Analyst firm Deloitte has painted a rosy picture of the African construction sector in its recent Deloitte African Construction Trends Report. The third annual edition of the report states that investment in African mega projects surged 46% to $326-billion (almost R4-trillion) in 2014, led by heavy investment in transport, energy and power.
The report, which monitors progress on capital intensive infrastructure on the continent, covered 257 projects across the continent. To qualify for inclusion in the report, projects must be valued at more than $50- million and had to have broken ground by at least 1 June 2014.
According to Deloitte, the total value of projects under construction increased from $222.77-billion in 2013, despite the fact that the number of projects that qualified for inclusion in the 2014 report fell from 322 the year before. "Africa's infrastructural transformation is being driven by increased output in the natural resources sector, which in turn has underpinned rising fiscal expenditure on infrastructure projects to facilitate rising international trade with the continent. At the same time, rapidly growing urbanisation and rising domestic demand in Africa has ushered in an unprecedented wave of foreign direct investment in the continent's biggest and most dynamic economies," the analysts noted.
143 of the projects listed in the report were led by the public sector, while 88 were private sector initiatives and 26 were classified as public private partnerships (PPPs). Energy and power accounted for 37% of the mega projects undertaken in Africa in 2014, followed by transport (34%), mining (9%), property (6%), water (5%), oil and gas (4%), mixed use facilities (2%) and health care (1%).
Southern Africa had the lion's share of investment, with the region accounting for half of the continent's construction load, which equates to $144.89- billion in projects. South Africa had half the projects in the region, followed by Mozambique with 15% and Angola with 13%.
West Africa overtook East Africa, with the region attracting $74.84-billion in projects, or 23% of the total projects on the continent by value. The African Construction Trends Report noted that in Francophone countries such as Senegal, Guinea and Togo, the West African Development Bank identified 17 major infrastructure projects which require funding, while projects in three new sectors – retail, manufacturing and Telecommunications, Media and Technology – were recorded.
East Africa was the only region to show a decline, with a 10% drop. East African projects totalled $60.67-billion last year. According to the report, Kenya contributed the 'largest bulk' in the region's capital infrastructure followed by Uganda, Ethiopia and Tanzania. The transport sector dominated the East African mix.
Central Africa experienced 117% growth in the value of construction projects, which reached $33.21-billion while North Africa saw the value of construction projects increase almost 36% to $9.12-billion.