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Home » Danfoss celebrates 30 years in South Africa: a regional perspective

Danfoss celebrates 30 years in South Africa: a regional perspective

Written by Eamonn Ryan

Danfoss, the multi-national Danish engineering company, is celebrating its 30th anniversary in South Africa, marking three decades of growth and expansion in the region.

The Danfoss team mingling with guests.
The Danfoss team mingling with guests. photo supplied © Eamonn Ryan – RACA Journal

As part of the celebration, it hosted a media event just ahead of its official gala evening at which Cold Link Africa was present.

Ziad Al Bawaliz, the regional president for Turkey, Middle East and Africa.
Ziad Al Bawaliz, the regional president for Turkey, Middle East and Africa. Photo supplied © Eamonn Ryan – RACA Journal

Ziad Al Bawaliz, the Regional President for Turkey, Middle East and Africa (TMA), highlighted the importance of engineering in driving society forward and addressing key global challenges such as urbanisation, climate change, food and water supply, digitisation and electrification.

With South Africa as a strategic hub, Danfoss is looking to expand its operations throughout Africa and continue its commitment to engineering a greener tomorrow.

“After closing our operations in Russia, all central Asia countries in the region became part of our territory, resulting in an umbrella of over 75 countries. Our focus now lies in Africa, as it holds significant importance in our growth plans. We embarked on this journey 30 years ago in South Africa and have since expanded our activities to the northern parts of Africa. However, our current objective is to develop other African countries, particularly in East and West Africa. As we move forward, we are actively hiring new talent and increasing our engagement in these areas,” says Al Bawaliz.

“Undoubtedly, South Africa holds great significance in our operations. It serves as a crucial starting point for our expansion. With a larger team and stronger partnerships established here, South Africa will continue to be a pivotal country for us. We have extensive plans to enhance our presence, improve our business operations, strengthen our marketing strategies, and foster partnerships in South Africa. Additionally, we aim to contribute to the development of the local workforce through initiatives such as training centres and collaborations with major universities. We envision a mission where students can join us for a temporary period of six months to one year, gaining valuable experience and knowledge. These students might have the opportunity to continue with us or explore other career paths, creating a talent pipeline aligned with our long-term goals,” says Al Bawaliz.

He provided a brief overview of Danfoss Middle East and Africa: “As a global company, we have a presence in more than 100 countries, employing over 42 000 professionals worldwide. With a rich history dating back to 1933, we are thrilled to celebrate our 90th anniversary this year. Our operations encompass 97 factories spread across 20 countries, and our core focus lies in engineering solutions. We are committed to assisting our clients and customers in decarbonising through energy efficiency, electrification, and various other applications that foster growth. Recognising the global megatrends, such as smart cities, climate change, sustainable food supply, water scarcity, digitalisation, and electrification, we prioritise these critical aspects in both our personal and professional lives.

“Our commitment to these megatrends extends to South Africa and the African continent. We aim to provide assistance to people as urban migration increases and new cities emerge. For instance, Egypt alone is constructing 17 new cities, with some expected to accommodate populations ranging from five to seven million. This trend is not limited to Egypt but extends across the continent. Taking the example of Ivory Coast to Nigeria, five countries alone, nine cities are projected to house 500 million people within the next 75 years. This population growth and rapid urbanisation pose significant challenges, which we are determined to address. We possess a wide range of solutions designed to tackle these issues, such as cold chain optimisation to combat food waste, energy-efficient solutions for heavy industries like mining, water desalination and wastewater treatment for water scarcity, and high-efficiency refrigeration systems to decarbonise the cold chain,” says Al Bawaliz.

“Africa’s significance extends beyond our company; it is crucial for all businesses and industries due to its vast land area and immense potential for agriculture. By 2050, the continent’s GDP is projected to reach approximately USD29 trillion, manufacturing is estimated to contribute USD1 trillion, and it is expected to create 14 million jobs primarily in the food and beverage, tourism, and construction sectors. The population of Africa is anticipated to surpass 2.5 billion by 2050, surpassing even China in terms of size. The digital economy is also set to flourish, reaching an estimated value of USD180 billion by 2025. By 2050, Africa is expected to have 17 cities with populations exceeding five million. These statistics demonstrate the vast opportunities and immense potential for growth in various sectors across the continent,” he added.

Following the anniversary event, Cold Link Africa did a Q&A with Al Bawaliz on opportunities in the TMA region:

Q: Last year was commonly regarded as a tough, inflationary year. Could you describe how it was for the construction sector and allied industries such as HVAC&R and cold chain in Danfoss’ TMA region?

