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Strategic Opportunity for the Biofuels Industry in Key
Sub-Saharan African Countries
Chemicals Materials Food (CMF)
Research Service Code: M25F - 39
Completion Date: July 2008
2
Content
� Background to Study Slide 03
� Research Aims and Objectives Slide 04
� Scope of Research Slide 05
� Methodology followed Slide 07
� Respondent Scope Slide 08
� Research Deliverables Slide 09
� Benefits of Research Slide 12
� Frost & Sullivan Company Information and Contacts Slide 13
3
Biofuels are being sought as an alternative energy source due to limited fossil-fuel stocks, volatile international
fossil fuel prices and environmental legislation to reduce polluting emissions. Currently, large-scale production of
biofuels is based mainly on the use of starch and sugar-based food crops. Major biofuel producing countries
have limited land available for a sustainable cultivation of biofuel feedstocks.
Sub-Saharan Africa has vast areas of unutilised and underutilised land available and has therefore become the
focus of the global biofuel industry. This land can be used to grow agricultural crops as feedstock for biofuel
production. However, the region is both fuel dependent and food insecurity poses significant challenges. Most
Sub-Saharan African countries are net importers of staple food crops. The production of food crops for fuel
therefore poses a huge dilemma.
The establishment and success of the national biofuel industries in Sub-Saharan Africa is directly dependent on
an already strained agricultural industry. Governments are promoting land resources to lure investment into the
agricultural sector. The investment could serve as a catalyst for:
� Economic Development
� Rural development
� Poverty alleviation
� Energy independence
� Job creation
Background
4
This report provides a strategic
assessment of the biofuel
industry of key Sub-Saharan
African countries such as
Nigeria, Uganda and Angola
Aims and Objectives of Research
Analyse the legislative environment regulating this
market in Sub Saharan Africa.
Assess and forecast the current and future biofuel
market size and growth rate in the in Sub-
Saharan Market.
Analyse the key trends in the development of the
biofuel market, and how these are expected to
influence its future.
Assess and analyse the drivers, restraints and
challenges facing the industry.
Evaluate and analyse market growth
opportunities.
In this context, the core objectives of this project
are to
A
B
C
D
E
5
Area (km 2),
1,246,700
Area (km 2),
923,768
Area (km 2),
236,040
Nigeria Uganda Angola
Arable Land 2.65%
Arable Land 33.0%
Arable Land 21.6%
GEOGRAPHIC SCOPE
• The Sub-Saharan countries Nigeria, Uganda and Angola has a total of 245.72 million
hectares of potential arable land, of this 16.4% is cultivated
PRODUCT SCOPE
• Biodiesel and Ethanol
Biofuel Market: Total Land and Arable Land
Cultivated, (Nigeria, Uganda and Angola), 2007
Research Scope
6
For Market Engineering Research, Frost & Sullivan utilises tried and tested marketing techniques to provide structure to the research and an easy format to compare results across different countries, markets and over time.
This project was carried out using primary research (telephone or face-to-face interviews) and secondary (published and online material) as the principle methods of data gathering. The focus of the interviews for this project were primarily the respondent types outlined in the figure below.
For Market Engineering Research, Frost & Sullivan utilises tried and tested marketing techniques to provide structure to the research and an easy format to compare results across different countries, markets and over time.
This project was carried out using primary research (telephone or face-to-face interviews) and secondary (published and online material) as the principle methods of data gathering. The focus of the interviews for this project were primarily the respondent types outlined in the figure below.
Organisation TypeOrganisation Type Target DesignationsTarget Designations Type of Information Type of Information
Government InstitutionsGovernment InstitutionsGovernment ministers and
Directors
Government ministers and Directors
Strategic plans, Legislative Environment, Infrastructural
Development, Feedstock Production Models and the Blending Ratios,
Drivers and Restraints, IncentivisationModels
Strategic plans, Legislative Environment, Infrastructural
Development, Feedstock Production Models and the Blending Ratios,
Drivers and Restraints, IncentivisationModels
Research InstitutesResearch Institutes Directors, Professors and Researchers
Directors, Professors and Researchers
Trends and Experiences, FeasilibilityStudies, Agronomic Reports and
Environmental Impact Assessment
Trends and Experiences, FeasilibilityStudies, Agronomic Reports and
Environmental Impact Assessment
Private Companies (BiofuelProducers, Engineering
Companies, etc.)
Private Companies (BiofuelProducers, Engineering
Companies, etc.)
Managing Directors, Sales and Managers, Engineers and
Researchers
Managing Directors, Sales and Managers, Engineers and
Researchers
Strategic Views on Biofuel Market, Legislative Environment, Feedstock Production, Drivers and Restraints, Current Development, Future Plans
Strategic Views on Biofuel Market, Legislative Environment, Feedstock Production, Drivers and Restraints, Current Development, Future Plans
Respondent Scope
7
This Research Service on Key Sub-Saharan BiofuelMarkets follows the principle of Frost & Sullivan's Market Engineering research methodology. This measurement-based methodology focuses on market measurement, analysis, forecasting, strategy development and monitoring.
The base year of 2008 was used for this research and a forecast period of seven years was projected.
This Research Service on Key Sub-Saharan BiofuelMarkets follows the principle of Frost & Sullivan's Market Engineering research methodology. This measurement-based methodology focuses on market measurement, analysis, forecasting, strategy development and monitoring.
