Global tendencies unearthed and analysed point out that the chemicals sector is increasingly being pushed by Environmental, Social, and Governance (ESG) considerations. It also signifies that decarbonisation is usually a key rationale behind the investments (and divestments) within the sector, except for Africa where investments understandably lagged once more this year.
These are the findings of the most recent Chemicals Executive M&A Report for 2022 launched by global management consulting agency Kearney, now in its ninth edition.
“The reasoning for it’s because there are simply not that many attractive target companies with suitable ESG credentials out there to amass for chemicals organizations looking to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner on the firm.
As the least industrialized continent, the place as much as 600million individuals still reside with out electricity, 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 element of Africa’s economy. A large complicated trade, with various sub-sectors, Africa’s chemical business is intrinsically interlinked with other sectors – fuels, prescription drugs, plastics, and manufacturing, to call a couple of.
The sector is responsible for key outputs and essential commodities along several industries’ entire worth chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for around 25% of manufacturing 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 deals within the global chemicals sector have resulted in a robust investor appetite for M&A targets with good ESG credentials, permitting Africa’s chemical companies that embrace ESG to place themselves to draw funding.
“Although realistically Africa will nonetheless need to harness its abundant hydrocarbon-based energy reserves to stay economically aggressive, there are proven strategies to make even fossil-fuel burning amenities cleaner and more sustainable, leading to vital reductions in carbon emissions, similar to using low-carbon gas, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical substances sector thereby has a chance 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 choices by way of applied sciences like carbon capturing and sequestration (CCS).
Echoing global tendencies, African National Oil Companies (NOCs) continue to feature prominently within the chemical trade M&A house.
“Chemicals M&A activity has been comparatively quiet in Africa over the previous 12 months. ไดอะแฟรม -rich nations’ corresponding to Nigeria, Angola, and more just lately Namibia, who’ve traditionally focussed on the extraction, manufacturing, and supply of crude oil products, are now contemplating the diversification of their product portfolios as part 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 products additional along the worth chain.
pressure gauge may therefore see a spate of acquisitions of services that produce petrochemicals, ammonia, and fertilisers, for example, 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 ownership of beneficiation and manufacturing and turn out to be a web exporter of chemicals, 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 rapid population expansion, climate change, digitisations and decarbonisation. Traditional chemical and power giants, and NOCs, are repositioning themselves to remain relevant in a greener future. We hope to see Africa’s emergent chemical compounds sector main the cost towards an environmentally and socially sustainable chemical compounds business worldwide.”

For more info, visit www.kearney.com

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