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Key Sectors Driving Growth Opportunities in the sub-
Saharan African Chemicals Market
6 November 2013
Prepared for : ChemExpo 2013
Kholofelo Dzvukamanja – Frost & Sullivan
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Chemicals in Africa - Key megatrends driving growth by sector
What are the opportunities for chemicals companies?
How are companies accessing these opportunities?
Outline
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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
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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
Background
4
The Frost & Sullivan Story
1961 1990 Today
Emerging Research 1961–1990
Pioneered Emerging Market
& Technology Research
• Global Footprint Begins
• Country Economic Research
• Market & Technical Research
• Best Practice Career Training
• MindXChange Events
Partnership Relationship
with Clients
• Growth Consulting
• Implementation Consulting
• Technology Consulting
• Industry Research & Analysis
• GIL Global Events
• GIL University (Skills
Development)
Growth Partnership 1990–Today
Visionary Innovation Today–Future
Growth Partner and Visionary
Innovation
• Growth, Implementation and
Transformation Consulting
• Technology Consulting
• Mega Trends Research
• Industry Research & Analysis
• CEO 360 Visionary Perspective
• Growth Team Development
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Key Service Offering Functions
Growth
Implementation
Growth Consulting
Growth Partnership Services
Generate
Evaluate
Implement
Growth Consulting
Services
Market & Technical
Research Support
Services
Skills Development Services
(GIL University)
Implementation
Consulting Services
Technology
Consulting
Services
6
Frost & Sullivan’s Global Industry Coverage
Automotive &
Transportation
Aerospace & Defense Measurement &
Instrumentation
Information &
Communication Technologies
Healthcare Environment & Building
Technologies
Energy & Power
Systems
Chemicals, Materials
& Food
Electronics &
Security
Industrial Automation
& Process Control
Automotive
Transportation & Logistics
Consumer
Technologies
Minerals & Mining
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Chemicals, Materials and Foods
High degree of specialisation and focus within the
Chemicals, Materials & Food industry across Africa
Oil & Gas Water & Sanitation
Mining
Infrastructure
&
Construction
Consumer
Products
Industry
Development
Chemicals, Materials & Food
Materials
Energy
Agriculture &
Animal Products
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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
Consumer Products • South African Market for Food Additives • Southern African Food & Beverage Chemicals
market • South African Market for Surfactant Chemicals • South African Market for Biorenewable
Chemicals
North Africa Planned Titles • Opportunities for phosphate, fluoride and sulphur along the value chain in selected sub-Saharan countries • Opportunities in development of public sector water infrastructure in SSA • Mapping of water treatment technologies in SSA • Demand for construction chemicals in high growth markets in Africa • Tapping into the opportunities offered by the increasing need of low cost housing in Sub Saharan Africa • Opportunities for materials for biodegradable packaging • Possible solutions for reduction of gas flaring in Africa and the related potential for chemicals demand
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
Chemicals, Materials & Food Sub Saharan Africa – Research Available To-Date
Infrastructure/Construction • South African Building Paints Market • South African Markets for Construction Chemicals • South African Industrial Paints and Coatings Markets • Southern African Paints and Coatings Markets • East African Market for Coatings and Adhesives • South African Building Materials Market • Bitumen and Additives for road infrastructure • Sub-Saharan Africa Infrastructure Chemicals Market
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
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
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
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
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
KEY: Circle colour matched with sectors
Industry Development • The Future of Manufacturing in South Africa
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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
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
Automotive • South African Advanced Manufacturing Strategy
for Automotive Sector • Growth Opportunities Analysis in the East
African Automotive Sector
Agriculture • Nigerian Market For Agricultural Products • Impact Assessment of Selected
Agricultural Chemicals in South Africa
Chemicals, Materials & Food Africa – Consulting Experience To-Date
Infrastructure/Construction • Growth Opportunities in the East and
West African Infrastructure and Construction Chemicals Markets
Water and Sanitation • Water Treatment Chemicals Analysis
