International Plastics News for Asia

A look at Africa's growing industrial sector

Starting with the July issue, we expand our editorial coverage to include Africa. Thus, the International Plastics News – Middle East & Africa now has a wider coverage, not only the Middle East but also Africa. Both regions are as dynamic and as interesting to plastics and rubber processors now given their robust growth in these sectors. The change in our coverage aims to bring into focus the African region as it moves to become a sourcing centre where investment opportunities are becoming more diverse and more promising each day.

Africa has been showing its importance in the global economy, and this cannot be underestimated. Since the 1990s, the African economy - which consists of over 50 individual countries - has been growing at a faster pace. In its May 2012 regional economic outlook report for sub-Saharan Africa, the International Monetary Fund refers to "solid trend growth" in the region, as its regional output expanded by 5% in 2011, with a further increase expected to reach over 6% by 2012.

The region's construction, telecom, banking, retail, manufacturing, and oil and gas industries are now booming, given the substantial surge in foreign investment into the region. Africa received its largest-ever share of global foreign direct investment (FDI) in 2011, according to the 2012 survey by Ernst & Young which stated that FDI projects in the region rose by 27% from 2010 to 2011, and have grown at a compound rate of nearly 20% since 2007.

A large population makes the African region an attractive market for emerging industries. With almost 200 million people aged between 15 and 24, Africa has the youngest population in the world. This number will double by 2045. Many jobs have been created over the last decade, but the pace needs to accelerate significantly to match the demand of Africa's next generations, according to the African Economic Outlook.

In particular, South Africa has an unusually large chemical industry -- the larges of its kind in Africa -- and has held substantial economic significance. Plastics production has been growing faster than the country’s economy with an impressive overall annual rate of 5.5% for the past five years, with sales of about R175 billion ($21.4 billion). The industry employs over 60,000 people or 3.4% of those employed in the manufacturing sector in South Africa.

Export of plastic products reached R2.4 billion ($294 million) in 2010 as against import of R7 billion ($857 million) worth of imported plastic products. This reflects the continued dependence on imports that could very well serve as opportunity to those supplying plastics products, as well as high performance materials and equipment/technology for production of plastic items. To encourage production as well as stable supply of plastic products, the government recently lowered import tariffs on products and inputs for automotive parts and interior products; packaging; medical products such as syringes, HIV and diagnostic tests kits; building supplies such as pipes, sheets, woven PP, roofs; electrical and electronic cables and appliances; as well as products for the energy sector such as wind turbine blades.

For many investors now, Africa has taken on a new bright spot in their agenda. And the plastics and rubber industry will definitely be a recipient of a large bulk of these investments.