Key Sectors Driving Growth Opportunities in the sub-Saharan African Chemicals Market


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What are the key sectors driving growth opportunities for the chemicals industry in Sub-Saharan Africa? A presentation delivered by Frost & Sullivan's Kholofelo Dzvukamanja, at the ChemExpo Africa event held in in November, highlights opportunities available to chemicals companies and also discusses how companies are accessing these opportunities.

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Key Sectors Driving Growth Opportunities in the sub-Saharan African Chemicals Market

  1. 1. Key Sectors Driving Growth Opportunities in the subSaharan African Chemicals Market Prepared for : ChemExpo 2013 Kholofelo Dzvukamanja – Frost & Sullivan 6 November 2013 1
  2. 2. Outline  Chemicals in Africa - Key megatrends driving growth by sector  What are the opportunities for chemicals companies?  How are companies accessing these opportunities? 2
  3. 3. Background  Growth consulting and market intelligence firm  Founded in 1961  Over 1,800 Consultants / Analysts across 40 global locations  10,000+ clients worldwide including: – The global 1,000 – Emerging companies – The investment community – Public sector and NGOs  Corporate HQ in Mountain View California – Staff compliment of over 1800 analysts & consultants  Offer an exclusive Consulting Support System including; – Growth Partnership Services (Published Industry Research Services) – Growth Consulting Services – Growth Implementation Services A trusted growth & implementation partner with 52 years of experience 3
  4. 4. The Frost & Sullivan Story Emerging Research Growth Partnership Visionary Innovation 1961–1990 1990–Today Today–Future 1961 1990 Today Pioneered Emerging Market & Technology Research Partnership Relationship with Clients Growth Partner and Visionary Innovation • Global Footprint Begins • Growth Consulting • Country Economic Research • Implementation Consulting • Growth, Implementation and Transformation Consulting • Market & Technical Research • Technology Consulting • Best Practice Career Training • Industry Research & Analysis • MindXChange Events • GIL Global Events • GIL University (Skills Development) • Technology Consulting • Mega Trends Research • Industry Research & Analysis • CEO 360 Visionary Perspective • Growth Team Development 4
  5. 5. Key Service Offering Functions Implement Growth Implementation Implementation Consulting Services Skills Development Services (GIL University) Evaluate Growth Consulting Technology Consulting Services Growth Consulting Services Generate Growth Partnership Services Market & Technical Research Support Services 5
  6. 6. Frost & Sullivan’s Global Industry Coverage Automotive & Transportation Aerospace & Defense Measurement & Instrumentation Consumer Technologies Information & Communication Technologies Automotive Transportation & Logistics Energy & Power Systems Environment & Building Technologies Healthcare Minerals & Mining Chemicals, Materials & Food Electronics & Security Industrial Automation & Process Control 6
  7. 7. Chemicals, Materials and Foods Infrastructure & Construction Mining Oil & Gas Water & Sanitation Chemicals, Materials & Food Energy Materials Consumer Products Agriculture & Animal Products Industry Development High degree of specialisation and focus within the Chemicals, Materials & Food industry across Africa 7
  8. 8. Chemicals, Materials & Food Sub Saharan Africa – Research Available To-Date Energy • South African Biofuel Markets • Sub saharan African Biofuels Market • Southern African Markets for Biofuel Feedstocks • Strategic Opportunities for the Biofuel Industry in Key Sub-Saharan African Countries • Sub-Saharan African Biofuels Market Infrastructure/Construction North Africa Planned Titles • South African Building Paints Market • Opportunities for phosphate, fluoride and sulphur along the value chain in selected sub-Saharan countries • South African Markets for Construction Chemicals • Opportunities in development of public sector water infrastructure