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Preface Annex 1
PRODUCTION AND CONSUMPTION PATTERNS
Although Africa’s contribution to value-added production is very small, current trends suggest that its contribution to global production of chemicals will continue to grow. Between 1976 and 1996, this sector grew by 2.5 per cent per year (OECD 2001). Given that projections indicate that chemicals manufacturing will be relocated from OECD countries to developing countries in the medium term, this sector can be expected to grow. The shift in production from OECD countries to developing countries is directly related to the rise of multinational chemical companies, who have been able to relocate and invest in developing countries (Buccini 2004). This move may also be related to growing public concerns in developed countries about chemicals and the hazards they pose, as well as lower labour costs and a less regulated production environment in developing countries. Increasing consumption, directly linked to economic growth and improved levels of per capita GDP, underlies market development. There has also been an increase in international trade as tariffs and non-trade barriers have been removed in order to comply with the provisions of the World Trade Organization (WTO).
The most advanced chemical industries in the region are found in Northern, Western and Southern Africa. The development of chemical industries in these sub-regions has been facilitated by access to larger markets and by the presence of natural resources that can support growth in this sector, such as natural gas and oil, and well-developed infrastructure and communications. In Northern Africa, there are strong chemicals industries in Algeria, Egypt, Libya, Morocco and Tunisia (MBendi 2002). In Western African, Nigeria is the main producer and user of chemicals. In Southern Africa, the prime market and producer is South Africa. South Africa is also the only African country with a chemicals company listed among the top 30 in the world (the South African company is number 16) (CEFIC 2005). South Africa’s chemical industry differs from others in the region in that energy use is largely based on coal.
Although it is relatively small by international standards, South Africa’s chemical industry is the largest in Africa, contributing about 5 per cent of GDP and employing approximately 150 000 people. Annual production of primary and secondary process chemicals is in the order of 13 million tonnes, with a value of around US$2 825.75 million (UNEP 2004b).
Industry predictions are that future global growth in the chemicals industry will be led by pharmaceuticals, followed by specialty chemicals, agricultural chemicals, textile fibres and industrial chemicals (Buccini 2004). Currently, petrochemical commodities, polymers and fertilizers are the main products of the African industry (MBendi 2002). However, a number of African countries have capacity in pharmaceuticals production and many are investing in oil and gas, which are key drivers for the chemicals industries. The production of agricultural chemicals is a key focus of the chemical industry in Africa. Africa contributed approximately 4 per cent to total world pesticides (insecticides, fungicides, disinfectants) production in 1998, and approximately 5 per cent in 2002 (CropLife Africa Middle East undated, UNSTATS 2005). Global trade in this sector is shown in Figure 5.
In 2002, Africa contributed only about 3 per cent of total world nitrogenous fertilizer production – with most coming from Egypt and South Africa; however, production from these two countries has declined between 1998 and 2002 (CropLife Africa Middle East undated). In 1998 Africa’s contribution to global production of phosphates fertilizer was approximately 7 per cent, but this has also declined from 537 tonnes in 1998 to 369 tonnes in 2002 (CropLife Africa Middle East undated). The capacity to produce agricultural chemicals requires investment in technology, access to finance and raw materials. It is notable that the top two producers of pesticides in Africa, Egypt and South Africa, are also leaders in the production of oil-related products.
Mining chemicals produced in Africa include explosives and accessories such as fuses and detonators, mineral processing chemicals such as leaching agents, floatation agents, smelting and refining chemicals.
The chemical market in Africa is primarily targeted at meeting local needs rather than being export-orientated. Nevertheless, the import and export of chemicals are on an upward swing; this trend is expected to continue given the increasing demand for chemicals by Africa’s growing economies (MBendi 2002). In the case of the Northern African Mediterranean countries, the proximity to European markets has led to a greater export focus than in other areas.
Although in all chemical sectors consumption is currently higher in developed countries than in developing countries, demand for chemicals and chemical products is likely to increase as disposable income grows. Globally, there is a correlation between chemical consumption and GDP per capita, which suggests that there is tremendous scope for increased consumption of chemicals in developing countries (OECD 2001). Still Africa’s share of the global market is currently very small (Figure 4). These chemicals come from a range of countries: China and India are emerging as the major exporters of chemicals to Africa.
Generally, imports of chemicals exceed exports due to a mismatch in production and the size of the market. Figure 5 illustrates this in relation to trade in pesticides: most African countries were net importers of pesticides (FAOSTAT 2006).