Market Trends of Africa Construction Industry
Infrastructure construction projects driving the market
- African cities are changing with several major projects, ranging from magnificent skyscrapers to megacities built from scratch. These multimillion-dollar construction projects in Africa are giving its cities a much-needed transformation.
- Developing infrastructure has been a focus of many governments to meet the needs and requirements of a growing population, making construction the largest sector in Africa. There are over 570 construction projects in Africa worth USD 450 billion. The energy sector has projects worth over USD 370 billion, followed by the transportation sector, with projects that include roads, airports, and railways worth USD 280 billion.
- Egypt leads the market with over 300 active projects worth USD 338 billion. With active projects worth around USD 207 billion, South Africa comes second, followed by Nigeria, which has ongoing and upcoming projects worth USD 200 billion.
- Nigerian refineries are in a dismal state, leaving one of Africa's biggest crude oil producers to depend on petroleum imports. However, Dangote is changing that narrative with an indigenous refinery capable of processing 650,000 barrels per day, making it the largest single-train refinery in the world. The refinery spans 2,635 hectares in the Lekki Free Trade Zone, Lekki, Lagos State. It is said to cost more than USD 12 billion.
- Konza Technopolis is Kenya's smart city project, a few kilometers from Nairobi. The Kenyan government allocated 2,000 hectares of land for the project. The city is part of the government's vision for 2030 and may serve as the central hub for tech, science, telecom, and education. The estimated cost of this smart city is USD 14.5 billion, and it may generate about 20,000 jobs when completed. The first phase of the project's horizontal infrastructure works was wrapped up in 2022.
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Chinese investments and BRI initiatives
- Over the last two decades, China has established a significant economic presence in most African countries. Its lucrative economic investment package, flexible political approach, and focused big-ticket development projects under the Belt and Road Initiative (BRI) provide a massive opportunity to African countries.
- China is Africa's biggest and strongest ally. In recent years, it invested millions of dollars into the continent. Chinese investment has increased globally, and Africa is the third-largest destination for China's investment, behind Asia and Europe. However, investment in Sub-Saharan Africa slightly declined in 2017, following the slight drop in aggregate Chinese investment.
- In recent years, Nigeria received relatively large funds from China for railways. China is backing two major standard-gauge rail projects, a line from Lagos to Kano and a coastal railway from Lagos to Calabar.
- The country is also building railways in Kenya, Ethiopia, and Zambia. For instance, the Chinese Export-Import Bank provided 85% of the funding for the USD 475-million Addis Ababa Light Rail, which serves the city's 4 million residents. The investments in energy, though mainly made up of oil and gas investments, comprised investments in clean energy such as hydropower.
- Despite disruptions due to the COVID-19 pandemic, Africa started construction on more than USD 160 billion worth of projects in 2021. The Export-Import Bank of China is funding projects worth more than USD 15 billion that started construction work in 2021.
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