Africa PE, PP business to grow despite complexities

30 May 2013 13:29  [Source: ICIS news]

Polyethylene is used in food packagingBERLIN (ICIS)--Despite the complexities of doing business in Africa, the polyethylene (PE) and polypropylene (PP) markets there are expected to grow, said the divisional manager of a distributor on Thursday.

While annual world economic growth during 2010-2015 is expected to average 5.5%, in Africa the forecast is for annual growth of 6.3%.

Furthermore, of a list of the top 10 fastest growing countries in the world in terms of GDP, six are in Africa.

According to Emeraude Polymers’ figures, African consumption of PE and PP, including local production and imported volumes, stands at 4.2 million tonnes/year.

The annual growth rate for 2010-2015 is expected to be 7%, said Hasan Alikhan, divisional manager of Emeraude Polymers, at the 2nd ICIS World Polyolefins conference in Berlin.

Meanwhile, African PE capacity currently stands at 1.3 million tonnes/year, while PP capacity is 1.33 million tonnes/year.

This difference between supply and demand means that Africa is a net importer of PE and PP.

Speaking of his customers in Africa, he said: “There is hardly any customer who has not grown, bought new machinery, or invested in technology, from the largest to the smallest customer.”

However, he explained that in terms of global business, Africa is a unique place.

“Africa is still the final frontier, the unknown commodity,” he said. “There are new developments and investments there, but doing business in Africa is a new phenomenon, it’s very difficult to do business there.”

He said that distributing in Africa is very different from doing business in Europe.

“There’s often no insurance, some deals are done on a handshake only, sometimes you don’t get paid,” he said. “It can be difficult in terms of security in Africa, too.”

Politics, buying patterns, geography, climate and other factors all account for differences between each country’s market.

“No one country is similar to another, every country is unique,” Alikhan said.

By: Jo Pitches
+44 208 652 3214

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