Market Trends of East Africa Diesel Generator Industry
This section covers the major market trends shaping the East Africa Diesel Generator Market according to our research experts:
Increasing Demand from Industrial Sector
- The industrial sector is expected to dominate the market for diesel generators over the forecast period. The major industries in East Africa consist of mining, manufacturing, agriculture, and construction. These industries (except agriculture) are highly power intensive and require grid connectivity for its operation.
- Majority of the mining companies, farmers and small scale manufacturers completely rely on diesel-fueled generators for a full-time power supply due to inaccessibility of the grid. Supportive government policies to boost industrial activities in the region is expected to give rise to new manufacturing and mining plants and will thus, drive the diesel generator market.
- Another upcoming sector that is expected to emerge as a huge potential market for diesel generator is the oil & gas industry which is very underdeveloped in the region. East Africa is estimated to have more than 10 tcf of proven gas reserves and roughly 11 bpd of proven oil reserves. Although it may take several years for the fields to develop, it still poses as an opportunity for the diesel generators in the long term.
- By offering incentives such as zero ratings of various raw materials, and through various manufacturing incentive schemes, the East African Community (EAC) countries have been trying to promote manufacturing as a way of diversifying their economies. This is further expected to boost the demand for diesel generators, as grid-supplied power may prove to be inadequate due to the underdeveloped grid infrastructure.
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Ethiopia to Dominate the Market
- After being hit by drought in the past few years, Ethiopia is steadily recovering with a continued expansion of services and industry and a rebound in agriculture. The share of industry in national GDP increased from 22.1% in 2016 to 22.9% in 2017, which was driven by the construction, manufacturing, and power sector.
- The government of Ethiopia has prioritized industrialization, especially through the development of industrial parks. It has also started a 656 km Addis Ababa-Djibouti electric railway to ease the cost of doing business.
- The Ethiopian industrial sector is witnessing a high growth rate. Special focus on textile and apparel, as well as leather and leather products, has been a bold move. The construction of industrial parks, one of the priorities of the five-year Growth and Transformation Plan I and II has received due attention.
- While some of the industrial parks, such as Hawassa and Lemi Industrial parks, are built specifically for textile and apparel, others also have a place for textile and garment industries besides others, such as food processing and vehicles assembly. Both inside and outside the industrial park, textile industries have attracted several global companies with renowned international brands.
- Furthermore, the implementation of the export-led industrialization strategy is supporting the growth in the industry. The growth is expected to continue, led by investments in line with the stable public infrastructure spending and the higher foreign direct investment (FDI). The combined effect of all these factors is expected to be a positive sign for high optimism for the increasing demand for diesel generator among the industries in Ethiopia.
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