Moving into the rest of Africa could “reignite” South Africa’s lagging chemicals industry with vast opportunities for growth in the rest of the continent as the population expands and the middle class grows, the Global Business Report (GBR) said in its latest research report.

The local chemical sector – a small player in the global $4.12-trillion industry – was found to be South Africa’s fourth-largest employer with 200 000 jobs and was seen as a critical component of economic growth, contributing about 5% to gross domestic product (GDP).

The greatest opportunity for South Africa’s chemical sector was in Africa and companies seeking growth should embrace the economic opportunities presented by sub-Saharan Africa’s faster growing neighbours, a panel assembled by Deloitte for the report’s launch, in Sandton, agreed.

The Deloitte strategy and innovation director Mike Vincent-led panel comprised Deloitte Southern Africa chemicals leader Patrick Earlam; Chemical and Allied Industries Association chairperson Joaquin Schoch; Industrial Development Corporation chemicals and allied industries strategic business unit senior account manager Deon Cloete; Germany-based Evonik Degussa president and MD for sub-Saharan Africa Dr Iordanis Sawopoulos and AECI group technical and safety, health and environmental manager Gary Cundill.

While the International Monetary Fund revised South Africa’s economic growth downward to 2% for 2013 and 2.9% for 2014, almost every other country in sub-Saharan Africa was expected to deliver growth above 4% in 2013 and 2014.

Further, South Africa’s manufacturing sector, in which the chemicals sector played a key role, had been losing competitiveness over the past few years, registering a ranking of 24 last year on the back of the rising cost of labour and energy, inhibiting policy structures and the declining attractiveness of the local market.

The nation’s competitiveness was expected to fall to a ranking of 25 in the next five years, Deloitte pointed out.

However, a move into Africa, which was on the “tipping point” of becoming a significant chemical consumer, could reignite the industry, GBR’s report had found.

Cloete said that with a rising population, which was expected to double from one-billion by 2030, and the increasing disposable income and growing middle class, it was “just a matter of joining forces and crossing the border”, despite the significant challenges in wait.

These included the significant presence of cheap imports and dumping, higher input costs such as labour, energy and raw materials, the size of demand economies in, and around, South Africa, the vast distance from potential export markets and ageing skills.

Earlam, however, averred that, if South Africa did not enter the markets and exploit the opportunities, “someone else will”.

Schoch noted that Southern Africa was “clearly a winner” despite holding a smaller market, as Morocco, Tunisia and Algeria maintained strong trade ties with Spain and surrounding European countries and the rest of North Africa and West Africa had proved difficult.