in SSA • South African Industrial Paints and Coatings Markets • Mapping of water treatment technologies in SSA • Southern African Paints and Coatings Markets • Demand for construction chemicals in high growth markets in Africa • East African Market for Coatings and Adhesives • Tapping into the opportunities offered by the increasing need of low cost housing in Sub Saharan Africa • South African Building Materials Market • Opportunities for materials for biodegradable packaging • Bitumen and Additives for road infrastructure • Possible solutions for reduction of gas flaring in Africa and the related potential for chemicals demand • Sub-Saharan Africa Infrastructure Chemicals Market All Segments • Strategic Analysis of the Nigerian Chemicals Market • Strategic Analysis of the Angolan Chemicals Market • Base Chemicals Year Book • South African Chemicals CEO 360 Degree Report • Speciality & Performance Chemicals year book • Angolan Chemicals Market Materials • South African Engineering Plastics Market • South African Markets for Commodity Plastics • South African Personal Protective Equipments Market • South African Market for Chemical Solvents • South African Markets for Adhesives and Sealants • South African Markets for Thermal insulation • Southern African Plastics Packaging • South African Automotive Plastics • Sub-Saharan Africa Market for Polyurethane • South African Silicon Market Overview • Status of PPE distribution in Sub Saharan Oil & gas and mining industry (MI) • Opportunities within the Titanium Dioxide Pigment Market in South Africa (MI) • Southern African PPE Markets • South African Automotive Refinish Paints Market • South African Thermoset Resins • Environmentally friendly materials in construction • Materials in cable manufacturing • Personal Protective Clothing in Sub-Saharan Africa Industry Development • The Future of Manufacturing in South Africa Water and Sanitation • South African Industrial Water and Waste Water Treatment Chemicals Market • Sub-Saharan African Water & Wastewater Treatment Market • Sub Saharan Africa Oilfield & Mining Water Treatment Chemicals Oil & Gas • Strategic Analysis of the South African and Nigerian Petrochemicals Market • Sub Saharan African Markets for Liquid Fuels • Sub-Saharan African Oilfield Chemicals Market Mining • South African Mining and Mineral Processing Chemicals Market • Southern African Markets for Explosives • South African Markets for Gold Mining Chemicals • South African Markets for Platinum Group Metals Mining Chemicals • Sub Saharan African Mining Chemicals Market KEY: Circle colour matched with sectors Consumer Products • South African Market for • Southern African Food & market • South African Market for • South African Market for Chemicals Food Additives Beverage Chemicals Surfactant Chemicals Biorenewable Agriculture • South African Markets for Fertiliser Chemicals • Key Sub Saharan African Markets for Crop Protection Chemicals • South African Markets for Agriculture chemicals • South African Market for Animal Feeds and Additives • South African Market for Animal Health Products 8
  9. 9. Chemicals, Materials & Food Africa – Consulting Experience To-Date Oil & Gas • Opportunity and Market Entry Strategy for Oilfield and Reining Chemicals in Nigeria • Growth Opportunities in the West African Oil and Gas Sector Automotive • South African Advanced Manufacturing Strategy for Automotive Sector • Growth Opportunities Analysis in the East African Automotive Sector Mining and Minerals Beneficiation • Pre-Feasibility Study on the Titanium and Zircon Minerals Beneficiation Market in South Africa • Analysis of the Manufacturing Opportunities of Cast Iron and Hot Briquetted Iron in South Africa • Commercial Pre-Feasibility of the Titanium and Zirconium and Hot Briquetted Iron Markets in South Africa • Advanced Manufacturing Strategy of the South African Mining and Minerals Sector Materials • Opportunities for Innovative Packaging Systems in Sub-Saharan Africa for Lubricants and Paints and Coatings and Food • Analysis of the Chemicals Market for Packaging in