Elsewhere in this issue is a report about lubricant demand recovering in some European countries while languishing in others – and how either case is due to economic trends. Its a connection we come back to repeatedly in this magazine – the influence of overall economic output on lubricant consumption. There are other factors, of course, such as lube technology and drain intervals, but for year-to-year changes in lubricant demand, few things have the impact of the economy.
Europes economy may be flagging, but the picture is brighter on the continent to its south. Specifically, economic output in Sub-Saharan Africa is expanding at a healthy clip of more than 5 percent, according to an economist who addressed Novembers ICIS African Base Oils and Lubricants Conference in Durban, South Africa. Moreover, said Brent Cloete, of DNA Economics, growth is dispersing in the region, finally reaching smaller economies that were left behind for so long. With plenty of potential yet to be tapped, the region deserves attention.
DNA, which is based in Pretoria, South Africa, forecasts that economic in Sub-Saharan Africa will grow 5.25 percent from 2012 to 2013. Thats better than many predictions for North or South America or Europe. Cloete said expectations for Africa stem largely from a reduction in civil strife and natural disasters, as well as better performance by those in charge.
Government is becoming better, and thats starting to show up in economic performance, Cloete said. He predicted that next years growth will stem largely from increased consumer spending in Africa, which will offset a drop-off in exports.
DNA estimates that the fastest growing countries are not the regions anchor economies of South Africa and Nigeria, but smaller ones such as Equatorial Guinea, Chad, Sierra Leone, Uganda and Rwanda, all of which grew at average rates of at least 7 percent per year from 2001 to 2011. In fact, the 10 fastest growers during that period included only three of the regions 10 biggest economies.
Not too long ago, you wouldnt have been expecting this level of growth in so many countries in Africa, Cloete said.
A few things pose threats to the potential that DNA sees for the region. One is another recession in Europe, which would sap exports from Africa as well as foreign direct investment there. Cloete said the region could weather even such a development.
Hopefully, if were lucky, over time other countries will come in and make up the shortfall.
Africa may not be ready to pass Europe just yet, starting as it is from a much smaller base. But if it continues expanding as it has in recent years it will offer significant opportunities to lubricant marketers and the industrys raw material suppliers.