Bright new beginnings beckon for this vast continent, from the changing political scene to a footballing fillip ahead.

The race is on across Africa – a race to meet the challenges the continent faces over the coming months and years.

Just as had been the case when gasworld staged its African Conference last year, there is still a wealth of opportunity to be explored across this previously ‘dark continent’. To realise the bright new beginnings however, a number of obstacles must first be overcome.
Achieving such goals is likely to inspire both hope and industrial gas demand along the journey.

Industrial gas revenues grew by an impressive 15% in 2006 and totalled around $1.1bn. Growth has been just as euphoric since then too, with a further 14% rise in revenues pointing to a gases market valued at over $1.25bn in 2007.

A picture of the market is perhaps less clear for the year to have just passed, while the smokescreen of the global economic downturn also clouds the outlook ahead for 2009 and beyond.

What is still abundantly clear however, is that there is still much to be done across Africa.

What’s new?
So what’s new as we enter the first quarter of 2009?

The continent’s political landscape is shifting, shaped once more by presidential power struggles and a raft of problems facing the government of the day.

Zimbabwe in Southern Africa for example, is under ever-growing scrutiny as the Republic endures evolving economic and political circumstances.

Perhaps seen as a sign of hope, was the recent ceremony to mark opposition leader Morgan Tsvangirai sworn-in as Prime Minister in a unity government with President Robert Mugabe. Whether this really is a sign of positive change remains to be seen, but what is more evident right now is the challenge that lies ahead for this new-found alliance.

The new Prime Minister is riddled with problems to address in Zimbabwe, ranging from a cholera epidemic and collapsed economy, to a huge 90% unemployment rate.

Much investment is required in the country’s healthcare system, which is thought to be in a dire state and particularly poor in Zimbabwe’s second city of Bulawayo for instance.

Equally poor is the Republic’s poor drinking water system, where clean drinking water is merely a pipedream and the impact of this piles further pressure on a failing healthcare service. More than 3,000 people have died so far and at least 60,000 are believed to have fallen ill from cholera, as proper sanitation and access to clean drinking water have become less routine.

Investment in Zimbabwe’s water treatment and healthcare system is clearly required – and with such resource and investment in facilities, industrial gas consumption would naturally follow.

These problems do not go overlooked either.

During Barack Obama’s inauguration speech of 20th January 2009, the 44th US President alluded to the needs of nations such as Zimbabwe as he said, “To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds.”

“And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders, nor can we consume the world’s resources without regard to effect. For the world has changed, and we must change with it.”

The world is certainly changing, and in neighbouring South Africa a similar political evolution could soon be afoot.

February saw South Africa’s President Kgalema Motlanthe announce that general elections would take place on 22nd April, which some believe could prove to be the most interesting since Nelson Mandela rose to power in 1994.

The same problems persist in South Africa too. As with the majority of the continent, the country is still largely bereft of skill and knowledge base – as so widely acknowledged and addressed at the gasworld conference last year. A common theme throughout emerging markets and the gases industry alike, this lack of skillsets was perhaps also evident by recent news reports.

Copper thieves in South Africa have come across issues with their ‘loot’, as they lack the skill and expertise to ‘work’ with electrical equipment. This has prompted them to either fail in their attempts and attract arrest, or worse still, be electrocuted while trying to steal copper wire from power cables.

So rife is the stolen copper epidemic, that Cape Town has launched a major crackdown. The theft of copper, which has caused power cuts and train cancellations, has become big business in South Africa.

The stolen copper is sold to scrapyards which then export it to China. Last year alone, $10m worth of copper was sold even though the region has no natural copper reserves – astonishingly making it Cape Town’s second biggest export to China after fruit!

Sporting opportunity
Perhaps one of the biggest question marks hanging over South Africa had been the proposed Fifa World Cup tournament in 2010.

As well as potentially affording hope and a platform for progression for both South Africa and the wider African continent, the forthcoming 2010 World Cup is seen as a major growth driver for industrial gases.

A boom has been witnessed in demand for gases used in infrastructure development such as for cement and steel, while a drive for gases used in food & beverages, further construction, transport, and other services is anticipated too.

There are also apparently ‘no doubts’ that the tournament will be staged in the country, after former South African President Thabo Mbeki insisted late last year that the event would go ahead as planned.

With just over a year to go until the big kick-off, progress is swift and Pretoria’s Loftus Versfeld stadium has become the first of the country’s 10 World Cup venues to be completed.

The stadium’s renovations and expansion to 50,000 capacity is finished, perhaps exemplifying a finished example of the gas-consuming construction work that is underway.

So strong are the benefits to be gained from this infrastructure drive, that a number of UK-based firms have been keen to pick-up business from the work generated by the event.

South Africa hopes that the World Cup will be a catalyst for the nation’s economy, as the sport, tourism, transport, telecoms and construction sectors all receive a welcome boost. The World Cup budget recently stood at 28bn rand or £1.8bn and includes stadiums, transport, security, broadcasting and training.

There is clearly much business opportunities to be had from this sporting event.

Perhaps that’s why so many UK construction, signage and branding firms were present at the 12th Soccerex football business exposition in Johannesburg in November. A number of manufacturing, technology and services companies gathered to win some of the business potential.

Gas revenues
The potential is clearly there from a gases perspective too. As a region that appears to demonstrate double digit growth year on year and a continent that encourages outside investment, Africa is a gases market marching forward.

Those $1.25bn industrial gas revenues of 2007 should surely have continued the trend and grown at a similar percentage again in 2008, even after the onset of the financial and economic crisis late last year.

Of this market, South Africa is far and away the largest country in terms of gases value and perhaps always will be. Estimated to account for around 55% of the continent’s market in 2007, the South African gases business was valued at $701m and showed a 9% growth rate in 2007.

In the same year, North African gas revenues (perhaps largely driven by the advancing Moroccan gases industry) were believed to have reached just over $130m and had risen 12% from its value in 2006. A further petrochemicals ‘stimulus’ could potentially be expected in North Africa, as plans for a Libyan crude oil refinery gather pace at a total estimated investment of around $4bn.

Foster Wheeler revealed in October 2008, that its Milan-based subsidiary (Foster Wheeler Italiana S.p.A) had been awarded a contract for consultancy and project management services for the planned refinery, which will process up to 200,000 barrels per stream day.

Set to be located at Mellita, the facility is a project of Zwara Oil Refinery Company Limited (ZORCO).

ZORCO Chairman Dr Ali Shamekh said of the refinery, “This is a flagship project in North Africa requiring deep technical knowledge, experience, and flexibility.”

Marginally behind Northern African revenues are those of the remainder of Southern Africa, estimated to have reached a value of $101m in 2007 and projected to account for a further 8% of the market.

Egypt and Nigeria alone account for much of the remainder of the market and have also shown strong growth rates, with the latter achieving 14% growth in 2007 to reach $90m revenues, and the Egyptian gases business valued at $96m – having risen 9% from 2006 valuations.