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

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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

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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

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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

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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

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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

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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

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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.

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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

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$ 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

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48.0%

97.0%

$326.0 million

Growth Stage

Nigeria

Decreasing

Decreasing

Increasing

Increasing

Increasing

Increasing

Trend

Research Deliverables (3/3)

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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

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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

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Frost & Sullivan Contacts

Phil HowarthOperations DirectorFrost & Sullivan Africa+27 21 680 3269phil.howarth@frost.com

Guillaume de BassompierreAccount ManagerFrost & Sullivan+27 21 680 3286+27 71 684 0011guillaume.bassompierre@frost.com

Mani JamesProgramme Manager - CMFFrost & Sullivan+27 21 680 3286mani.james@frost.com