AFRICA’S GREENFIELD OPPORTUNITY

Global developments unearthed and analysed indicate that the chemical substances sector is more and more being driven by Environmental, Social, and Governance (ESG) considerations. It additionally indicates that decarbonisation is often a key rationale behind the investments (and divestments) in the sector, except for Africa where investments understandably lagged again this yr.
These are the findings of the latest Chemicals Executive M&A Report for 2022 released by global management consulting firm Kearney, now in its ninth version.
“The reasoning for it’s because there are simply not that many enticing goal corporations with suitable ESG credentials out there to acquire for chemical compounds organizations trying to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner on the firm.
As the least industrialized continent, the place up to 600million folks still live without electricity, Africa’s chemical business is emergent, and its markets are immature in comparability to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical substances sector is a key part of Africa’s economic system. A massive complicated industry, with numerous sub-sectors, Africa’s chemical trade is intrinsically interlinked with other sectors – fuels, prescription drugs, plastics, and manufacturing, to call a couple of.
The sector is answerable for key outputs and crucial commodities along a quantity of industries’ entire worth chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for round 25% of producing gross 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 deals within the global 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 position themselves to attract funding.
“Although realistically Africa will still need to harness its ample hydrocarbon-based energy reserves to stay economically competitive, there are proven methods to make even fossil-fuel burning facilities cleaner and more sustainable, leading to vital reductions in carbon emissions, such as the use of low-carbon gas, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemicals sector thereby has an opportunity to leap forward of the curve, by building sustainability and green design principles into new chemical facility developments from the outset, and by working to decarbonise present offerings by way of technologies like carbon capturing and sequestration (CCS).
Echoing global tendencies, African National Oil Companies (NOCs) proceed to function prominently within the chemical business M&A area.
เกจปรับแรงดันแก๊ส &A activity has been relatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and extra just lately Namibia, who’ve historically focussed on the extraction, manufacturing, and provide of crude oil merchandise, at the moment are contemplating the diversification of their product portfolios as a half of their future-proofing efforts. This should begin to present leads to the medium-term,” explains Reddy.
These new alternatives arising are in downstream beneficiation of power products further alongside the value chain.
“We could due to this fact see a spate of acquisitions of amenities that produce petrochemicals, ammonia, and fertilisers, for example, by these NOCs over the coming years. These acquisitions would operate synergistically alongside their present oil and gas-focussed strategies,” he says.
There are indicators that Africa is decided to take possession of beneficiation and manufacturing and become a web exporter of chemical compounds, well-poised to supply 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 growth, climate change, digitisations and decarbonisation. Traditional chemical and power giants, and NOCs, are repositioning themselves to stay relevant in a greener future. We hope to see Africa’s emergent chemical compounds sector leading the cost in course of an environmentally and socially sustainable chemical compounds industry worldwide.”
For extra data, visit www.kearney.com
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