Across Sub-Saharan Africa • Market and Competitor Intelligence in
the Water Treatment Chemicals Market
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
Oil & Gas • Opportunity and Market Entry
Strategy for Oilfield and Reining Chemicals in Nigeria
• Growth Opportunities in the West African Oil and Gas Sector
Renewable Energy • Market and Commercial Pre-
Feasibility and of Wind and Solar Energy in South Africa
KEY: Circle colour matched with sectors
Industry Development • Investment Challenges • Tax Incentives for IDZ’s • Market Pre-Feasibility Studies • Commercial Pre-Feasibilities
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
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Chemicals in Africa – Key Megatrends Driving
Growth
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Definition of a Mega Trend
What is a Mega Trend? Impact of Mega Trends on Key
Organisational Functions
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
Marketing and
Strategy
R&D Budget
Spending
Competitive Benchmarking
Product Planning
and Development
Technology Planning
Innovation Scouting
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Top Mega Trends That We Track Under The Program
Urbanization –
City as a
Customer
Smart is the New
Green
Social Trends: Gen
Y, Middle Bulge,
She-conomy,
Geosocialization
Connectivity and
Convergence
Bricks and Clicks
Innovating to
Zero
New Business
Models: Value for
Many
Economy:
Beyond BRIC:
The Next Game
Changers
Future
Infrastructure
Development
Health, Wellness
and Well Being
Future of Mobility
Global Megatrends that Frost & Sullivan tracks
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Impact of Megatrends on the Chemicals Industry
Increasing
Urbanisation
Infrastructure
Development
Visionary
Innovation
&
Market
Vanguard Public / Private
Sector
Investment to
Drive Industry
Development
Health & Safety Sustainable
Development
Rebuilding War Torn Countries
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Impact of Megatrends on the Industry
Mega Trend Degree of Impact Industries Most
Impacted
Increasing
Urbanization
Construction and
infrastructure
Sustainable
Development
Agriculture;
Construction and
Infrastructure
Infrastructure
Development
Construction,
infrastructure and
transportation
Public / Private Sector
Investment to Drive
Industry Development
Construction and
infrastructure;
agriculture
Mega Trend Impact on the Chemicals Industry
2
6 8
10
4
Severity
2
6 8
10
4
Severity
2
6 8
10
4
Severity
2
6
8
10
4
Severity
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Understanding how Megatrends affect your company
Sub Trend A Sub Layer of Trends that Has
Wide Ranging Impact
Mega Trend Selected Trends That
Impact Your Business
And Markets
Analysis of
Opportunities
and Unmet
Needs
Impact on
Future Product/
Technology
Impact to Your
Industry Visualizing The Roadmap Of
These Critical Forces Through
Scenario Building and Macro
Economic Forecasts
Macro Micro 1
2
3
4
5
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Where do the opportunities lie?
Key Findings
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NAFTA
26.4%
The global chemicals industry – Asia to dominate in the
future
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
2000: £1,300 Bn
2010: £1,800 Bn
2020: £3,000 Bn
Asia
40.4%
EU
26.2%
NAFTA
16.9%
Others
11.2%
Japan
5.3%
Asia
32.3%
EU
28.7%
NAFTA
21.6%
Others
10.1%
Japan
7.3%
EU
31.7%
NAFTA
26.4%
Asia
20.5%
Others
10.9%
Japan
10.4%
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Economic growth in each country along with expected
investments into key sectors will drive opportunities
To take advantage of this long-awaited growth cycle, early entry is vital to ensure competitive positioning
The time is now!
Source: Frost & Sullivan
GDP Growth
1990’s 2000’s
FDI Inflows
Civil Wars
2.2% 5.5%
1990 2000s
1990’s 2000’s
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$66.32bn $342.51bn
Foreign Debt to
GDP
1990’s 2000’s
61.8% 37.4%
• Agriculture & Agro-
processing
• Agricultural chemicals
• Oil extraction and
investment in
refining capability
• Construction
• Infrastructure development
• Transport, energy, water
supply/treatment
• Healthcare
Nigeria
Zambia
Ethiopia
DRC
Ghana
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
Countries with High Growth and Investment
Potential in Africa, 2013-2015
Africa to Average
4.8% GDP Growth
in 2013
• Retail
• Financial services South Africa
Gabon
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Opportunities across various sectors in Africa
`
Electricity
$0.5 trillion in
electricity
infrastructure
Healthcare
Infrastructure
$30 billion private healthcare
infrastructure
Infrastructure
$0.3 trillion in road
and rail
infrastructure
upgrading
Port
Infrastructure
Port infrastructure
investment and
upgrading of $0.2
trillion
Water Sanitation
Infrastructure and
Chemicals
$0.6 trillion in
investment
Key Opportunities, Africa, 2010-2020
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High Medium
Construction and Infrastructure
Where are the growth opportunities?