The base year of 2008 was used for this research and a forecast period of seven years was projected.
This study is based on thorough secondary and primary research principles. Extensive interviews were conducted with key stakeholders. Data were qualitatively and quantitatively analysed to give a comprehensive analysis of the biofuel market in Sub-Saharan Africa.
This study is based on thorough secondary and primary research principles. Extensive interviews were conducted with key stakeholders. Data were qualitatively and quantitatively analysed to give a comprehensive analysis of the biofuel market in Sub-Saharan Africa.
Frost & Sullivan’s
Market Engineering Research Methodology
Project Methodology
8
Biofuel Market: Market Life Cycle Analysis,
(Nigeria, Uganda and Angola), 2008
Source: Frost & Sullivan
Development Growth Saturation Decline
Research Deliverables (1/3)
Key Industry Challenges:
Lack of Infrastructure
Awareness of biofuel
Lack of Expertise
Pioneering Teething Problems
Lack of Biofuel Policy
Key Market Drivers:
Reduction of Fuel Imports and High Oil Prices
Poverty Alleviation and Rural Development
Availability of Suitable Land
Available Financing
Environmental Obligations
Key Market Restraints:
Poor Infrastructure
Insufficient Energy to Run Plants
Lack of Technical Expertise
Weak Commercial Agriculture Sector
Lack of Information
It is expected that market developments on
other continents will have a strong influence on
the long term success of biofuel in Africa. This
is as a result of best practice legislation,
improved production equipment and skills
having to be imported to ensure success in this
growth market.
9
72.1%
27.9%
Ethanol Biodiesel
Research Deliverables (2/3)
A sustainable biofuel industry in Nigeria,
Uganda and Angola will depend on:
� Political and Economic stability
� Government policies and frameworks
� Improved market co-ordination between
the different market players
� Investment and improvement in the
transport infrastructure
� Investment and improvement in the energy
sector
� Investment as well improvement in the
agriculture sector
� Sustainable feedstock production. Enough
feedstock for biofuel production without
compromising food availability
� Improved skill, wealth and job creation
Biofuel Market: Breakdown by Application,
(Nigeria, Uganda and Angola), 2010
10
$ 110.9 million
5 to 10%
70.0 %
Medium
4 to 5
3
20.8%
43.3%
$ 75.3 million
Developing
Uganda
$ 70.9 million
5 to 15%
75.0%
Medium
4 to 5
3
44.3%
114.8%
$ 20.2 million
Developing
Angola
constantMediumDegree of Technical Change
constant95.0%Market concentration (% of 2010 market controlled by top three competitors)
Increasing7% to 15%Industry Profitability Margin
Increasing$560.3 millionMarket Forecast (2014)
Number of Competitors (2010)
Degree of Competition (scale of 1 – 10)
Compound Annual Growth Rate (2008 –2014)
Annual Growth Rate (2010)
Market Size (2010)
Market Life Cycle Stage
Measurement Name
5 to 6
4
48.0%
97.0%
$326.0 million
Growth Stage
Nigeria
Decreasing
Decreasing
Increasing
Increasing
Increasing
Increasing
Trend
Research Deliverables (3/3)
11
Analysis of Market Dynamics: Challenges, Drivers and Restraints
Provides a Strategic Overview of
the Biofuel Market in the Sub-
Saharan Africa
Research
Benefits
Evaluation and Analysis of
Market Growth
Opportunities
Analysis Each Country’s
Legislative Environment as
well as Key Legislation
Changes Expected
2
3
4
5
7
6
8
1
Analysis of the Number of
New Plants Expected
Latest Market Revenue
Figures and ForecastsAnalysis of Key Current
Market Trends
Overview of Market
Competitive Forces and
Key Market Participants
Benefits of this Research
12
Who?Who? How?How?
Current Market Participants
Current Market Participants
• Find out how you compare to the competition• Assess the customer’s product and service requirements in this industry
• Determine and exploit new market share opportunities
• Find out how you compare to the competition• Assess the customer’s product and service requirements in this industry
• Determine and exploit new market share opportunities
New EntrantsNew Entrants
• Analyze challenges associated with the industry• Calculate time scales for strategy implementation• Position yourself to capitalize on the market’s unmet needs
• Analyze challenges associated with the industry• Calculate time scales for strategy implementation• Position yourself to capitalize on the market’s unmet needs
Investment CommunityInvestment Community
• Analyze long-term strategies of participating companies• Determine which participants will outperform the competition
• Assess attractiveness of investing in the biofuel industry in Sub-Saharan Africa (Nigeria, Uganda or Angola)
• Analyze long-term strategies of participating companies• Determine which participants will outperform the competition
• Assess attractiveness of investing in the biofuel industry in Sub-Saharan Africa (Nigeria, Uganda or Angola)
Who is this research designed to support?
Benefits of this Research
13
Frost & Sullivan Contacts
Phil HowarthOperations DirectorFrost & Sullivan Africa+27 21 680 [email protected]
Guillaume de BassompierreAccount ManagerFrost & Sullivan+27 21 680 3286+27 71 684 [email protected]
Mani JamesProgramme Manager - CMFFrost & Sullivan+27 21 680 [email protected]