, and fertilisers, for instance, by these NOCs over the approaching years. These acquisitions would function synergistically alongside their current oil and gas-focussed methods,” he says.
There are signs that Africa is set to take possession of beneficiation and manufacturing and turn into a web exporter of chemical compounds, well-poised to produce the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemicals sector companies should navigate the mega-trends of rapid inhabitants expansion, climate change, digitisations and decarbonisation. Traditional chemical and vitality giants, and NOCs, are repositioning themselves to stay related in a greener future. We hope to see Africa’s emergent chemical compounds sector leading the charge in path of an environmentally and socially sustainable chemical substances trade worldwide.”
For extra info, visit www.kearney.com
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