Plastics Industry in Africa

IT'S taken a little over 150 years for plastic to find its way into every corner of our lives. From the wrap on our bread to the casing on our computers, the interior of our cars, our chairs, water pipes, or the lenses that cover our eyes, plastic has become an indispensable part of our daily lives. That integration now sees around 300 million tonnes of plastic produced globally every year1. With such broad and deep penetration of household consumables as well as of the manufacturing, automotive, and construction industries, it is hardly surprising that the plastics industry was hit hard by the economic slowdown in 2008 - 2009. The industry saw a global contraction in demand for most major resins with developed countries showing negative growth, whilst emerging economies, such as China and India, pulled back from high pre-recession demand2.

With the United States currently accounting for 25 - 30 per cent of global plastics demand, industry analysts have been closely monitoring the recovery of the U.S. economy over the past three years. What has become apparent, however, is that whilst the United States dominates market share, the highest market growth is being recorded in Africa and amongst developing nations. For example, for suppliers of polyolefin, such as polyethylene (PE) and polypropylene (PP), Africa appears to have been sheltered from the worst of the economic downturn and is considered an industry success story3. In addition, many analysts are now looking to the Middle East and Africa as a new source of manufacturing and export capabilities, as those companies who survived the recession are  reinvigorating their business models and moving to capitalise on both international and domestic demands. With the IMF predicting 5.75 per cent growth for sub-Saharan Africa in 20124, analysts  believe that Africa offers considerable market Potential.

In assessing industry market rebound, analysts have been looking to a number of key factors, including

? Increased consumer spending leading to expansion in the market for packaging and consumer goods;

? Recovery of the manufacturing sector and thus increased demand for industrial plastics; and

? Growth in construction including both infrastructure and Housing.

According to a recent report by the African Development Bank, Africa's middle class has tripled over the past 30 years to around 300 million people or approximately 34 per cent of the African population. Whilst some have suggested that the African Development Bank's figures need to be treated with caution as they classify the middle class as encompassing those living on between $10 and $20 per day, it is clear that economic growth is driving up consumption and bolstering the private sector in many African countries5. Of direct relevance to the plastics industry is research suggesting that the middle class exhibits more permanent home ownership and a greater take-up of durable household items such as refrigerators, telephones, and automobiles. In the last five years, for example, ownership of automobiles in Ghana has increased by 81 per cent.

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