The impact of COVID-19 on the African coatings industry

The COVID-19 pandemic has had varying degrees of impact on the coatings and coatings industry in Africa, including the closure of production activities and the interruption of sales channels, as the region’s government has imposed operational and commercial restrictions to curb the spread of the disease.

However, other paint manufacturers saw a glimmer of hope in the COVID-19 crisis and used this to expand their business to new manufacturing areas such as the production of hand sanitizer, while other paint manufacturing companies, like Akzo Nobel, completed it during the crisis. In order to complete the business acquisition plan, Akzo Nobel previously acquired 95% of the equity of Mauritian paint manufacturer Mauvilac.

The shutdown means the closure of the paint manufacturing industry, the production and supply of raw materials, and the stagnation of paint and paint end-user projects, thereby slowing the growth of the construction industry.

In fact, Akzo Nobel stated in its latest global business update, “Headwinds related to COVID-19 are increasing in most parts of the world and will have a significant impact in the second quarter.

"In an uncertain macroeconomic environment, the demand trends of each region and sector are different," the report added.

One of the leading industry organizations in Africa, the South African Paint Manufacturing Association (SAPMA) takes South Africa as an example. Due to the country’s strict lockdown regulations to stop the spread of the virus, paint manufacturers and hardware stores engaged in paint and related products have closed. .

Although the South African government eased the blockade before May 1, SAPMA stated that during the blockade, thousands of people were deprived of the opportunity to use "their residential confinement period to purchase products to upgrade their homes and increase the value of their property" .

SAPMA executive director Deryck Spence said that relaxing the COVID-19 restrictions would allow "re-sale of paint and auxiliary products."

He said that part of the move to lift the blockade “not only keeps the frustrated and trapped South Africans busy with the long-awaited renovation project, but also helps to instill a positive mindset after so many weeks of limited life. After that, this mentality is now urgently needed across the country."

SAPMA cited the example of Australia. Australia "allows paint production and sales, but the distance between the factory and the society must be strictly enforced." SAPMA stated that the regulations for the production and sale of coatings and related products have led to "a surge in demand for home improvement materials."

Spence also pointed out that the latest information from the World Coatings Council shows that the United States "federal and state governments’ actions to close down companies have largely avoided coatings and coatings. Several other countries have also applied to their governments to allow the coatings industry to resume operations."
However, South Africa issued new COVID-19 regulations on May 1, allowing industry-wide operations because hardware retailers can reopen on May 1, selling all inventory consumables.

In other African markets such as Kenya, paint manufacturers broke new ground during the COVID-19 crisis and expanded their business to produce hand sanitizer to control the spread of the disease.

Kenya’s leading paint manufacturer, Crown Paints Kenya, has launched an alcohol-based crown hand sanitizer, "a fast antibacterial formula that protects hands from bacterial infections, 84% alcohol can provide 99.99% Bacterial protection."

The company’s CEO Rakesh Rao said: “Alcohol-based disinfectants that have been approved by the Kenya Bureau of Standards will be able to meet the high demand for this product, especially during the current period when the world is fighting the COVID-19 pandemic. "

"The new hand sanitizer works quickly and is very easy to use because it does not require water and towels to dry. Crown hand sanitizer uses ethanol as the active ingredient, which is effective against live bacteria, fungi, enveloped viruses, non-enveloped viruses, and Grams. Positive bacteria and Gram-negative bacteria have a broad spectrum of activity."

PPG, which has operations in more than 8 African markets, recently stated that its organic sales of architectural coatings in Europe, the Middle East, and Africa fell by a low percentage of a single digit due to the mandatory closure of retail stores. When countries reopened their economies, strong and broad-based growth in June almost offset the impact of forced retail store closures.

PPG stated in its second quarter report: “The revenue of the division was mainly affected by the decline in sales caused by customer shutdowns related to the influenza pandemic, partially offset by active cost mitigation measures, restructuring cost savings and moderately increased sales prices. "

As the core business of paint manufacturing slowed down, many other paint manufacturers in the region took advantage of the growing demand for COVID-19 control products such as water, soap, hand sanitizer and preservative solutions to open new business lines.

Even with the strong momentum of the COVID-19 crisis, Adenia, a private equity fund manager focused on Africa, reached an agreement with Akzo Nobel to sell 95% of the shares in Mauvillac, a leading paint and coating manufacturer in Mauritius.

Adenia, which is active in Kenya, Côte d’Ivoire, Ghana and Madagascar, invested in Mauvilac six years ago and stated in April that shortly after the new management team “directed the implementation of an ambitious modernization plan”, the successful The transaction appears.

Other investments in Mauvilac prior to Adenia/AkzoNobel included the upgrade of the manufacturing plant infrastructure and the improvement of production standards, paving the way for the launch of "innovative products" and paying more attention to environmentally friendly coatings.

Adenia’s statement said: “Given Mauvilac’s strong positioning in the core market, improved processes and the quality of its distribution network, Adenia has won the favor of many strategic and financial buyers in the exit process.”

Looking to the future, many paint and coating manufacturers in Africa are likely to follow what PPG said, as the pandemic continues, they will continue to follow this route in the next few months, that is, continue to focus on "protecting our employees and protecting our employees." Employees provide excellent support and provide customers with the basic products and services needed to restore and enhance operations".

PPG is very active in Egypt, Cameroon, Algeria, Ivory Coast, Morocco, Nigeria, Senegal and South Africa. The company expects that "the overall economic activity will continue to recover, despite the uncertainty of the ongoing impact of the influenza pandemic, the development of end markets and regions The speed varies."

As African governments announce stimulus packages to support the worst-hit economic sectors, it is expected that once the COVID-19 epidemic is fully contained, the manufacturing sector, including paint and coating production, will gain a certain share to maintain the industry’s Running to wait for a full recovery.