Construction projects in Africa

What’s driving the growth in the construction industry in Africa?

Africa, Construction, Developing Nations, Feature, Industry | No Comments

The global construction market is forecast to grow by over 70% to $15 trillion worldwide by 2025. The industry is set to see a growth of 4.3% pa until 2025, concentrated primarily in the world’s emerging economies. Africa is one of the world’s fastest growing economic regions, with several countries making real, albeit tentative, steps into the global market. But this new found economic growth still faces a range of hurdles, not least a lack of real-world infrastructure and affordable housing. As the global economy enters its next act, Africa’s role on the world stage, and indeed the construction industry in Africa, is still largely unwritten. Each country’s prominence in the international arena depends on a number of factors. How they react to the multiple challenges of housing a growing urban population in liveable, sustainable cities and encouraging greater investment through dialogues with other nations will define how well the African countries of tomorrow fare. 

Perhaps one of the only certainties in Africa’s new chapter is that the construction industry will play a decisive role. It’s still not clear, however, if this role will involve helping shape a brighter future for the continent or inhibiting the potential for growth through labour exploitation and sub-par design practices. The construction industry in Africa is a major driver for social change, accounting for a sizeable proportion of most countries’ Gross Domestic and Gross National Product. But what exactly is driving this growth, and how can the construction industry help cities keep pace with the rapid urbanisation sweeping the African continent?

Government initiatives and regional investment

Domestic investment is central to the growth of construction in Africa’s cities, particularly in new civic and government projects. By supporting the housing market through local initiatives and ensuring funding is injected into key infrastructure projects, cities like Mombasa in Kenya and Tanzania’s former capital Dar es Salaam are flourishing. As the city with the fastest growing population in Africa, Dar es Salaam offers an invaluable insight into how best to encourage rapid urban and economic growth.

Urbanisation led to a growth in the city’s population, but city planners recognised the importance of investment in further projects. The resulting urban expansion has provided a solid economic base from which to develop the city further, as well as drawing in more investment.

Large-scale projects like the recently constructed Mtwara Dar es Salaam Pipeline and the currently under construction Kigamboni Bridge serve a dual role. They provide the city with much-needed infrastructure. This, in turn, enables it to cope with the influx of new workers while providing construction jobs during the development and subsequent employment through operating and maintaining the projects upon completion.
The construction industry in Africa
Government initiatives have helped kick-start ailing economies and encourage foreign investment

Engaging with academic centres

In an ICSID study, one of the key hurdles faced by several African countries was the reluctance of academic centres to maintain pace with new advances in technology and design. Whilst governments are identifying the need for innovative home-grown design talent, academic centres have been slow to adapt. By investing money in educational institutions, construction companies can highlight just how beneficial original thinking and in-depth industry knowledge can be.

Although already taking place in education centres across Africa, managers need to do more to liberate organisational structures and encourage a more creative approach to learning. This translates into a platform that enables organisations to participate in value-creating networks whilst redefining the traditional boundaries in the new economy.

By investing money in educational institutions, the construction industry in the developing world can highlight just how beneficial original thinking and in-depth industry knowledge can be. Although already taking place in education centres across Africa, managers need to do more to liberate organisational structures and encourage a more creative approach to learning. This translates into a platform that enables organisations to participate in value-creating networks whilst redefining the traditional boundaries in the new economy.

Through the development of creative solutions, Africa’s business leaders are enabling a new generation of ongoing dialogue across the industry, creating new knowledge bases and reinforcing innovative new approaches.

Investment in intelligent construction and digital design

The widespread availability of the internet and innovative design software has created a new generation of opportunities, with less cultural and physical boundaries than ever before. With innovation the driving force behind economic change, it’s essential developing countries engage with new advances in design software and embrace technological evolution.

In Nigeria and the Cote d’Ivoire, computer aided design is aiding the development of flood-proof housing. Coupled with augmented reality, designers can subject designs to all-weather tests before laying a single foundation.

The Building Information Modelling Industry is fast becoming an invaluable asset. With it, designers have the opportunity to produce high-quality developments on a mass scale, streamlining the construction process in turn. By working with architects, planners and designers, the construction industry can help usher in a new age of safe and affordable housing.The construction industry in Africa
A BIM Diagram assessing structural aspects of a building

Greater natural exports demand

The African economy has been steadily improving, thanks in large part to soaring prices for metals and minerals. With oil prices rising from less than $20 a barrel prior to the millennium to more than $140 in 2010, countries like Uganda, Tanzania and Angola enjoyed greater economic liberty for much of the early 21st century than in any decade previously.

However, from June 2014 to January 2015, oil prices fell by nearly 50 percent, and countries heavily dependent on exporting the resource suffered as a result. In Nigeria, this devaluation has led to strains in the balance of payments, slashing revenues and, without structural reforms, limiting the country’s growth to well below 5% for the coming years.

Low oil prices haven’t been bad news for every African nation, however. Kenya has benefited from the dip, narrowing the country’s trade deficit in late 2014 and early 2015. A promising sign for the East African nation, Kenya’s growth looks set to continue largely because this current prosperity is being driven by rising productivity rather than a temporary commodity boom.