Zambia
• Residential
• Commercial
• Tourism
Mozambique
• Infrastructure (road, rail
and airport)
• Tourism
South Africa
• Residential
• Infrastructure
Angola
• Infrastructure (road,
rail, port and airport)
• Residential
Botswana
• Commercial
• Infrastructure
Kenya
• Infrastructure
• Residential
Tanzania
• Infrastructure
Cameroon
• Infrastructure
Morocco
• Infrastructure (road, rail, airport,
port, water, telecommunications)
• Residential Ethiopia
• Infrastructure
• Commercial
Nigeria
• Infrastructure (road,
rail, airport)
• Residential
• Commercial
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Construction and Infrastructure
Nigeria and Mozambique
account for 10.8% and
9.4% of infrastructure
investment
South Africa is the leader in infrastructure development on the continent, investing $145 billion
$288 billion will be invested in the
transport and energy and power sectors
(Includes housing, hospital
and school construction)
*based on active projects in 2012
Source: Frost and Sullivan analysis
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Construction / Infrastructure in Africa – Macro to Micro
Formal
construction
Infrastructure
upgrades
Ongoing
maintenance Lack of
skills
Innovative
solutions
Lack of Housing, Energy, Roads, Communication, and Water
Infrastructure Development Sustainable Development Increasing Urbanisation
Eco
no
my
Bu
sin
ess
The Gaps
Green
building
materials
The Opportunities
Paints &
Coatings
Building
Materials
PPP &
Skill
Transfer
Construc-
tion
Chemicals
Local
Manufac-
turing
Demand > supply
General overcrowding
Negative impact on tourism
Remote workforce
Lifestyle impacts
Limits industrial development
Lowers economic income
Limits FDI
Negative impact on regional trade
Higher production costs
Limits competitiveness
Need for renewable energy
Depletion of natural resources
Need more skilled labour
High initial costs
Acceptance
Source: Frost & Sullivan analysis.
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Infrastructure Chemicals and Materials Market &
Decorative and Industrial Coatings Market
South
Africa
Kenya
Coatings (63.6%)
Thermal insulation material (23.7%)
Waterproofing material (9.3%)
Sealants & grouts (3.4%)
416.8 453.6
0
200
400
600
2010 2015
Reve
nu
e (
$ M
illi
on
)
Infrastructure Chemicals and Materials Market, South Africa,
2010 and 2015
Sales Breakdown:
Coatings (62.1%)
Waterproofing material (31.2%)
Sealants & grouts (6.7%)
62.6 75.1
0
20
40
60
80
2010 2015 Reve
nu
e (
$ M
illi
on
)
Infrastructure Chemicals and Materials Market, Kenya, 2010
and 2015
East Africa
East Africa
71.9
88.1
0 20 40 60 80
100
2010 2015 Reve
nu
es
($ M
illi
on
)
Decorative Coatings Market, East Africa, 2010 and 2015
9.5 11.7
0
5
10
15
2010 2015 Reve
nu
es
($ M
illi
on
)
Industrial Coatings Market, East Africa, 2010 and 2015
Source: Frost & Sullivan analysis.
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C
Mining
Source: Frost & Sullivan.
Resource
Share of global
resources, %
Platinum 88
Gold 40
Copper 5
Uranium 20
Diamonds 60
Copper Platinum Gold C Diamonds
Mineral Resources Distribution , sub Saharan Africa, 2013
C
Uranium U
U
U
Country Mineral Growth / Decline
South Africa
Namibia
Zambia
DRC
Malawi
U
U
C
C
U
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Mining Chemical Opportunities
Increased
exploratory
activities
and
discoveries
Demand for
energy and
industrial
applications
New
technology and
uptake by the
industry
Increasing
need for
safety in
mines
Extended mine
lifespans
Environmental
concerns
Disruptive
technologies
such as
alternatives to
blasting
Power and
water
shortages
Mining Chemicals Market, Drivers and Restraints, sub Saharan Africa, 2013
Mining Chemicals Revenues ($ million),
sub Saharan Africa, 2013 and 2016
CAGR = 4.0%
Disruptions
and low
productivity
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Agriculture
Crop Protection
> US$2 billion
(projected value
of the market in
sub-Saharan
Africa by 2020)
Fertilizers
US$5 billion (increase fertilizer
use from 9kg per
hectare to 15kg)
Countries with sizeable
agrichemcals usage
African countries under-
utilising agrichemicals
`
KENYA
Agricultural sector
($ billion) 8.04
Agrichemicals
market ($ million) 111.6
SOUTH AFRICA
Agricultural sector
(primary) ($ billion) 12.06
Agrichemicals market
($ million) 675.5
GHANA
Agricultural sector
($ billion) 11.33
Agrichemicals
market ($ million) 125.5
NIGERIA
Agricultural sector
($ billion) 96.04
Agrichemicals
market ($ million) 225.3
Key Agricultural Markets, sub Saharan Africa, 2013 Future Growth, 2013
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How are companies accessing these opportunities?
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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
Power: Unavailability across the continent a key growth inhibitor
Extreme Costs: In most oil based economies, basic costs are prohibitive
Complex Tax, Legal and Excise: Still a huge deterrent to investment in many countries
Accessing opportunities in Africa presents some
challenges
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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)
Diversified
In Transition
Highly
dependant on
primary
sector
Note: Bubble Size Denotes GDP Per Capita (Current US$)
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Are you gearing your company for accessing these
growth opportunities?
What opportunities are accessible
Planning with internal and external challenges
in mind
Strategies for growth
aligned with future
customer needs
Delve Downstream
Levergaing existigmanufacturing
capacity to access new markets
Consumer focus – Customer‘s customer
Customised solutions and product portfolio
differentiation
More global chemical companies locating to
Africa
South Africa‘s dominance challenged
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Contact Us
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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