Africa’s Potential

By John Richardson

AFRICA was described as “one  of the last frontiers for the chemicals industry” by a delegate during last week’s 2nd World ICIS Polyolefins Conference in Berlin.

The opportunity is certainly there with a population of around one billion people, and with six countries in the world’s top ten fastest-growth countries (See GDP chart below).

AfricaGDPchart.jpgBut the continent’s polyethylene (PE) and polypropylene (PP) consumption amounted to a total of just 4.2m tonnes in 2012. This compares with last year’s PP consumption of more than 16m tonnes in China, with linear-low density PE (LLDPE) alone amounting to above 6m tonnes, according to ICIS Consulting.

Of course, though, there is a vast difference between a relatively politically, economically and socially unified China and Africa, said Hasan Alikhan, divisional manager of global chemicals and polymers distributor Emeraude, in a presentation during the conference.

Plus, China’s economic development has been staggering over the last two decades, whereas Africa has struggled.

In addition, Africa has 54 different countries, many different cultures, many different languages, and a wide variety of customs procedures, import tariffs, business cultures, political and country risks and infrastructure challenges, added Hasan.

And the problem for any distributor, caught in the middle of the supply chain, is that producers obviously want constant sales, whereas converters in Africa often shut down and start-up based on fluctuations in local demand, he said.

But still, any chemicals and polymer company with a truly long-term perspective has to plan for if and when Africa becomes a major consumer.

And right now, with China undergoing an economic slowdown, and with the rest of the global economy struggling, Africa might well become a battleground for surplus volumes.

For reference, see Africa’s polyolefins capacities below.

AfricaPolyolefinsCapacity.jpg 

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