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

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

The greatest opportunity for South Africa’s chemicals sector is 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, says.

The panel, led by Deloitte strategy and innovation director Mike Vincent, comprises 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 has revised South Africa’s economic growth downward to 2% for 2013 and 2.9% for 2014, almost every other country in sub-Saharan Africa is expected to deliver growth above 4% in 2013 and 2014.

Further, South Africa’s manufacturing sector, in which the chemicals sector plays a key role, has 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 is expected to fall to a ranking of 25 in the next five years, Deloitte points out.

However, a move into Africa, which is on the “tipping point” of becoming a signifi- cant chemicals consumer, could reignite the industry, GBR’s report states.

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

These include 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, avers that, if South Africa does not enter the markets and exploit the opportunities, “someone else will”.

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