Shem Oirere, Africa Correspondent09.13.16
Africa’s paints and coatings industry is likely to be shaped by five mega trends that are emerging in the region and whose impact is likely to be felt in the long-term, according to market analyst Frost and Sullivan Africa.
The analyst’s Chemicals and Food Business Unit leader Richard Weissenberg told participants at the inaugural East Africa Coatings Congress (EACC) in Nairobi that urbanization and infrastructure development, energy demand and demand resource drain, water and food scarcity, emerging African economies and supply chain efficiencies are the trends emerging in the region and which are likely to greatly impact Africa’s paints and coatings market.
He projected Africa’s urbanization rate at more than 70 percent by 2025 with “cities likely to see double fold increase in economy.”
“Urbanization in Africa will require the development of innovative products to meet specific needs of the urban poor and the wants of an emerging consumer class,” said Weissenberg.
Increasing urbanization will also provide an opportunity in tapping into the bottom of the pyramid (BOP) market “with small unit packages, low margin per unit and high volume.”
The World Bank’s lending arm, the International Finance Corporation separately estimates the global BOP consumer market at $5 trillion.
A large market is expected to be provided by the construction of the region’s transport corridors at an estimated cost of $28 billion, according to Weissenberg.
“Ten transport corridors are being developed across the region to improve road and rail networks and increase port capacity,” said Weissenberg. The three major corridors are the 1000-kilometer Abidjan-Ougadagou, the Kampala-Nairobi-Mombasa and the Greater Ibadan-Lagos-Accra.
He said with only about 10,000 km of road connecting countries across Africa “it is estimated that 60,000 to 100, 000 kilometers of road will be required to fully integrate the region.”
“Approximately $32 billion is required to develop Africa’s roads to successfully integrate the road network, which could see the increase of trade by $250 billion over the next 15 years,” said Weissenberg.
He also said Africa is expected to see a $14.8 billion investment in the extension and upgrading of rail networks, another key consumer of paints and coatings, to complement the Trans-Africa highway. One of the largest projects in East Africa is the $23 billion Lamu Port South Sudan Ethiopian Transport (LAPSSET) corridor, which comprise Lamu port, 1710 kilometer railway line, 880 kilometer highway, 2249 kilometer oil pipeline, three resort cities and three airports.
In addition, Weissenberg said an estimated $3 billion is being invested in East Africa’s Mombasa – Kisumu rail road to support trade in the region while plans are underway to implement the East Africa Railway Master Plan which entails construction of rail lines to link Tanzania, Zambia, Mozambique, South Sudan, Uganda, Ethiopia and Eritrea.
The capacity of the region’s ports will be expanded at an estimated $3.5 billion in the short term “to decrease bottlenecks and support growth in trade and industry.”
The growth of sub-Saharan’s biggest economies of Nigeria, South Africa, Angola, Kenya, Ethiopia, Tanzania, Ghana and Democratic Republic of Congo is also likely to shape the trends in the paints and coatings industry.
In South Africa for example, Weissenberg said there are growing opportunities in Gauteng province for construction chemicals because of the increasing demand for housing and commercial infrastructure.
The demand has outstripped supply in previous years with Frost and Sullivan’s analysis of the construction chemicals market in the province indicating that about 40 percent of the resinous flooring segment and about 7 percent of the cementitious segment was imported in 2013.
“Infrastructure is the main requirement for concrete protection and concrete repair and rehabilitation products in South Africa,” said Weissenberg.
The admixtures segment represented 36.4 percent of the South Africa’s total construction chemicals market by 2013, according to Frost and Sullivan. Waterproofing, flooring, repair and rehabilitation represented 23.9 percent, 18.9 percent and 12 percent of the country’s total construction chemicals market share while sealants and grouts’ share was 8.8 percent during the same period.
An estimated 3.6 million square meters of concrete surfaces needs protection according to Weissnberg while nearly 18,000 tons of concrete repair and rehabilitation products are needed to meet the market demand.
He said key drivers in South Africa’s construction chemicals market include increased demand for housing and commercial infrastructure and maintenance with building specifications by contractors, which has raised demand for green chemicals.
However, Weissenberg told participants the market also faces a few restraints such as the product of cost competitive chemicals which constrains manufacturing of high quality products, impact of exchange rate fluctuations on the importation of raw materials, importation of finished waterproofing chemical products which slows down growth in total construction chemical market and finally the shortage of bitumen which shows down the production of waterproofing chemicals.
He said although Kenya has a smaller water proofing market compared to South Africa, the East African country has experienced “increased demand for infrastructure and housing” which he added “will be the main drivers of its construction chemicals market.”
“Kenya’s adhesives market is growing faster than the gross domestic product fueled by extensive private and government spending in infrastructure,” said Weissenberg.