East and West Africa • South African Advanced Manufacturing Strategy in Material Sciences • Analysis of Key Application Markets for Adhesives Products in Selected African Countries Infrastructure/Construction • Growth Opportunities in the East and West African Infrastructure and Construction Chemicals Markets Renewable Energy • Market and Commercial PreFeasibility and of Wind and Solar Energy in South Africa Consumer Products • Market for Food and Beverage Additives in Nigeria • Opportunity Analysis of Key Raw Material Markets in the Food and Beverage Sector • Growth Opportunities in the East and West African Food and Beverage Chemicals Markets • Analysis of Advanced Manufacturing in the Food and Beverage, Home and Personal Care and Pharmaceuticals Market • Customer Assessment of Phosphoric Acid Suppliers to the Food and Beverage, Metal Treatment and Cleaning (detergents) Treatment Other (Including Chemicals, Maritime and Best Practices) • Advanced Manufacturing Strategy Focus on the Chemicals Sector in South Africa • Sub-Saharan African Specialty Chemicals Analysis • Market and Commercial Pre-feasibility of Maritime Activities in South Africa Water and Sanitation • Water Treatment Chemicals Analysis Across Sub-Saharan Africa • Market and Competitor Intelligence in the Water Treatment Chemicals Market Industry Development • Investment Challenges • Tax Incentives for IDZ’s • Market Pre-Feasibility Studies • Commercial Pre-Feasibilities KEY: Circle colour matched with sectors Agriculture • Nigerian Market For Agricultural Products • Impact Assessment of Selected Agricultural Chemicals in South Africa 9
  10. 10. Chemicals in Africa – Key Megatrends Driving Growth 10
  11. 11. Definition of a Mega Trend What is a Mega Trend? Impact of Mega Trends on Key Organisational Functions Marketing and Strategy Mega Trends are global, sustained and macro economic forces of development that impact business, economy, society, cultures and personal lives thereby defining our future world and its increasing pace of change R&D Budget Spending Innovation Scouting Technology Planning Competitive Benchmarking Product Planning and Development 11
  12. 12. Global Megatrends that Frost & Sullivan tracks Top Mega Trends That We Track Under The Program Urbanization – City as a Customer Bricks and Clicks Smart is the New Green Innovating to Zero Social Trends: Gen Y, Middle Bulge, She-conomy, Geosocialization New Business Models: Value for Many Connectivity and Convergence Future Infrastructure Development Economy: Beyond BRIC: The Next Game Changers Health, Wellness and Well Being Future of Mobility 12
  13. 13. Impact of Megatrends on the Chemicals Industry Sustainable Development Public / Private Sector Investment to Drive Industry Development Health & Safety Increasing Urbanisation Visionary Innovation & Market Vanguard Infrastructure Development Rebuilding War Torn Countries 13
  14. 14. Impact of Megatrends on the Industry Mega Trend Impact on the Chemicals Industry Mega Trend Degree of Impact 6 4 Increasing Urbanization 8 2 10 10 Public / Private Sector Investment to Drive Industry Development Agriculture; Construction and Infrastructure 10 Construction, infrastructure and transportation 6 8 2 Severity 6 4 Infrastructure Development Construction and infrastructure Severity 4 Sustainable Development Industries Most Impacted 8 2 Severity 4 6 8 2 10 Severity Construction and infrastructure; agriculture 14
  15. 15. Understanding how Megatrends affect your company Macro 1 Micro 5 Mega Trend Selected Trends That Impact Your Business And Markets Analysis of Opportunities and Unmet Needs 4 2 Impact on Future Product/ Technology Sub Trend A Sub Layer of Trends that Has Wide Ranging Impact 3 Impact to Your Industry Visualizing The Roadmap Of These Critical Forces Through Scenario Building and Macro Economic Forecasts 15
  16. 16. Where do the opportunities lie? Key Findings 16
