High Growth Potential for Sub Saharan African Biofuels Markets

Now that the African biofuels industry is entering a period of extended growth, an in-depth understanding of current and future trading conditions will boost the chances of success—especially for early entrants that are positioned to make sizeable gains as these markets develop.

According to new analysis from the global consulting firm Frost and Sullivan, the Sub-Saharan African Biofuels Markets will be worth USD $1.54 billion in 2010 and could reach $1.82 billion in 2013.

At present, biofuels production in Africa is limited. However, successful ethanol production is ongoing in several countries that are all currently finalizing their biofuel strategies. A number of companies have already started investing in the biofuels market in Africa and early participants are expected to gain considerable benefit from early market entry.

“Many acres of jatropha have already been planted, intensive skills programs are being set up and various international companies are investing in this ‘non-existent’ industry,” said Frost and Sullivan Research Analyst Cornelis van der Waal. “Early market participants will not only have a significant advantage over future competitors but will also be able to shape the industry in their favor.”

The current market for biofuels in Africa is very ripe. However, sluggish government policy, fears centered around sustainable feedstock production and a general lack of skills in the African biofuels industry is restraining market expansion. In addition, the severe lack of capital to develop this market is hampering the objectives set under the Kyoto Protocol. Alternative technologies such as fuel cells are also putting a dampener on enthusiasm for investment.

“Although the African market as a whole and the South African market in particular hold tremendous potential, the slowness of governments to develop and implement policies is straining development,” said Mr. van der Waal. “However, most strategies are expected to be completed by the end of 2007 and this will result in exponential growth and investment opportunities for local and foreign companies.”
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