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From Subcontinent to Sub-Saharan Africa: Part Two

World Cement,


Read Part One of this article here.

A glance at the current stance of Sub-Saharan Africa

Sub-Saharan Africa is titled as ‘the hottest frontier’ and ‘the new investment frontier’ by various financial magazines such as Time and The Economist. International investors are enticed by the unceasing growth rate of the GDP in Sub-Saharan Africa over the past 3 years. The main frontier markets are Kenya and Nigeria and they have both witnessed positive growth in the main markets of more than 50% in the last year. According to the International Centre for Trade and Sustainable Development, the GDP growth of Sub-Saharan Africa has shown a positive increase of 5% in 2012 and it was forecast that it will grow by a further 5.7% in 2013.

Collectively there are 48 countries in Sub-Saharan Africa. West Africa, covering the region from Senegal to Cameroon, recorded sales of 22 million t, which signifies 20% of the total African market. The top five cement producers in West Africa are Nigeria, Senegal, Ghana, Benin and Togo. Of these, Nigeria and Mali are the largest importers of cement in West Africa, with imports standing at 1.2 million tpa. By 2015, the production of cement in West Africa is expected to surpass consumption. Ghana is the leading importer of cement and clinker with 4 million tpa. The growth rate is expected to surge in forthcoming years and will be higher in the regions of Ghana and Nigeria as opposed to landlocked smaller countries.

East Africa is also experiencing favourable growth in cement demand. The main reason lies in its strategic location near the swiftly emerging markets of Burundi, Rwanda and newly-formed Southern Sudan. The main markets in East Africa are Kenya, Tanzania, Mozambique and Madagascar, whereas the main exporters are Sudan and Ethiopia.

The UN categorises Botswana, Lesotho, Namibia, South Africa and Swaziland as part of Southern Africa. The highest per capita consumption of cement in Sub-Saharan Africa originates from Southern Africa region at 220 kg. South Africa is equipped with a production capacity of 18.4 million tpa and is the foremost cement producer in Africa. The Southern African region has witnessed notable advancements in terms of foreign investors entering the market for cement plant ventures, such as Germany’s Schwenck Cement investing in Namibia.

Angola, Cameroon, Chad, DRC (Democratic Republic of Congo), Equatorial Guinea and Gabon are a part of Middle or Central Africa. Previously, Central Africa was importing cement from the west but since East Africa has increased its local production it is seizing the new mounting demand for cement in the Central African region. Various international cement companies, such as Lucky Cement of Pakistan, HeidelbergCement and Cementos La Union are also zealously entering the market and investing in advanced plants in DR Congo.

Africa’s strategic position in the global economy

Traditionally, the minerals and raw materials in Africa have not been properly explored and the emerging interest in the region has classified it amongst the untapped markets with immense growth potential. The key growing markets in Sub-Saharan Africa are Tanzania, Mozambique, South Africa and Indian Ocean Islands (Madagascar, Comoros and Mauritius).

According to Global Trends 2013, the rate of return on foreign investment in Africa is higher than any other developing country across the globe. Furthermore, Forbes highlighted that, with the sharp increase in African urban consumers, the region can expect long-term growth. The business magazine also discusses how the recent upsurge of middle class in urban areas combined with a high population of young people makes way for the current wave of Afro-optimism.

Lucky Cement Limited’s investment in DR Congo

Lucky Cement Limited has embarked on the journey of being the first Pakistani-based multinational company by setting up its JV plant in Basrah, Iraq: Al Mabrooka Cement. Now, the company is investing in DR Congo in a project named M/s Nyamba Ya Akiba, which offers vital access to the regional market of Sub-Saharan Africa, making it an attractive investment.

The project is strategically located near the Matadi Port and is 250 km away from Kinshasa. The location offers easy access to raw material and cheap power, including abundant and high quality limestone reserves.

The M/s Nyamba Ya Akiba project has a capacity of 1.18 million tpa and comprises state-of-the-art European technology from renowned plant and machinery supplier, FLSmidth. As a responsible corporate citizen, Lucky Cement Limited has utilised the most efficient advanced technology with an environmentally friendly operational framework. The project will be spread over an area of 250 acres of land for the cement plant and 7057 acres for limestone and clay mining. An estimated 400 employees will be recruited for the project and local employees will be hired and given training as per the international standards. Hydel-based power supply will be easily available from the nearby Kwilu substation, which is only 6 km away from the project.

The Public Investment Corporation of South Africa is laying strong emphasis on the infrastructural development in and outside South Africa. The top management at PIC contends that cement is the new gold. In its January 2014 report, Imara also forecast that by 2013 Sub-Saharan Africa would have experienced noteworthy capital expenditure investment and a striking increase in the cement capacity from 1.28 million t to 29.2 million t. In a nutshell, when it comes to cement production, Africa has started to catch up in the race for global economic development.

Bibliography

  • http://www.ictsd.org/sites/default/files/review/bridges-africa-review/2-1.pdf
  • http://www.globalcement.com/magazine/articles/822-top-75-global-cement-companies
  • http://www.globalcement.com/magazine/articles/741-top-20-global-cement-companies
  • http://www.economist.com/news/finance-and-economics/21575769-strategies-putting-money-work-fast-growing-continent-hottest
  • http://www.cgmplc.com/content/assets/pdf/icr_201107_the_last_cement_frontier.pdf
  • http://minerals.usgs.gov/minerals/pubs/commodity/cement/mcs-2014-cemen.pdf

Written by Faheem Ahmed, Lucky Cement Limited. This is an abridged version of the full article, which appeared in the September 2014 issue of World Cement. Subscribers can view the full article by logging in.

Read the article online at: https://www.worldcement.com/africa-middle-east/02092014/from-subcontinent-to-sub-saharan-africa-part-two-360/


 

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