  17. 17. The global chemicals industry – Asia to dominate in the future 2020: £3,000 Bn 2010: £1,800 Bn Japan 5.3% 2000: £1,300 Bn Japan 10.4% EU 31.7% Others 10.9% Others 11.2% Japan 7.3% Others 10.1% Asia 32.3% Asia 40.4% NAFTA 16.9% NAFTA 21.6% Asia 20.5% NAFTA 26.4% NAFTA 26.4% EU 28.7% EU 26.2% Estimated market size and regional segmentation for the global chemical industry. Middle East and Africa will emerge as key destinations Figures do not include pharmaceutical production. Source: CEFIC / Frost & Sullivan analysis 17
  18. 18. Economic growth in each country along with expected investments into key sectors will drive opportunities • Agriculture & Agroprocessing Countries with High Growth and Investment Potential in Africa, 2013-2015 • Agricultural chemicals • Oil extraction and investment in refining capability • Construction • Infrastructure development 1990’s Nigeria Gabon $342.51bn 2000s 15 Civil Wars 1990’s • Healthcare • Financial services $66.32bn 1990 DRC • Transport, energy, water supply/treatment • Retail 2000’s GDP Growth FDI Inflows Ghana 5.5% 1990’s Ethiopia 2000’s 2.2% Africa to Average 4.8% GDP Growth in 2013 Zambia Foreign Debt to GDP South Africa 2000’s 61.8% 37.4% Note: Countries based on score determined from weighted average of per capita GDP and potential growth, GDP & GDP potential growth, FDI stock and growth, political stability, export and import growth potential, and population size and population growth potential Source: Frost & Sullivan To take advantage of this long-awaited growth cycle, early entry is vital to ensure competitive positioning The time is now! 18
  19. 19. Opportunities across various sectors in Africa Key Opportunities, Africa, 2010-2020 Electricity $0.5 trillion in electricity infrastructure Infrastructure $0.3 trillion in road and rail infrastructure upgrading Healthcare Infrastructure $30 billion private healthcare infrastructure Water Sanitation Infrastructure and Chemicals $0.6 trillion in investment Port Infrastructure Port infrastructure investment and upgrading of $0.2 trillion ` 20
  20. 20. Construction and Infrastructure Where are the growth opportunities? Morocco • Infrastructure (road, rail, airport, port, water, telecommunications) • Residential Ethiopia • Infrastructure • Commercial Nigeria • Infrastructure (road, rail, airport) • Residential • Commercial Kenya • Infrastructure • Residential Cameroon • Infrastructure Angola • Infrastructure (road, rail, port and airport) • Residential Zambia • Residential • Commercial • Tourism Botswana • Commercial • Infrastructure High Medium Tanzania • Infrastructure South Africa • Residential • Infrastructure Mozambique • Infrastructure (road, rail and airport) • Tourism 23
  21. 21. Construction and Infrastructure South Africa is the leader in infrastructure development on the continent, investing $145 billion Nigeria and Mozambique account for 10.8% and 9.4% of infrastructure investment (Includes housing, hospital and school construction) $288 billion will be invested in the transport and energy and power sectors Source: Frost and Sullivan analysis *based on active projects in 2012 24
  22. 22. Construction / Infrastructure in Africa – Macro to Micro Increasing Urbanisation Infrastructure Development Sustainable Development Business Economy Lack of Housing, Energy, Roads, Communication, and Water Demand > supply General overcrowding Negative impact on tourism Limits industrial development Need for renewable energy Lowers economic income Depletion of natural resources Limits FDI Negative impact on regional trade Remote workforce Lifestyle impacts Higher production costs Limits competitiveness Need more skilled labour High initial costs Acceptance The Gaps Formal construction Innovative solutions Lack of skills Infrastructure upgrades The Opportunities Ongoing maintenance Green building materials Paints & Coatings Construction Chemicals Building Materials PPP & Skill Transfer Local Manufacturing Source: Frost & Sullivan analysis. 25
