the one hand and ensuring their customers do not flee from them for increasing
prices on the other.
Rao said this trend put pressure on
the paint makers’ margins “consider-
ing also the international pressure of
raw materials.”
The depreciating local currencies
meant high prices for construction materi-
als and high interest rates on commercial
bank loans. These factors combined to
constrain the growth of the region’s real
estate sector. But overall, analysts predict
good times ahead both for Africa’s econ-
omy and the paints and coatings industry.
Market research analyst Frost and
Sullivan said, the East African automotive coatings market is likely to grow its
revenues to $27 million by 2016.
“The coatings and adhesives market
in East Africa has a significant potential
despite the recent global economic down-
turn and the challenges and restraints
faced by the countries in this region,” the
analyst said. “Investors who capitalize
on the developing East African economy
will benefit from a market that is driven
by minimal competition and limitations
when compared to the more developed
global markets of Asia, North America
and Europe.”
The analyst also said that revenues for
the adhesives market that stood at $15.6
million in 2009 could rise to $21.7 mil-
lion over the next three years.
“Heightened industrial and economic
development in East Africa is driving
the coatings and adhesives market,” said
Kholofelo Maele, Frost and Sullivan’s
chemicals, materials and food research
analyst. “Additionally, the recently imple-
mented East African Common Market
Protocol encourages cross-border trade
and industrial expansion within the East
African region along with tax benefits for
the market participants.”
This is unlike the case for South Africa
whose performance was greatly affected
by the 2009-2010 global financial crisis
resulting in stagnation of the automotive
and construction industry. The paints and
coatings industry market in the country
according to UK-based research firm IRL,
were forced to move “in favor of low-
medium quality products.”
In its fourth edition report, A Profile
of the Middle Eastern and African Paint
Industries, IRL paints a bright picture
for the North Africa paint and coatings
market especially Egypt. Despite the political turmoil that led to the overthrow of
former strongman Hosni Mubarak, IRL
said the country will lead the anticipated
growth of the region’s paints and coatings
market driven by the 3. 5 percent GDP
growth expected of 2012 through 2013.
Elsewhere in Africa, the paints and
coatings market has seen key players expanding beyond their countries of origin
or forming partnerships that have resulted in new technologies and expanded
supply networks across the region.
For example Crown Paint Kenya is expanding its operations to Eastern Africa’s
second largest economy, Tanzania, where
it is investing in excess of $3 million putting up a manufacturing plant.
“As we look to widen our footprint
within East Africa, we have set aside
Ksh 250 million (approximately $3 mil-
lion) to launch operations in Tanzania,”
Rao said. “We are currently exporting
to South Sudan and Rwanda–which
is one of the most innovative and pre-
mium markets, Burundi and also getting
good market responses in Democratic
Republic of Congo.”
The Nairobi-based company, whose
sales rose from 12. 4 million liters to 14
million liters by 2011, also announced a
major deal with the world’s second larg-
est manufacturer and supplier of paint,
Hempel, which had earlier acquired
Crown Paints UK. The deal in November
2012, paved the way for the sharing of
supply networks and technology between
the two paint firms.
“By sealing a deal with the second
largest manufacturer and supplier of
paints in the world, Crown Paints has
pulled another rabbit out of the hat.
Today we become a player in all sectors
of the world paint market,” Rao said.
The expansion was also realized in
South Africa where leading global chemical company BASF’s South Africa subsidiary, which also acts as a regional hub
to Sub-Saharan Africa, opened the region’s first dispersions plant as part of its
strategy to take advantage of the growth
expected in the coatings and construction
industries in coming months.
“With this new facility we are well positioned to support our customers growth
in South Africa and Sub-Saharan Africa by
providing BASF’s high quality, premium
service and reliable supply,” said Jacques
Delmoitiez, BASF’s president for Europe,
Middle East and North Africa when
launching the plant in October 2012.
According to Christoph Hansen,
BASF’s senior vice president dispersions
for adhesives and construction Europe:
“South Africa as an emerging market is
very attractive for us. By investing into
local production of our high-tech acrylic
dispersions we can serve our customers in
Sub Saharan Africa even more effectively
and flexibly.”
A number of countries in Africa have
unveiled additional funding for infra-
structure development in the medium
term. This is expected to trigger demand
for infrastructure chemicals and materials
according to analysts.
“Governments in the Sub-Saharan
Africa region have plans to increase infrastructure investments, signaling augmented demand for chemicals and materials,”
said Frost and Sullivan.
The analyst singles out Ghana, Kenya
and South Africa where growth of the
paint and coatings industry is expected
with the governments “having programs
underway to increase the infrastructure
stock.”
The African Development Bank too,
has changed to an extent of triggering
increased investment by both the public
and private sector hence creating more
growth opportunities for the paints and
coatings industry. According to the Bank,
recognizing the infrastructure gap as an
opportunity, both domestic private inves-
tors and emerging partners have scaled
up their investments in Africa’s infra-
structure. The Bank went on to say that
“increased private sector role in Africa’s
infrastructure has been accompanied by
changes in lending and policy facilities of
International Finance Institutions.”
It would appear, the African paints
and coatings market is putting its best
foot forward and its share of the global
business is set to go up. CW
