Dow Chemical Co. is increasing its presence in Africa as it seeks to extend sales growth of its industrial products in one of the U.S. company’s fastest-growing regions.
The company’s revenue from sub-Saharan Africa has gained more than 10 percent annually over the past five years and advanced 25 percent in 2014, Ross McLean, Dow’s president for the region, said in an interview on Thursday. Dow has opened offices in Ethiopia, Nigeria and Morocco since November and is in the process of setting one up in Angola, he said. The company also has representatives in South Africa, Egypt, Kenya, Ghana and Algeria.
“If you roll back five or six years, we were only present in Egypt and South Africa,” McLean said at the World Economic Forum on Africa in Cape Town. “We wanted to get closer to our markets and connect with our customers. We have been building foundations to get ready for a real growth take-off.”
Africa accounts for less than 3 percent of the Midland-based company’s total sales yet that should increase to more than 5 percent by 2025, Mclean said. The company makes petrochemicals that go into plastics, cosmetics, electronics, and coatings, and also produces agrochemicals.
While Africa has benefited from increased levels of foreign investment and improved infrastructure, the prospect of a rise in U.S. interest rates is dampening demand for emerging market assets. The International Monetary Fund last month lowered its 2015 growth outlook for sub-Saharan Africa by 1.25 percentage points to 4.5 percent. Expansion in Nigeria, Africa’s largest economy and most populous country, is set to slow to 4.8 percent from 6.3 percent last year.
“Our view is still a very positive one but we have never pretended that the macroeconomic environment globally, or within Africa, is the thing we rely on,” McClean said. “We rely on our own focus, our capability, being in the right places and changing the game for ourselves whether economies go up or down.”
While McClean expects “remarkable” sales growth in Nigeria next year as the expansion of Dow’s sales force pays off, he still sees Africa’s biggest crude producer as a long- term play.
“The current year we dig in, we get things right, we build our team, we build our relationships and we get ready to build our business in the future,” he said. “You can’t set up there and expect immediate results.”
Dow sources most of the products it sells in Africa from Europe and North America. That will change later this year, when the new $20 billion Sadara Chemical complex in Saudi Arabia comes on line.
The new plant will reduce logistics costs and help make Dow more competitive, McClean said.