  23. 23. Infrastructure Chemicals and Materials Market, Kenya, 2010 and 2015 75.1 80 62.6 60 40 20 0 2010 2015 Sales Breakdown: Coatings (62.1%) Waterproofing material (31.2%) Sealants & grouts (6.7%) Revenues ($ Million) East Africa Decorative Coatings Market, East Africa, 2010 and 2015 100 80 60 40 20 0 88.1 71.9 2010 2015 Industrial Coatings Market, East Africa, 2010 and 2015 East Africa Revenues ($ Million) Kenya Infrastructure Chemicals and Materials Market, South Africa, 2010 and 2015 600 453.6 416.8 400 200 0 2010 2015 Coatings (63.6%) Thermal insulation material (23.7%) Waterproofing material (9.3%) Sealants & grouts (3.4%) Revenue ($ Million) South Africa Revenue ($ Million) Infrastructure Chemicals and Materials Market & Decorative and Industrial Coatings Market 15 10 9.5 11.7 5 0 2010 2015 Source: Frost & Sullivan analysis. 26
  24. 24. Mining Mineral Resources Distribution , sub Saharan Africa, 2013 Country Mineral Growth / Decline South Africa U Namibia Resource Share of global resources, % Platinum Gold 40 Copper 5 Uranium 20 Diamonds Zambia C DRC C Malawi C C 88 U U 60 Platinum Gold C Copper U U Diamonds U Uranium Source: Frost & Sullivan. 27
  25. 25. Mining Chemical Opportunities Mining Chemicals Market, Drivers and Restraints, sub Saharan Africa, 2013 Increasing need for safety in mines Demand for energy and industrial applications Disruptions and low productivity Extended mine lifespans Disruptive technologies such as alternatives to blasting New technology and uptake by the industry Increased exploratory activities and discoveries Mining Chemicals Revenues ($ million), sub Saharan Africa, 2013 and 2016 CAGR = 4.0% Power and water shortages Environmental concerns 28
  26. 26. Agriculture Key Agricultural Markets, sub Saharan Africa, 2013 Future Growth, 2013 KENYA Agricultural sector ($ billion) Agrichemicals market ($ million) Fertilizers 8.04 US$5 billion (increase fertilizer use from 9kg per hectare to 15kg) 111.6 Crop Protection > US$2 billion (projected value of the market in sub-Saharan Africa by 2020) GHANA Agricultural sector ($ billion) 11.33 Agrichemicals market ($ million) 125.5 ` NIGERIA SOUTH AFRICA Agricultural sector ($ billion) 96.04 Agricultural sector (primary) ($ billion) 12.06 Agrichemicals market ($ million) 225.3 Agrichemicals market ($ million) 675.5 African countries underutilising agrichemicals Countries with sizeable agrichemcals usage 29
  27. 27. How are companies accessing these opportunities? 31
  28. 28. Accessing opportunities in Africa presents some challenges Key Challenges of Today Infrastructure: Universally seen as the foremost inhibitor to intra regional trade Crime & Corruption: Both in decline but persistent deterrents to investors Increasing competition: In almost all sectors, global companies are entering the content and there are increased levels of competition Skills Availability: Prominent & persistent across the entire region Extreme Costs: In most oil based economies, basic costs are prohibitive Power: Unavailability across the continent a key growth inhibitor Complex Tax, Legal and Excise: Still a huge deterrent to investment in many countries 32
  29. 29. Geographic expansion and M&A are key growth processes followed to access opportunities Country Comparison for Economic Diversity and Export Strength (Africa) Oil Producers (Primary sector contributes to largest share of GDP and exports) Note: Bubble Size Denotes GDP Per Capita (Current US$) Diversified Highly dependant on primary sector In Transition 33
  30. 30. Are you gearing your company for accessing these growth opportunities? Planning with internal and external challenges in mind South Africa‘s dominance challenged Customised solutions and product portfolio differentiation More global chemical companies locating to Africa Levergaing existigmanufacturing capacity to access new markets Consumer focus – Customer‘s customer Strategies for growth aligned with future customer needs Delve Downstream What opportunities are accessible 34
  31. 31. Contact Us 35
  32. 32. For Additional Information Kholofelo Dzvukamanja Programme Manager Chemicals Materials and Foods (+27) 21 680-3261 Avril Harvey Team Leader Chemicals, Materials and Food (+27) 21 680-3283 Mani James Operations Director Africa +27 21 680-3208 Danielle Kruger Account Manager +27 21 680-3262 36