This slide of the month tries to shade some light on the plastic packaging sector in Nigeria. Nigeria’s packaging industry is projected to be worth $294 billion by 2020, up from $178 billion in 2012. Local market experts further suggest the market is 15 years behind India and about 30 years behind Europe but it is on a steady growth path as innovative solutions are being introduced into the market from across the world. By far, BOPP is the most utilized packaging material used in Nigeria followed by PE which has very diverse applications, same as BOPP. Plastics top the chart for most preferred packaging product used by manufacturers in Nigeria with soft drinks, beverages (currently at 10% CAGR) and personal/home care products driving this trend.
This slide shows the result of a recent study of one of africon´s employees. Aim was to identify firm capabilities, that have an impact on various aspects of performance of German companies operating in Nigeria. The study was based on existing research findings, as well as a survey of senior staff of 40 German firms operating in the country with at least with an appointed distributor (or own staff etc.). As only very few German firms are invested in large own local structures, it emerged that especially the marketing capability in terms of brand building, gathering market intelligence and strong sales channels are key for success locally. Efforts by the German firms can be supported by strong partners – leaving all the work to these partners is however not enough. Interestingly, factors such as adapting products to local needs, lobbying the German or Nigerian government, as well as attending Nigeria focused trade shows did not have a significant impact.
The African continent offers an ideal environment for electricity generation from renewable sources. Therefore, it is not surprising that sub-Saharan Africa (SSA) already ranks third worldwide in terms of percentage of electricity generated through renewable sources. Roughly 27% of electricity generated in 2015 was generated through renewable sources. Lesotho, Ethiopia, D.R. Congo, Central African Republic, Namibia, Zambia, Uganda and Malawi rank best, as they generate more than 90% of their total electricity output from renewable sources.
However, as of 2015, 91% of the renewable energy generated in SSA was generated from hydropower. The continent’s abundant solar, wind, biomass and geothermal resources are yet to be exploited more efficiently.
The Africa Renewable Energy Initiative (AREI), established in 2015 and operating under the mandate of the African Union, aims to add 310 gigawatt of additional renewable energy generation capacity to the continent until 2030. This brings also other sources of renewable energy than water into focus and creates high opportunities for international technology and service providers in the renewable energy sector.
The African automotive markets are meanwhile one of africon´s absolute strongholds. The company has won and executed projects in the areas of e.g. assembly machinery, engine filters, ignition products and general spare parts in countries ranging from Nigeria in the West, Kenya and Tanazania in the East, Egypt in the North and South Africa in the South. Insights gathered cover areas such as vehicles in operation, spare parts markets, local vehicle assembly projects and key distribution firms. They also include companies ranging from major automotive OEMs such as Toyota, Isuzu, Hyundai and VW, to aftermarket players like BOSCH, Denso, NGK, Hengst, MANN-FILTER, Mahle and others.
In 2017 and 2018 africon conducted two market assessment projects for major international players of the plastic packaging sector. Both projects had Nigeria as their focus market and more than 100 interviews were conducted with all relevant players of the plastic packaging sector locally.
The results concluded from the analysis of all interviews and market data is very clear: the plastic (packaging) sector in Nigeria is very vivid and growing at a high pace. Nevertheless, the Nigerian market is highly cost conscious. Competition is set on pricing strategy: the cheaper the product, the more sales a company makes. Most manufacturers still shy away from cost increases even marginally. The majority of consumers do not care much about quality as they do have an open eye for the cost.
At the same time the future is certain to come with changes. The upper middle class is expanding and there’s a growing awareness on quality products among Nigerian consumers generally.
Any high quality / high price level company entering the Nigerian market will need a targeted product awareness campaign to help realize the market potential for their products. Both end users & converters need some form of education on the use of the products.
Since 2015, africon won various clients and executed a multitude of projects in the steel industry. The hightened interest in the African steel markets can partly be explained by this chart: it shows the rapidly increasing demand for steel in Africa, as well as key countries for steel in Africa. As part of the projects, africon personally conducted meetings with over 100 decision takers of local steel producers and stakeholders across the SSA region. Visited companies included local groups such as Safal, Comcraft and Aarti. Insights were also gathered about machinery suppliers such as HITEC, HITACHI, Danieli, SMS and Sinosteel.
In 2016 africon was contracted to create a detailed overview on the debit and credit card market in Nigeria. Aim of the client was to understand the key personalisation bureaus in Africa, the market potential for payment modules and local pricing. Within 60 interviews with banks, personalisation bureaus, IT companies and experts in the market africon could gain extensive know how on the local pricing of Gemalto, G&D and Union Pay. Key learning is that the local pricing has strongly declined in a short period of time due to the strong pressure from the market.
The share of investments in the water sector in SSA is relatively small at 9.7% compared to other infrastructure sectoral financing according to the Infrastructure Consortium for Africa (2016). The region’s water access flounders at 40% (World Bank 2017). Whereas industrial wastewater is aiding the deterioration in water quality, resulting in reduced biodiversity in rivers, lakes and wetlands by about one-third in the region, finds a UN brief on Water Management (2017). This overall, complicates Africa’s development efforts to achieve both industrialization and sustainability.
Primarily, a combination of water technologies and investments can implicitly unlock much of Africa’s stagnant efforts, largely driven by the private sector. However, something was missing. At africon we studied what additional forces could attract more technology providers to enter the market. Our findings show that countries equipped with engineering capacity and environmental legislation had a favorable environment for water technologies. Added to that, water scarcity coupled with industrial activity and investment trends were stark signals of strong market demand for water solutions.
As a result of our market analysis, the top 5 countries were: South Africa, Nigeria, Kenya, Ghana and Ethiopia.
In the past three years, africon has conducted extensive market research projects on the automotive industry in sub-Saharan Africa. In 2017, the market for automotive filtration in Kenya and Tanzania was analysed in detail. During the project, 60 senior level industry players from authorities, key automobile traders and leading parts distributors, more than 300 consumers, around 70 workshops and 100 parts traders in Kenya and Tanzania were interviewed.
In terms of vehicles in operation (VIO), Kenya and Tanzania belong to the countries with the highest stock of VIO in sub-Saharan Africa (SSA). Through a fast-growing local assembly industry, Kenya promises to stay the local automotive hub in East Africa. This also reflects in a growing local spare parts industry ranging from automotive batteries to tires. Also the automotive market in Tanzania, with a first local assembly line for agricultural vehicles in place and various spare parts manufacturers operating successfully, promises to continue growing in the next years.
Apart from the activities in Kenya and Tanzania, africon has been active in the Nigerian automotive market since 2015. With the new insights from Kenya and Tanzania gathered in 2017, the africon expertise regarding the African automotive market grew decisively.
After growing its expertize in the African packaging markets throughout the last 5 years, africon supported a leading aluminium foil supplier to the flexible-, laminated carton, cigarette- and blister packaging industry with the development of its Africa strategy.
53 key industrial players were interviewed, including 11 packaging manufacturers in South Africa and 12 packaging manufacturers in Nigeria. In terms of market attractiveness, the South African market outscored the Nigerian market. However, given the well established long term relations many South African companies have with their suppliers, the Nigerian market offered a far bigger accessible market than the South African.
Only by meeting the local key players personally in Nigeria and South Africa, africon was able to identify which companies signalled interest in a future cooperation with the client. The africon hands-on approach was therefore once again essential for the development of a successful Africa strategy.
October 23 @ 9:00 - October 26 @ 18:00
November 12 @ 10:00 - November 15 @ 18:00