Africa’s Coatings Market: New Year’s Opportunities and Drawbacks

Africa’s economy is expected to post a slight growth in 2024 with governments in the continent anticipating more economic expansion in 2025. This will pave the way for revival and implementation of infrastructure projects, especially in transportation, energy and housing, that are usually associated with increased consumption of various types of coatings.

A new economic outlook for Africa by the regional African Development Bank (AfDB) projects the continent’s economy to increase to 3.7% in 2024 and 4.3% in 2025.

“The projected rebound in Africa’s average growth will be led by East Africa (up by 3.4 percentage points) and Southern Africa and West Africa (each rising by 0.6 percentage points),” the AfDB report says.

At least 40 African countries “will post higher growth in 2024 relative to 2023, and the number of countries with more than 5% growth rate will increase to 17,” the bank adds.

This anticipated growth, however small, is expected to support Africa’s drive to reduce its external debt burden, boost ongoing and delayed infrastructure projects, especially affordable housing, roads, railways, as well as educational institutions to accommodate the fast-growing student population.

Infrastructure Projects

Numerous infrastructure projects are underway in many African countries even as 2024 comes to a close with some of the coatings suppliers in the region reporting increase in sales revenues for the first, second, and third quarter of the year driven by good performance of manufacturing sectors such the automotive industry and additional investment in the housing sector.

For instance, one of East Africa’s biggest paint manufacturers, the 1958-founded Crown Paints (Kenya) PLC, posted a 10% growth in revenues for the first half-year ended June 30, 2024 to US$47.6 million compared to US$43 million for the previous year.

The company’s profit before tax stood at US$1.1 million compared to US$568,700 for the period ended June 30, 2023, an increase attributed to “growth in sales volumes.”

“The overall profitability was also boosted by the strengthening of the Kenyan shilling against major world currencies during the period ended June 30, 2024 and the favorable exchange rates ensured stability in prices of imported raw materials,” said Conrad Nyikuri, Crown Paints’ company secretary.

The good performance by Crown Paints has a ripple effect on the supply of some brands from global market players whose products the company distributes within Eastern Africa.

Apart from its own range of automotive paints that are available under its own Motocryl for the informal market, Crown Paints also supplies the Duco brand as well as world-leading products from Nexa Autocolour (PPG) and Duxone (Axalta Coating Systems) as well as leading adhesive and construction chemicals company, Pidilite. Meanwhile, the Crown Silicone range of paints are produced under license from Wacker Chemie AG.

Elsewhere, oil, gas and marine specialist coatings giant Akzo Nobel, with which Crown Paints has a supply agreement, says its sales in Africa, a market that is part of the Europe, Middle East region, posted an organic sales increase of 2% and revenue of 1% for the third quarter of 2024. The organic sales growth, the company says was largely driven by “positive pricing.”

A similar positive outlook has been reported by PPG Industries, which says the “year-over-year organic sales for architectural coatings Europe, Middle East and Africa were flat, which is a positive trend after several quarters of declines.”

This increase in consumption of paints and coatings in Africa could be attributed to the rising demand for infrastructure development linked to an emerging trend of growing private consumption, the region’s resilient automotive industry and a housing construction boom in countries such as Kenya, Uganda and Egypt.

“On the back of a growing middle class and increasing household consumption expenditure, private consumption in Africa presents significant opportunities for infrastructure development,” the AfDB report says.

In fact, the bank observes for the last 10 years “private consumption expenditure in Africa has been steadily increasing, driven by factors such as population growth, urbanization, and a burgeoning middle class.”

The bank says private consumption expenditure in Africa grew from $470 billion in 2010 to over $1.4 trillion in 2020, representing a substantial expansion that has created “a growing demand for improved infrastructure, including transportation networks, energy systems, telecommunications, and water and sanitation facilities.”

Furthermore, various governments in the region are promoting an affordable housing agenda to achieve at least 50 million housing units to address shortages in the continent. This probably explains the surge in consumption of architectural and decorative coatings in 2024, a trend expected to continue in 2025 as completion of many of the projects is expected in the medium to the long-term.

Meanwhile, although Africa expects to enter into 2025 relishing a booming automotive industry there is still uncertainty in the global market linked to a weak global demand that has eroded the continent’s share of the export market and political instability in countries such as Sudan, Democratic Republic of Congo (DRC) and Mozambique.

For instance, Ghana’s automotive industry, which was valued at US$4.6 billion in 2021, is expected to reach US$10.64 billion by 2027 according to a report by the management of Dawa Industrial Zone, a purposefully designed industrial enclave in Ghana intended to host a wide range of light and heavy industries across various sectors.

“This growth trajectory underscores the immense potential Africa holds as an automotive market,” the report says.

“The increased demand for vehicles within the continent, coupled with the drive to become self-sufficient in manufacturing, opens up new avenues for investment, technological collaborations, and partnerships with global automotive giants,” it adds

In South Africa, the country’s Automotive Business Council (naamsa), a lobby of the South African automotive industry, says vehicle production in the country increased by 13.9%, from 555,885 units in 2022 to 633,332 units in 2023, “exceeding the global year-on-year increase in global vehicle production of 10.3% in 2023.”

Overcoming Challenges

The performance of Africa’s economy in the new year would largely depend on how governments in the continent tackle some of the challenges that are also likely to directly or indirectly impact the continent’s coatings market.

For instance, the raging civil war in Sudan continues to destroy key infrastructure such as transportation, residential and commercial buildings and without political stability, the operations and maintenance of assets by coatings contractors has become nearly impossible.

While the destruction of the infrastructure would create business opportunities for coatings manufacturers and suppliers during the reconstruction period, the impact of the war on the economy could be disastrous in the medium to the long term.

“The impact of the conflict on Sudan’s economy appears to be much deeper than previously assessed, with a contraction in real output increasing more than three times to 37.5 percent in 2023, from the 12.3 percent in the January 2024,” AfDB says.

“The conflict is also having a significant contagion impact, particularly in neighboring South Sudan, which relies heavily on the former’s pipelines and refineries, as well as port infrastructure for oil exports,” it adds.

The conflict, according to AfDB, has caused extensive destruction to critical industrial capacity as well as major logistic infrastructure and supply chains, resulting in significant impediments to foreign trade and exports.

Africa’s debt also poses a threat to the capacity of governments in the region to spend on heavy coatings consuming sectors such as the construction industry.

“In most African countries, debt servicing costs have risen, straining public finances, and limiting the scope for government infrastructure spending and investment in human capital, which maintain the continent in a vicious cycle that traps Africa in low growth trajectory,” the bank adds.

For the South African market, Sapma and its members have to brace for a tighter economic regime as high inflation, energy deficits, and logistical problems pose growth constraints for the country’s manufacturing and mining sectors.

However, with the projected surge of Africa’s economy and an anticipated increase in capital expenditure by governments in the region, the continent’s coatings market could also post growth in 2025 and beyond.