A: In the construction sector and allied industries such as air conditioning (A/C) and cooling, the year was challenging due to the overall economic environment marked by inflationary pressures. However, within Danfoss’ TMA (Turkey, Middle East, and Africa) region, the impact was somewhat mitigated by several factors. The presence of ongoing megaprojects in Saudi Arabia and Egypt contributed to sustained construction activity, providing a stable market for the construction sector and associated industries.

Furthermore, the GCC (Gulf Cooperation Council) countries, which form part of the TMA region, also exhibited resilience and continued to demonstrate strong growth in construction and related sectors. These countries, including the United Arab Emirates, Qatar, Oman, Bahrain and Kuwait, have a history of robust infrastructure development and investment, which helped cushion the effects of the challenging economic conditions.

Also, the construction sector’s performance in the TMA region was supported by government initiatives and investments in infrastructure development, including transportation, energy, and real estate projects. These ongoing projects provided a steady demand for construction materials, equipment and services, including A/C and cooling systems. As a result, Danfoss, as one of the leading providers of energy-efficient solutions in the A/C and cooling sectors, was able to maintain a relatively stable market presence within the TMA region.

Q: What are the key macro-economic challenges that you see in 2023 and the years ahead?

A: Looking ahead to 2023 and beyond, several macro-economic challenges are expected to impact the global and regional economies. Inflation is anticipated to remain a pressing concern, particularly in certain markets in the region. Inflation erodes purchasing power, increases production costs, and can dampen consumer demand, thereby impacting businesses across sectors. Managing inflationary pressures will require governments and central banks to employ appropriate monetary and fiscal policies to maintain price stability and support economic growth. The high percentage of unemployment in several countries in the region is a major challenge; and we can see the impact clearly in South Africa.

Moreover, geopolitical tensions, trade disputes, and policy uncertainties can create headwinds for global and regional economies. These factors introduce risks to international trade, investment flows, and business confidence, which can have ripple effects on multiple industries and sectors.

The statistics underscoring Danfoss’ focus on Africa. Photo supplied © Eamonn Ryan – RACA Journal
The statistics underscoring Danfoss’ focus on Africa. Photo supplied © Eamonn Ryan – RACA Journal

Q: Where are the growth and investment opportunities regionally in the TMA region?

A: Within the TMA region, several areas present growth and investment opportunities. One of the most prominent opportunities is in Saudi Arabia, which has undertaken ambitious megaprojects and significant investments in infrastructure, tourism and renewable energy. These initiatives open up avenues for construction, real estate development, renewable energy solutions, and various associated industries.

Africa also offers immense potential as an emerging market that is yet to be fully developed. The continent boasts a young and growing population, increasing urbanisation, and a rising middle class. These factors create opportunities for infrastructure development, industrialisation, and investment in sectors such as energy, manufacturing, agriculture, and technology.

Central Asia, which became part of the TMA region recently, presents untapped growth potential for Danfoss. The region, comprising countries like Kazakhstan, Uzbekistan, and Turkmenistan, has been experiencing economic transformation and diversification efforts. There is a demand for modernisation, energy efficiency solutions, and infrastructure development, offering opportunities for companies like Danfoss to provide their expertise and products.

Q: Some countries in the world have localisation programmes to restrict imports. What is your view on this in the competing contexts of maintaining product national standards and in free trade, perhaps also looking at the use of national refrigerants in this context?

A: To promote domestic industries, these programmes typically involve imposing certain requirements or barriers that incentivise or mandate local production, content, or participation in order to protect domestic businesses and create jobs.

In the context of Danfoss, as a company with a global footprint, we value free trade and open markets while recognising the importance of complying with local regulations. Danfoss strives to navigate the competing contexts of maintaining product national standards and promoting free trade by working closely with regulatory bodies and industry associations in each market. This approach allows Danfoss to understand and comply with local requirements while continuing to provide high-quality products and solutions to its customers worldwide.

Regarding the use of natural refrigerants in the context of localisation programmes, it is essential to consider sustainability and environmental factors. Danfoss, as a company committed to sustainability, places great emphasis on the use of natural refrigerants and energy-efficient technologies. Natural refrigerants, such as CO2 (carbon dioxide), ammonia, and hydrocarbons, have lower environmental impact compared to synthetic refrigerants and contribute to reducing greenhouse gas emissions.

As part of their sustainability goals and corporate responsibility, Danfoss actively promotes the use of natural refrigerants globally.

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