The admixtures segment has the highest market share at 36.3 percent. Other segments include flooring 26.2 percent, repair and rehabilitation 17.5 percent, sealants and grouts 12.5 percent and water proofing 7.5 percent. Demand for admixtures in Kenya is mainly driven by increasing investment in the road sector and the upgrading of infrastructure and housing demand.
However, Weissenberg said despite the positive growth figures, Kenya’s construction chemicals market faces several constraints such as lack of acceptance among end-users, lack of transport and power infrastructure and the exchange rate fluctuations that adds pressure to distributor profits.
He estimated that Kenya’s tile adhesives would grow to 10,957 tons by 2017 up from the 5,800 tons realized in 2011. The country’s Tile & Carpet Centre has the largest share of the Kenya’s adhesives market distribution ahead of Saj Ceramics with 22 percent. Other players in the market include Rhino Special Products, Nairobi Garment and Ideal Ceramic which have an estimated distribution market share of 20 percent, 17 percent and 15 percent respectively.
In the grout distribution market, Nairobi Garment has the largest share by volume at 43 percent while Ideal Ceramics has 22 percent with Tile & Carpet Centre and Saj Ceramics having 11 percent each.
“The adhesives market is growing faster than GDP fuelled by extensive private and government spending on infrastructure,” said Weissenberg.
By 2013, Kenya’s construction and building sector was the country’s top industrial adhesive end user by revenue at 70 percent of the total market value ahead of packaging and paper converting and automotive at 11 percent and 5 percent respectively. Other end users had combined revenue of 14 percent.
According to Weissenberg, the total revenue for Kenya’s industrial adhesives is likely to grow to $13.5 million in 2018 from $9.2 million in 2014 driven mainly by “brand awareness, strong distribution network, continuous supply of products and competitive pricing.”
Weissenberg told the Congress participants that in Nigeria “the supply of tile adhesives represents the greatest market opportunity in the country’s tile installation products market.”
The country’s adhesives segment is likely to grow from 21,280 tons in 2012 to 35,599 tons by 2017.
Construction companies in Nigeria have the highest market share of adhesives at 46 percent according to Weissenberg. The country’s informal and semi-formal market has 37 percent with tillers and contractors taking up 17 percent.
Weissenberg sees tile adhesives representing the “greatest opportunity in Nigerian tile installation products market.”
The presentation by Weissenberg at the EACC reinforced a growing indication that the potential for the growth of Africa’s paints and coatings is huge and is yet to be fully exploited by both local and international investors probably because of the restraints outlined during the discussion and more specifically inadequate power and transport infrastructure.
The analyst’s Chemicals and Food Business Unit leader Richard Weissenberg told participants at the inaugural East Africa Coatings Congress (EACC) in Nairobi that urbanization and infrastructure development, energy demand and demand resource drain, water and food scarcity, emerging African economies and supply chain efficiencies are the trends emerging in the region and which are likely to greatly impact Africa’s paints and coatings market.
He projected Africa’s urbanization rate at more than 70 percent by 2025 with “cities likely to see double fold increase in economy.”
“Urbanization in Africa will require the development of innovative products to meet specific needs of the urban poor and the wants of an emerging consumer class,” said Weissenberg.
Increasing urbanization will also provide an opportunity in tapping into the bottom of the pyramid (BOP) market “with small unit packages, low margin per unit and high volume.”
The World Bank’s lending arm, the International Finance Corporation separately estimates the global BOP consumer market at $5 trillion.
A large market is expected to be provided by the construction of the region’s transport corridors at an estimated cost of $28 billion, according to Weissenberg.
“Ten transport corridors are being developed across the region to improve road and rail networks and increase port capacity,” said Weissenberg. The three major corridors are the 1000-kilometer Abidjan-Ougadagou, the Kampala-Nairobi-Mombasa and the Greater Ibadan-Lagos-Accra.
He said with only about 10,000 km of road connecting countries across Africa “it is estimated that 60,000 to 100, 000 kilometers of road will be required to fully integrate the region.”
“Approximately $32 billion is required to develop Africa’s roads to successfully integrate the road network, which could see the increase of trade by $250 billion over the next 15 years,” said Weissenberg.
He also said Africa is expected to see a $14.8 billion investment in the extension and upgrading of rail networks, another key consumer of paints and coatings, to complement the Trans-Africa highway. One of the largest projects in East Africa is the $23 billion Lamu Port South Sudan Ethiopian Transport (LAPSSET) corridor, which comprise Lamu port, 1710 kilometer railway line, 880 kilometer highway, 2249 kilometer oil pipeline, three resort cities and three airports.
In addition, Weissenberg said an estimated $3 billion is being invested in East Africa’s Mombasa – Kisumu rail road to support trade in the region while plans are underway to implement the East Africa Railway Master Plan which entails construction of rail lines to link Tanzania, Zambia, Mozambique, South Sudan, Uganda, Ethiopia and Eritrea.
