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    Africa Report

    COVID-19 Impact on Africa’s Paint Industry

    ...

    COVID-19 Impact on Africa’s Paint Industry
    Shem Oirere, Africa Correspondent08.10.20
    The COVID-19 pandemic has diversely affected the African paints and coatings industry, including shutdowns of production operations and disruption of distribution channels as governments in the region imposed movement and business restrictions to contain the spread of the disease.

    Other paint making companies, however, saw a silver lining in the COVID-19 crisis and leveraged on it to branch into fresh manufacturing grounds such as producing hand sanitizers, while others braved the crisis to complete their business acquisition plans as did AkzoNobel when it acquired the 95 percent equity stake in Mauritius-based paint maker Mauvilac, previously held by Adenia Capital (III).

    The lockdowns, which meant shutting down of paint manufacturing and cessation of production and supply of raw materials, stalled paints and coatings end-user projects hence slowing down the growth of the building construction industry.

    In fact, in its latest global operations update, AkzoNobel said, “Headwinds related to COVID-19 are increasing for most parts of the world and will have a significant impact during Quarter 2.

    “Demand trends differ per region and segment in an uncertain macro-economic environment,” it also said.

    One of Africa’s leading industry organizations, the South Africa Paint Manufacturing Association (SAPMA), cites the example of South Africa where paint manufacturing plants and hardware stores that deal in paints and related products shut down as the country enforced stringent lockdown regulations to combat the spread of COVID-19.

    Although the South Africa government relaxed the lockdown by May 1, SAPMA said the lockdown period saw thousands of people denied a chance to use “their residential confinement to buy products to upgrade dwellings and increase the value of their properties.”

    Relaxing of the COVID-19 restrictions, according to SAPMA executive director Deryck Spence, would allow “paint and ancillary products to be sold again.”

    He said the partial lifting of the lockdown “would not only keep frustrated house-bound South Africans busy on long-awaited renovation projects but also help instill a positive frame of mind, which is badly needed nationally now after so many weeks of restricted living.”

    SAPMA cited the example of Australia “where paint production and sales were allowed subject to strictly enforced factory social distancing.” The regulation production and selling of paints and associated products led to “soaring demand for home renovation materials” according to SAPMA.

    Spence also pointed to the World Coatings Council updates that gave the example of the US where “Federal and State actions to close businesses had, for the most part, spared paint and coatings, and that several other countries had also applied to their governments to allow coatings industry operations to resume.”

    However, South Africa had on May 1, promulgated new COVID-19 regulations that allowed for full industry operations as “hardware retailers could reopen on May 1 to sell all consumables in stock.”

    In other African markets such as Kenya, paint manufacturers broke new ground during the COVID-19 crisis as they branched into the production of hand sanitizers to control the spread of the disease that by July 20 infected 721,563 people and killed 15,169 across Africa.

    Leading Kenyan paint Manufacturer, Crown Paints Kenya unveiled an alcohol-based Crown Hand Sanitizer, “a fast action anti-germ & anti-bacterial formulation to protect hands from germs causing infections offering 99.99 percent germ protection with 84 percent alcohol.”

    “The alcohol-based sanitizer which has been approved by the government agency Kenya Bureau of Standards will be able to address the high demand for the commodity particularly during this period the world is grappling with the COVID-19 pandemic,” CEO Rakesh Rao said.

    “The new hand sanitizer will act quickly and is very easy-to-use as it doesn’t require water and towel to dry. Crown hand sanitizer contains ethanol as the active ingredient and has a broad spectrum of activity against viable bacteria, fungi, enveloped viruses, non-enveloped viruses, gram-positive bacteria and gram-negative bacteria.”

    Elsewhere, PPG Industries, which has operations in more than eight African markets said recently its architectural coatings organic sales in Europe, the Middle East and Africa “decreased by a low-single-digit percentage, as the impact from mandated retail store closures in the first half of the quarter was nearly offset by very strong and broad-based growth in June as countries re-opened their economies.”

    “Segment income was primarily impacted by lower sales volumes due to customer shutdowns related to the pandemic, partially offset by aggressive cost-mitigation actions, restructuring cost savings, and modestly higher selling prices,” said PPG in its Quarter 2 report.

    Many other paint manufacturers across the region have taken advantage of the increasing demand for COVID-19 control products such as water, soaps, hand sanitizers and antiseptic solutions to open new business lines as the core operations of paint making slow down.

    Even as the COVID-19 crisis gained momentum, Africa-focused private equity fund manager Adenia completed its deal with AkzoNobel for the sale of a 95 percent stake in Mauvilac, Mauritius’ leading paint and coatings manufacturer.

    Adenia, which is active in Kenya, Cote d’Ivoire, Ghana and Madagascar, invested in Mauvilac six years ago and said in April the successful deal came shortly after a new management team “steered the implementation of an ambitious modernization plan.”

    Other investments in Mauvilac that preceded the Adenia/AkzoNobel including the upgrading of the manufacturing factory infrastructure and production standards that paved the way for the launch of innovative products “with an increased focus on eco-friendly paints.”

    “Given Mauvilac’s strong positioning on its core market, its improved processes and the quality of its distribution network, Adenia has gained traction from various strategic and financial buyers during the exit process,” said Adenia’s statement.

    Going forward, many of Africa’s paints and coatings players are likely to take the route that PPG Industries says it’ll pursue in coming months as the pandemic continues, which is to remain focused on “the protection of our employees and providing excellent support to our customers with the essential products and services they need to resume and ramp-up their operations.”

    For PPG Industries, which is active in Egypt, Cameroon, Algeria, Ivory Coast, Morocco, Nigeria, Senegal and South Africa, the future looks optimistic with the company expecting “overall economic activity to continue to recover, although at a varied pace across end-use markets and regions given the uncertainty around the ongoing effects of the pandemic.”

    As governments in Africa announce stimulus packages to support worst-hit economic sectors, it is expected that the manufacturing segment, including paints and coatings production, would get a share to keep the industry afloat awaiting full recovery once the COVID-19 pandemic is fully contained. 

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