Emerging markets require large investments to build a modern economy’s infrastructure. Exports are the primary means to earn the hard currency for imported capital goods, which amount to roughly half of all investment in Africa. That’s not to say that African countries must follow an Asian model of export-led growth and trade surpluses, but it is vital they continue to encourage exports to finance the investments required to diversify.
The construction industry in Africa
African nations dependent on exporting oil have suffered following the global decline in oil prices

Diversifying the economy

If the oil crash of last year taught African economies anything, it’s that diversification is the only means to guarantee sustained high economic growth. Some have been quicker to adapt than others. As countries like Kenya and Uganda transition towards a more urban landscape, previously neglected sectors have been invigorated, injecting cash into the cities whilst draining income from rural areas. In turn, this creates more jobs in the cities, raises average incomes and further increases domestic demand. Africa represents an opportunity not witnessed before in the construction industry, but it is one that must be approached with cautious optimism. Whilst economists predict Africa’s current financial ascension will go largely from strength to strength, the current infrastructure suggests it will take several years yet before some sectors catch up to the demand of others.
Several countries have also begun to build their internal service sectors, a move that will further encourage sustainable sources of future employment. The diversified economies can also expand manufacturing, particularly in food processing and construction materials, for local and regional markets. This move has increased exports and reduced the demand for imports, easing current-account deficits.

Working towards a low-carbon construction industry

Often dismissed as an issue for the more established economies of the west and far east, sustainability is nevertheless taking a key role in the construction process for many African countries. By incorporating high standards of sustainability into new designs now, African cities can look forward to a brighter future. This is particularly important in rapidly growing cities, where congestion (resulting from the use of roads designed for a much smaller population) is driving down the quality of air and increasing the health risk for citizens. Greater clarity, better education and the promotion of sustainable and low-carbon construction opportunities is an integral element of giving businesses the confidence to invest in the potential of these new markets.The construction industry in Africa
Construction firms in the West are already looking at ways to reduce carbon footprint of projects

Identifying future opportunities

Thanks to the proliferation of the internet and the subsequent increased global awareness, developing nations now have a better understanding of the areas in which future opportunities in key public and private sector markets will become available. The resulting initiatives, such as the Kenya Vision 2030 development programme, are generating jobs, foreign investment and a strong tourism base to ensure sustainable business for years to come. With the help of Chinese investors, The Kenyan government has already invested in a number of large-scale transport projects, including the Mombasa-Kigali Railway Project, which will cover almost 3,000 kilometres and connect three East African states. The improvements to the country’s infrastructure are already boosting economic growth, but the biggest project to come out of the Kenya Vision initiative, Kenzo Techno City is perhaps the best example of the potential of targeted investments. Situated 40 miles from Nairobi, the $14.5 billion ‘smart-city’ is expected to generate up to 200,000 jobs by the time its final phase is completed in 2030.

Anticipating a new era of urbanisation

The global population is calculated to reach 9 billion people by 2050 (a global increase of 1.8 billion). The majority of that population growth is forecast to be in urban environments, with the population in Africa anticipated to double over the next 40 years. These major demographic shifts present substantial infrastructure challenges.
A century ago, around 15% of people lived in urban areas, compared to over half the global population today. With this figure expected to increase to 70% by 2050, the onus is on the construction industry to work alongside city planners, architects and city leaders to meet the demand for intelligently designed, rapidly constructed urban development. Not every African country has effectively responded to the rapidly growing urban population. In Lagos, Nigeria, there are fears that the government’s zeal for dismantling shanty towns is outstripping the country’s construction capabilities. Even with Eko Atlantic, Nigeria’s answer to Hong Kong, taking shape off the coast of Lagos, there are doubts that enough is being done to cater to the country’s varied income brackets. The construction industry can help change this dynamic, but first city planners must recognise the detrimental impact this approach is having on the economy and the most vulnerable members of society.
The construction industry in Africa
Eko Atlantic, the new ‘luxury’ city being built off the coast of Lagos

Diversification of the portfolio

No company can avoid all the risks associated with infrastructure in Africa. Successful companies, therefore, maintain a wide portfolio of projects. By diversifying to cover multiple countries, construction firms have established relatively consistent practice standards on an international level whilst taking advantage of the numerous opportunities becoming available across the African continent. For firms using a multi-sector approach, opportunities may be limited to just one country, but, depending on the country, can be no less rewarding. The slew of transportation, commercial and residential opportunities in East Africa are the result of increased investment in the public sector, which in turn expedites the transition of the population from rural to urban areas.
The construction industry in Africa
As economies diversify, more opportunities become available across sectors encouraging a multi-disciplined workforce

Initiatives and growth in international tourism

Despite international security levels being tightened, developing countries are increasingly becoming a viable option for tourists looking to holiday off the beaten track. And where tourism goes, infrastructure follows. As a result, cities like Mombasa in Kenya and Dar es Salaam in Tanzania are seeing a remarkable growth in infrastructure. The construction industry has been slow to respond, but as the fastest growing city in Africa (by population), Dar es Salaam represents an opportunity for both the international construction industry to establish a strong foothold in East Africa and the local economy to expand at a sustainable pace.

The construction industry in AfricaTourism is driving the construction of new hotels, resorts and amenities across Africa

A new path for Africa

As the continent’s infrastructure develops, Africa is laying the foundations for a new and brighter future. With international trade and the urban population also increasing in almost every African country, it’s essential new public developments are implemented with one eye on the future. Construction plays a vital role in shaping a country’s skyline as well as in enabling the most innovative and intelligent designs to form part of the country’s character. The choice of projects now will affect not only the city’s appearance but its rate of employment, access to basic amenities and the general public Africa is on a new, promising road to greater economic autonomy, but the continent still has a considerable way to go. It’s the job of the construction industry, among other sectors, to make this road as easy to navigate as possible.

Header image courtesy of Muhammad Mahdi Karim under GNU Free Documentation License Version 1.2