Africa
admixtures and additives, predicted a
rising demand for the products fuelled
by a projected increase in “performance
requirements placed on concrete and
mortar, especially in urban areas and
for infrastructure construction.”
In Ethiopia, the concrete admixtures
market is likely to be driven in coming
days by the increasing rate of urbaniza-
tion and fast-growing construction sector.
Ethiopia, Sika said, has huge poten-
tial because of being “the second big-
gest economy in sub-Saharan Africa
in population terms and fourth big-
gest in terms of economic output with
construction sector set to grow more
strongly than other countries in the
sub-Saharan region.”
The World Bank estimates Ethiopia
urban population will more than double
from the 15.2 million in 2012 to 42. 3
million in 2037, with analysts estimating
the country’s urban population growth
rate to be 5. 4 percent.
The bank estimates that 70 to 80 percent of the urban population in Ethiopia
lives in areas considered slums that lack
“durability, adequate space, access to
safe water and sanitation or security of
tenure.” This has created opportunities
for construction of housing to accommodate the growing urban population.
“Ethiopia could be 30 percent urban
by as early as 2028 with a tripling of urban population to 42 million by 2032,”
the bank said in its ‘Ethiopia Urbanisation
Review’ report for 2013.
Opening of the Ethiopia plant is
one of the major investment decisions
by Sika in the African market after
the January 2015, acquisition of the
Mozambican company Duro-moza,
which manufactures and sells mortar
and tile adhesives. Sika said in a state-
ment at the time the “transaction will
accelerate Sika Mozambique’s develop-
ment and market penetration.”
As part of its strategy to expand in
Africa and the rest of the world, Sika says
some of the businesses it plans to acquire
“are usually unable to market their systems
worldwide sooner or later proves a barrier
to growth, and by acquiring such compa-
nies, the Sika Group, as a global player, is
able to leverage their full potential.”
Separately, Kansai Plascon Africa
Ltd. (KPAL), a subsidiary of Japanese
giant Kansai Paints, has announced its
acquisition of the entire stake in Sadolin
Paints Company Ltd, a leading manufac-
turer and marketer in Kenya, Tanzania,
Uganda, Zanzibar and Uganda.
“The completion of the transaction
is subject to regulatory approvals and
other customary conditions,” said KPAL
in a statement.
“As part of the transaction, the parties
have also agreed to separately to investigate the acquisition of Sadolin Paints’
operations in Rwanda,” said KPAL.
Despite Kansai Paints saying in its
2016 annual report that business in
Africa deteriorated because of the economic slump in South Africa and neighbouring countries, its African subsidiary
said the acquisition of Sadolin Paints
“will reinforce KPAL’s leading position
in Africa and its presence in East Africa.”
The region has a population of about
285 million representing an estimated 24
percent and 9 percent of the total African
population and GDP respectively.
Kansai Paints manufactures and mar-
kets a wide range of coatings including
decorative, industrial, protective and au-
tomotive and has a research and develop-
ment facility in South Africa.
The acquisition comes at a time when
Kansai’s performance in the African market appeared sluggish according to the
Japanese company’s 2016 annual report.
“Despite continuing sales promotion efforts, sales fell slightly on a local
currency basis at a time of weakness
in the economies of South Africa and
neighboring countries,” the company
said in February.
“Investment in sales promotion and
other factors put pressure on profits, and
substantial currency conversion effects
contributed to weak business results,”
Kansai said. The company’s sales in
Africa for 2015 dropped by 26 percent
compared to 2014, to slightly more than
$257 million. Kansai estimates the ordinary loss, including goodwill amortization for 2015 at $5.2 million.
Despite Kansai’s decline in earnings
in the African market, the company’s
entry into East Africa seem to have
been timed to coincide with an ongoing infrastructure construction boom
in the region. With the recent oil and
gas discoveries in Kenya, Uganda and
Tanzania, analysts project investment in
related infrastructure to be between $60
billion and $70 billion.
Kenya’s construction industry for
example has reported good growth in
recent times contributing an estimated
$2.86 billion to the country’s gross domestic product in 2014, 13.1 percent
higher than 2013 according to global
research and consultancy firm Oxford
Business Group.
“The construction industry’s substantial jump in 2014 made it the best-per-forming sector that year, owing primarily
to an injection of funds for major road
works, railway projects and road rehabilitation,” the group said early last year.
With the entry of Kansai Plascon
Africa Ltd. into East Africa and the
launch of a concrete admixture production plant in Ethiopia, consumers in the
region are expected to access a variety of
quality coatings and paints products to
feed the increasing construction industry
at competitive prices. CW
“The new factory in
Ethiopia is part of
the implementation
of our Africa
strategy. We are
playing a pioneering
role that will bring
us significant
competitive
advantage.”
– Sika
