MasterBuild Africa

African Construction Market: Opportunities, Challenges and Prospects

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In recent time, Africa’s construction landscape has witnessed remarkable growth and groans through the exploration of vast opportunities laced with commensurate challenges yet clear untapped prospects. With an estimated value of USD324-billion in projects in 2016, Africa’s construction industry is experiencing an evolution from a state dormancy to functionality and global relevance.
As the second most populated continent in the world, Africa’s population and economic continues to be propel the need for thriving construction industry. From South Africa to Nigeria, Kenya to Egypt, the constructions needs, howbeit, opportunities, challenges and prospects are a great motivation for industry-passionate investors, developers, analysts and watchers. These needs include:
– Construction of roads, bridges, highways, railways and other infrastructure which make transportation possible.
– Construction of buildings e.g residential buildings for the ever growing African population.
– Construction of industries and institutions for the ever growing African economy.
– Construction in the power and energy sector
According to a report by Deloitte, large number of investors from both private and public companies are increasingly seeking key construction areas to invest in. This is due to the growing population of the continent which is currently 1.2billion people, the infrastructural deficit and the potentials for impressive return on investment within the construction industry. The research also provided forecasts into the rise of various industries and markets in the construction industry.
Invеѕtmеnt in infrastructure аnd сарitаl рrоjесtѕ (I&CP) is an imроrtаnt аѕресt fоr enabling GDP growth, mоrе diversified есоnоmiс аnd рrivаtе ѕесtоr activity, and рrоviding thе рlаtfоrm fоr ѕuсh growth tо bе ѕuѕtаinаblе аnd inclusive. Thiѕ iѕ dоnе bу рrоviding access to рорulаtiоnѕ fоr basic ѕеrviсеѕ such аѕ wаtеr, housing, еduсаtiоn аnd hеаlthсаrе. Invеѕtmеnt in infrastructure аlѕо tеndѕ tо inсrеаѕе buѕinеѕѕ confidence аnd at thе ѕаmе timе lоwеrѕ trаnѕасtiоn соѕtѕ bу mаking it еаѕiеr for businesses tо mоvе реорlе, goods аnd services. Infrаѕtruсturе аlѕо serves to foster соmреtitiоn, innоvаtiоn аnd рrоduсtivitу. Hence, the need to tap into the opportunities of Africa’s construction industry.
Although the African construction has seen a steady rise and is expected to rise even further, there are still some challenges that facing the market that need to be addressed to allow for undisturbed growth.
Lack of Skilled Labour
When looking into the challenges facing the African construction market, lack of skilled labour cannot be overlooked as it plays a very important role. Due to the lack of skilled labour in many African countries (which might be due to poor education or training), contractors are forced to go looking for skilled labour elsewhere and have to deal with the high salary wages.
The continent has ever been lacking in skilled labour and it seems to still pose a problem even till this time. An example of such incidence played out in the construction of East Africa’s standard gauge railway, where the Chinese contractor was forced to hire tens of thousands of Chinese works to help locals in the building the railway.
As the African construction market sees a steady rise, it is expected for contractors to seek more funds from money lending firms to meet up with the ever increasing demand. Unfortunately, banks (and other money lending firms) find it difficult to extend their service to construction firms. This poses a problem to construction firms, as without capital it would be impossible for contractors that carry out projects.
Corruption – Cases of corruption is very peculiar to developing countries.
The ever increasing costs of projects – This is practically due to the weakening of local currencies against the dollar.
Dynamics of the African construction industry presents the interwoven reality of opportunities, prospects and challenges for all and sundry.
Amidst the myriad of challenges, the African construction landscape still boasts of delivering the best of value to every stakeholder – investor.

Article by Tayo Elegbede

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