The Future of the African Lubricants Market

Egypt is one of the countries driving growth in lubricants demand in Africa.

SOURCE | SHUTTERSTOCK/ALEXANTON.

O f the 50 countries in Africa, the top 10 account for 67% of the continent’s total GDP. The continent is experiencing strong growth; between 2023 and 2028, CAGR is projected to stabilize at 4%, showing recovery and resilience following the COVID-19 pandemic, and higher than the projected global GDP growth of 2-3%. While economies, growth prospects and opportunities vary naturally by individual countries, the strong GDP growth bodes well for the lubricants market in Africa.

Regional dynamics are shaping various growth trends, with Nigeria, Egypt, and South Africa dominating Africa’s lubricant demand. However, despite being the largest markets, their growth outlook is modest compared to smaller markets like Ethiopia and Cote D’Ivoire, which are expected to experience high growth rates. This disparity is shifting attention to emerging markets such as Tanzania, Uganda, Morocco, Angola, and others, where economic expansion, infrastructure developments, and industrial growth are expanding.

There are additional factors driving finished lubricant growth in Africa, including:

Trade and policy initiatives – opening-up new markets and reducing trade barriers, for example, AfCFTA (African Continental Free Trade Area) aims to facilitate free movement of goods and services and promote intra-African trade. The hope is that this will enable supply chain optimization and increase cross-border trade.

Economic development – population growth is driving the expansion of the economy in various markets in Africa which will boost consumer disposable income. This economic growth and rising income will drive lubricant demand in automotive and industrial sectors, supported by urbanization and infrastructure expansion.

Rising vehicle ownership – income growth and a rising middle class is resulting in increasing vehicle ownership. South Africa plays a crucial role in the passenger vehicle market with major OEMs beginning to invest in the country due to favorable conditions. African countries are also imposing age limits on used car imports to promote a younger fleet, with some countries banning used car imports entirely.

AfCFTA (African Continental Free Trade Area) aims to facilitate free movement of goods and services and promote intra-African trade. The hope is that this will enable supply chain optimization and increase cross-border trade.

Higher viscosity & higher quality lubricants – there is growing demand for high viscosity lubricants, especially in heavy duty motor oils for heavy-duty vehicles. There has also been a rise in multigrades due to their adaptability.

Industrialization and infrastructure development – growth in Africa’s construction and manufacturing industries, as well as the increased demand for minerals in the mining sector, are driving demand for lubricants.

Technological advancements – the need for more affordable transport solutions, e-commerce, artificial intelligence and e-mobility are reshaping lubricant demand across the continent.

Due to its limited domestic production capabilities, Africa imports much of its high-quality base stocks (Group II, III, and III+) from Europe and the Middle East. Africa’s lubricant market still relies heavily on Group I base stocks, but a gradual shift from Group I to higher-quality Group II and III base stocks is expected, driven by industrial growth, regulatory changes, and evolving automotive needs.

Group II and III base stocks are expected to gain traction slowly, driven by OEM recommendations and increasing awareness of their performance and durability benefits. Additionally, countries like Kenya, Uganda, and Rwanda are implementing and planning regulations to support the adoption of higher-quality base stocks, particularly in sectors demanding fuel efficiency and lower emissions.

Africa is a dynamic and interesting market generally, but especially in terms of the future potential for the lubricant market. Not only are there key differences between regions, but also between countries. The continent offers numerous opportunities, but it also presents unique risks and challenges. It is essential for lubricant companies to be aware of where they can add value and where they need to mitigate challenges. To fully realize the potential across Africa, industry stakeholders must collaborate, innovate and strategize. .