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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

– Public sector and NGOs

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

Avril.Harvey@frost.com

Mani James

Operations Director

Africa

+27 21 680-3208

Mani.James@frost.com

Danielle Kruger

Account Manager

+27 21 680-3262

Danielle.Kruger@frost.com