The capacity of the region’s ports will be expanded at an estimated $3.5 billion in the short term “to decrease bottlenecks and support growth in trade and industry.”
The growth of sub-Saharan’s biggest economies of Nigeria, South Africa, Angola, Kenya, Ethiopia, Tanzania, Ghana and Democratic Republic of Congo is also likely to shape the trends in the paints and coatings industry.
In South Africa for example, Weissenberg said there are growing opportunities in Gauteng province for construction chemicals because of the increasing demand for housing and commercial infrastructure.
The demand has outstripped supply in previous years with Frost and Sullivan’s analysis of the construction chemicals market in the province indicating that about 40 percent of the resinous flooring segment and about 7 percent of the cementitious segment was imported in 2013.
“Infrastructure is the main requirement for concrete protection and concrete repair and rehabilitation products in South Africa,” said Weissenberg.
The admixtures segment represented 36.4 percent of the South Africa’s total construction chemicals market by 2013, according to Frost and Sullivan. Waterproofing, flooring, repair and rehabilitation represented 23.9 percent, 18.9 percent and 12 percent of the country’s total construction chemicals market share while sealants and grouts’ share was 8.8 percent during the same period.
An estimated 3.6 million square meters of concrete surfaces needs protection according to Weissnberg while nearly 18,000 tons of concrete repair and rehabilitation products are needed to meet the market demand.
He said key drivers in South Africa’s construction chemicals market include increased demand for housing and commercial infrastructure and maintenance with building specifications by contractors, which has raised demand for green chemicals.
However, Weissenberg told participants the market also faces a few restraints such as the product of cost competitive chemicals which constrains manufacturing of high quality products, impact of exchange rate fluctuations on the importation of raw materials, importation of finished waterproofing chemical products which slows down growth in total construction chemical market and finally the shortage of bitumen which shows down the production of waterproofing chemicals.
He said although Kenya has a smaller water proofing market compared to South Africa, the East African country has experienced “increased demand for infrastructure and housing” which he added “will be the main drivers of its construction chemicals market.”
“Kenya’s adhesives market is growing faster than the gross domestic product fueled by extensive private and government spending in infrastructure,” said Weissenberg.
The admixtures segment has the highest market share at 36.3 percent. Other segments include flooring 26.2 percent, repair and rehabilitation 17.5 percent, sealants and grouts 12.5 percent and water proofing 7.5 percent. Demand for admixtures in Kenya is mainly driven by increasing investment in the road sector and the upgrading of infrastructure and housing demand.
However, Weissenberg said despite the positive growth figures, Kenya’s construction chemicals market faces several constraints such as lack of acceptance among end-users, lack of transport and power infrastructure and the exchange rate fluctuations that adds pressure to distributor profits.
He estimated that Kenya’s tile adhesives would grow to 10,957 tons by 2017 up from the 5,800 tons realized in 2011. The country’s Tile & Carpet Centre has the largest share of the Kenya’s adhesives market distribution ahead of Saj Ceramics with 22 percent. Other players in the market include Rhino Special Products, Nairobi Garment and Ideal Ceramic which have an estimated distribution market share of 20 percent, 17 percent and 15 percent respectively.
In the grout distribution market, Nairobi Garment has the largest share by volume at 43 percent while Ideal Ceramics has 22 percent with Tile & Carpet Centre and Saj Ceramics having 11 percent each.
“The adhesives market is growing faster than GDP fuelled by extensive private and government spending on infrastructure,” said Weissenberg.
By 2013, Kenya’s construction and building sector was the country’s top industrial adhesive end user by revenue at 70 percent of the total market value ahead of packaging and paper converting and automotive at 11 percent and 5 percent respectively. Other end users had combined revenue of 14 percent.
According to Weissenberg, the total revenue for Kenya’s industrial adhesives is likely to grow to $13.5 million in 2018 from $9.2 million in 2014 driven mainly by “brand awareness, strong distribution network, continuous supply of products and competitive pricing.”
Weissenberg told the Congress participants that in Nigeria “the supply of tile adhesives represents the greatest market opportunity in the country’s tile installation products market.”
The country’s adhesives segment is likely to grow from 21,280 tons in 2012 to 35,599 tons by 2017.
Construction companies in Nigeria have the highest market share of adhesives at 46 percent according to Weissenberg. The country’s informal and semi-formal market has 37 percent with tillers and contractors taking up 17 percent.
Weissenberg sees tile adhesives representing the “greatest opportunity in Nigerian tile installation products market.”
The presentation by Weissenberg at the EACC reinforced a growing indication that the potential for the growth of Africa’s paints and coatings is huge and is yet to be fully exploited by both local and international investors probably because of the restraints outlined during the discussion and more specifically inadequate power and transport infrastructure.
