JEDDAH, Saudi Arabia – Lubricant consumption in Africa is forecast to grow at a compound annual rate of 2.4% over the next five years, an official with base oil trader Penthol told an industry gathering here last week.
Cliff Classen, the company’s director of sales for Africa, told the ICIS Middle Eastern Base Oils and Lubricants Conference that the growth will be partly driven by the creation of a continent-wide free trade zone and increased use of personal power generators and that grease will be the fastest-growing product category.
Compared to other continents, Africa is one of the world’s smallest lubricant markets, but is expanding faster than some of the larger ones. The continent consumed 2.1 million metric tons of finished lubes in 2022 and is projected to consume 2.5 million tons in 2028, Classen said.
The forecast is underpinned by several key demographic trends. The region is young, with 75% of its population of 1.4 billion being under 35. By 2050 the population should swell to 2.5 billion, creating lubricant demand and providing workers for business growth. Africa’s population is also moving from rural areas to cities at an annual rate of 4.4% – faster than any other continent.
“Rapid urbanization and a burgeoning middle class increase the demand for housing, mobility, technology and on,” Classen said. “Demand for urban transport by 2050 is anticipated to be more than 6,500 billion passenger kilometers just in Sub-Saharan Africa. This is 2.5 times more than the demand expected in the European Union by that date.”
Economies on the continent have long been focused on supply of natural resources, in which it is rich, but numerous nations are now working to foster industry that processes and refines raw materials to make value-added products. This should raise demand for industrial lubricants while also reinforcing the growth of the middle class and its lubricant consumption.
Classen cited predictions that the African Continental Free Trade Area will add momentum to the region’s economic growth. Taking effect in 2021, the pact eliminates import and export duties between African countries to create a single market for goods and services. The World Bank estimates it will raise real incomes by $450 billion by 2035, lifting 100 million people out of poverty, he added.
Power generation is forecast to be the fastest-growing lubricant end-user industry, driven by continued expansion of mining and consumer demand from the growing population. Numerous countries are working to expand public electricity supply, but use of private generators will continue to increase because of inadequate grids.
Automotive engine oils currently account for 55% of Africa’s lubricant demand – an outsized portion due to the large number of passenger cars and relatively small size of the continent’s industrial base. That segment will keep growing, Classen said, as the region relies heavily on imports of used vehicles, which will continue to run mostly on internal combustion engines. But he added that grease demand is forecast to grow at a compound annual rate of 4.1%, making it the fastest growing product category.
Egypt is the continent’s biggest country market, accounting for 25% of lubricant demand, Classen said, followed by Nigeria at 21%, South Africa at 17%, Algeria at 9%, Morocco at 5%, Tunisia at 3% and Ghana at 2%.