Seeds of Opportunity: The African Growth Series
January 2022 | Issue 2
In this week's issue, you will learn more about:
- The demand for mining chemicals in Africa
- The potential for Solar PV/CSP to bridge the electrification gap
- Fintech in South Africa
- Developments in Tanzania's Logistics sector
African Mining Chemicals Market
Globally, the demand for mining chemicals has been steadily increasing as the market was valued at USD 9.89 billion in 2020, with forecasts suggesting a CAGR in revenue of 5.8% between 2021 and 2028. The wide usage of mining chemicals in mineral processing, water treatment, surface and underground mining (to name a few) is likely to drive the demand during this forecasted period. In Africa, the deteriorating quality of mineral reserves which will most likely result in the development of new and advanced mineral processing methods is expected to drive the demand for chemicals. Growing demand for gold, copper and phosphate and the increased demand for water treatment is further likely to fuel the growth in the African mining chemicals market, with the market projected to reach USD 960.97 million by 2028, with a CAGR of 5.6% between 2021 and 2028.
The demand for mining chemicals will continue to rise with the rapid increase in urbanisation and industrialisation and rising infrastructure projects such as roads, highways, and railways.
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Solar PV/CSP potential to bridge the electrification gap
Extremely low electrification rates continue to inhibit the African continent to reach its highest potential, both from an economic; as well as social perspective. But there is hope. Africa is well endowed with renewable energy potential. The region has the potential to produce on average 23,039 TWh/year, more than enough to fully electrify the continent. The largest hurdle that needs to be overcome is a limitation on a transmission and distribution (T&D) side rather than generation. Poor overall extend of the transmission network coupled with vast distances between settlements, poor maintenance of the network; as well as continued theft and vandalism of distribution systems hampers the growth. Governments also need to be more conducive to private sector participation, specifically in the T&D sectors. Less than 10% of all countries allow Private Sector Participation (PSP) in the transmission sector, and nearly 20% allow PSP to participate in the distribution sectors, mainly through “whole-of-grid concessions”. The region is more than capable of achieving the 7th SDG by 2030, providing clean, modern and reliable electricity to all. However, this requires well developed policies, fair cost-reflective tariffs and open governments to attract the private sector.
Fintech in South Africa
With murmurs of the pandemic transitioning into an endemic, the new ways of living we've developed in the past two years are here to stay. Financial technology (fintech) continues to grow and transform the global financial services sector by supplying tech-enabled solutions to 30% of consumers who use banking apps and 64% of global consumers who use one or more fintech platforms.
Funding for African fintech's has quadrupled from half a billion in 2020 to $2 billion in 2021, overshadowing the 17.3% increase in active tech companies accessing the capital. South African companies such as Yoco, Jumo, Ozow, and Entersekt have raised significant funding from offshore investors, and our fintech startups make up one-fourth of Africa's total market. Growth is swift, so South African regulators and policymakers need to support the fintech ecosystem by developing its six foundational elements.
Developments in Tanzania's Logistics Sector
New infrastructure developments and great 2021 port performance results are some positive aspects in the Tanzanian Transport and Logistics industry since the start of 2022. In line with the global recovery, the Tanzanian ports recorded a 10,7% increase in cargo handling in the third quarter of 2021. Dar es Salaam port, accounted for the largest share of the activity, clearing 4,4 million tonnes in 2021 as compared to 3,9 million tonnes of cargo handled in 2020. The Mtwara and Lindi ports also recorded notable increases for the respective cargo handled. The improvements Tanzanian has recorded can in part also be attributed to the deliberate efforts by the government to improve the sector. Sh500 billion (roughly $216.5 million) was allocated in the 2021/22 national budget for the improvement of port infrastructure, of which Sh210 billion ($90.9 million) has already been distributed for upgrading equipment.
Most recent developments announced by the sector include a $900m railway deal between Burundi and Tanzania. Officials signed an MOU to construct a 282 km railway line from the western Tanzanian town of Uvinza to Burundi’s capital Gitega, which will improve trade between the East African Nations. The line will connect Dar es Salaam port to landlocked countries in the region, presenting an exciting opportunity for establishing a trade hub. However, the deal has not yet secured funding, but both nations will be responsible for sourcing financing for the project.
To find out more about opportunities in Africa, please contact Lynne Martin.
