Entrepreneurship Zone: 18 January 2022 :: 12 investment opportunities in Ethiopia’s packaging industry

Tue Jan 18 11:06:56 CAT 2022

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Entrepreneurship Zone: 18 January 2022 :: 12 investment opportunities in Ethiopia’s packaging industry

 <http://www.zitf.co.zw/> 

There is an unmet and growing demand for packaging products in Ethiopia, according to a recent study by Manufacturing Africa, a programme funded by the UK’s Foreign, Commonwealth & Development Office (FCDO) that supports investment into the manufacturing sector.

Ethiopia will have a packaging manufacturing opportunity worth $971 million by 2030, with more than 50% of the potential lying in packaging for the food and beverage sectors. About 20% of packaging is imported in the country, which is highly inefficient for consumer goods companies. Opportunities exist across Ethiopia’s packaging value chain, particularly in manufacturing of paper/plastic intermediate inputs and recycling.

Ethiopia’s manufacturing output doubled in over the past five years and is expected to expand at 13% annually. The fast-growing agro-processing industry is a major consumer of packaging.

The food and drinks sector collectively represent about half of total demand for packaging (about $333 million of $649 million).

There are an estimated 59 companies producing packaging in Ethiopia, focusing mainly on paper and plastics.

Almost all packaging manufacturing takes place in the vicinity of Addis Ababa and outside industrial parks. Several industrial zones now under review/development are being located next to existing packaging players and could become sources of additional demand.

Investment opportunities

The study highlights the following 12 investment opportunities in Ethiopia’s packaging sector:

PLASTIC

1. Secure supply of PET bottles to domestic market – opportunity ranging from blow-moulding to end-to-end production

Rigid plastic is one of top substrates currently and in terms of expected growth, with several agro-processors (e.g. in fruit juices and edible oils) resorting mostly to imports.

Market opportunity by 2030: $95 million
Investment required: $20 million

2. Secure supply of flexible plastic packaging

Growing popularity of type of packaging with limited local offer in terms of quantity and quality that could be used for key export commodities.

Market opportunity by 2030: $200 million
Investment required: $35 million

3. Set up cutting plant for tubes for toothpaste

Consumer goods manufacturers are importing toothpaste tubes at a high premium.

Market opportunity by 2030: $8 million
Investment required: TBD

4. Incentivise production of bio-plastics from sugar cane to reduce environmental impact of plastic use

Increasing global pressure to shift from traditional plastic to alternative materials, as well as increasing global demand for eco-friendly packaging due to awareness, esp. in Europe and USA. Ethiopia’s large sugar production can supply sugar cane waste to produce plastic.

Market opportunity by 2030: <$120 million
Investment required: TBD

5. Boost production of recycled plastic to replace imports for local producers to use as feedstock or for gasification (fuel)

All raw materials for plastic production are imported currently, yet both rigid and flexible plastics are highly consumed locally, ensuring sufficient supply of feedstock for the recycling process.

Market opportunity by 2030: $30 million
Investment required: $25 million

6. Recycle PET plastic to converted polyester fibre for textile sector

Add value to exported PET flakes and provide raw materials to the textile sector by converting plastic to polyester fibre.

Market opportunity by 2030: $30-40 million
Investment required: $75-90 million

PAPER

7. Set up liquid carton converting hub

Growing presence of product in Africa by Tetrapak, which could be looking for other African countries which are well connected to set up as hubs.

Market opportunity by 2030: $140 million
Investment required: TBD

8. Set up supply of forest-certified bamboo wood pulp for paper packaging producers

Increasing demand for eco-packaging due to consumer awareness and preferences, particularly in Europe and North America, that could be served by large local supply of bamboo that is easy to ship in the pulp form.-Howwemadeitinafrica

Invest Wisely!

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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