Global tendencies unearthed and analysed point out that the chemicals sector is increasingly being pushed by Environmental, Social, and Governance (ESG) concerns. It additionally indicates that decarbonisation is commonly a key rationale behind the investments (and divestments) within the sector, apart from Africa where investments understandably lagged once more this yr.
These are the findings of the latest Chemicals Executive M&A Report for 2022 released by world management consulting agency Kearney, now in its ninth edition.
“The reasoning for it is because there are merely not that many attractive goal companies with appropriate ESG credentials out there to amass for chemical compounds organizations trying to invest and consolidate on the continent,” explains Prashaen Reddy, Partner at the firm.
As the least industrialized continent, where up to 600million people nonetheless live with out electrical energy, 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 financial system. เครื่องมือที่ใช้วัดความดันคือ advanced industry, with various sub-sectors, Africa’s chemical business is intrinsically interlinked with other sectors – fuels, pharmaceuticals, plastics, and manufacturing, to call a couple of.
The sector is responsible for key outputs and crucial commodities along a number of industries’ whole value chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for round 25% of manufacturing gross sales. (Chemical and Allied Industries’ Association:
ESG and decarbonisation more and more being the dominant rationales behind M&A deals within the international chemical compounds sector have resulted in a robust investor appetite for M&A targets with good ESG credentials, allowing Africa’s chemical corporations that embrace ESG to position themselves to draw funding.
“Although realistically Africa will nonetheless must harness its plentiful hydrocarbon-based power reserves to stay economically competitive, there are proven methods to make even fossil-fuel burning amenities cleaner and extra sustainable, leading to vital reductions in carbon emissions, similar to using low-carbon gasoline, 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 offerings through applied sciences like carbon capturing and sequestration (CCS).
Echoing world tendencies, African National Oil Companies (NOCs) proceed to function prominently within the chemical industry M&A space.
“Chemicals M&A activity has been relatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and extra lately Namibia, who’ve traditionally focussed on the extraction, production, and provide of crude oil products, at the moment are contemplating the diversification of their product portfolios as part of their future-proofing efforts. This ought to begin to show results in the medium-term,” explains Reddy.
These new alternatives arising are in downstream beneficiation of vitality products additional alongside the value chain.
“We might subsequently 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 strategies,” he says.
There are signs that Africa is determined to take possession of beneficiation and manufacturing and turn into a web exporter of chemicals, well-poised to produce the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemicals sector companies must navigate the mega-trends of fast inhabitants growth, local weather change, digitisations and decarbonisation. Traditional chemical and power giants, and NOCs, are repositioning themselves to stay related in a greener future. We hope to see Africa’s emergent chemicals sector main the cost in direction of an environmentally and socially sustainable chemical substances trade worldwide.”
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