AFRICA’S GREENFIELD OPPORTUNITY

Global developments unearthed and analysed indicate that the chemical substances sector is increasingly being driven by Environmental, Social, and Governance (ESG) considerations. เครื่องมือใช้วัดความดัน indicates that decarbonisation is commonly a key rationale behind the investments (and divestments) in the sector, aside 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 global administration consulting firm Kearney, now in its ninth version.
“The reasoning for it is because there are simply not that many enticing target firms with appropriate ESG credentials out there to amass for chemical substances organizations looking to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner at the firm.
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 comparison to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical compounds sector is a key part of Africa’s economic system. A large advanced trade, with diverse sub-sectors, Africa’s chemical business is intrinsically interlinked with other sectors – fuels, prescribed drugs, plastics, and manufacturing, to name a quantity of.
The sector is liable for key outputs and essential commodities along a quantity of industries’ whole value 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 more and more being the dominant rationales behind M&A offers in the international chemical compounds sector have resulted in a robust investor urge for food for M&A targets with good ESG credentials, allowing Africa’s chemical companies that embrace ESG to place themselves to attract funding.
“Although realistically Africa will still need to harness its abundant hydrocarbon-based power reserves to remain economically competitive, there are proven methods to make even fossil-fuel burning amenities cleaner and extra sustainable, leading to important reductions in carbon emissions, corresponding to the usage of low-carbon fuel, 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 ideas into new chemical facility developments from the outset, and by working to decarbonise current choices via technologies like carbon capturing and sequestration (CCS).
Echoing international trends, African National Oil Companies (NOCs) proceed to function prominently in the chemical business M&A space.
“Chemicals M&A activity has been relatively quiet in Africa over the previous 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and more lately Namibia, who’ve traditionally focussed on the extraction, manufacturing, and supply of crude oil merchandise, at the second are considering the diversification of their product portfolios as a half of their future-proofing efforts. This should begin to show results in the medium-term,” explains Reddy.
These new alternatives arising are in downstream beneficiation of power merchandise additional alongside the value chain.
“We could due to this fact see a spate of acquisitions of facilities 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 strategies,” he says.
There are indicators that Africa is set to take ownership of beneficiation and manufacturing and turn out to be 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 companies 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 related in a greener future. We hope to see Africa’s emergent chemical substances sector leading the charge in the path of an environmentally and socially sustainable chemicals industry worldwide.”
For extra info, go to www.kearney.com
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