Southern Times Correspondent
The year 2017 was not too favourable for the construction industry of Southern Africa as most investors were hesitant to invest in the industry due to political uncertainties in most countries in the region, among other factors.
According to a report by Deloitte, in 2017 the region accounted for 30.7 percent of all construction projects in Africa and 29.2 percent in terms of US dollar value. In 2017, the overall number of projects in Southern Africa increased by 9.4 percent from 2016 while the value of projects decreased by 4.1 percent.
The report revealed that the drop in the value of the projects was mainly due to the continued suspension of the Lobito Refinery in Angola, which was included in the analysis.
South Africa continues to account for the largest share of infrastructure and capital project activity in Southern Africa with 47.3 percent of projects, followed by Angola with 14 percent and Mozambique with 12.9 percent of projects.
Southern Africa – consisting of Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe – has 93 projects in total, valued at US$89,7 billion.
Of the US$89,7bn, the energy and power projects take up US$33,6bn followed by the oil and gas sector taking US$22,6bn but in-terms of a number of projects, the real estate sector has the most projects taking up 29 percent of the total construction projects. The transport sector saw the greatest growth in the number of projects, growing 24 percent with four new projects beginning construction between 2016 and 2017.
Angola is home to two of the new transport projects, namely the Maria Mambo Café Airport Modernisation and the Quitexe-Ambuila-Quipedro Road Rehabilitation Project.
The number of water projects saw the only decline in terms of numbers, from six projects in 2016 to five in 2017 following the completion of the Mokolo and Crocodile Water Augmentation Project in South Africa.
Most governments in the region have presented plans of road and water projects in 2018 and this may result in an increase in both value and number of projects in these sectors, respectively. There has been some ongoing activity in Zimbabwe, which may also be accounted for in 2018.
The statistics gathered by Deloitte indicated that government-owned projects account for 60.2 percent of total projects, followed by private domestic-owned projects with 25.8 percent and UK-owned projects at 3.2 percent. Single countries (combined) own 10.8 percent of projects.
In line with the projects featured in 2016, governments in Southern Africa funded the greatest share of projects, funding 32.3 percent of projects in the region. Private domestic entities funded a further 25.8 percent of projects. International direct foreign investment and African direct foreign investments funded only 8.6 percent and 4.3 percent of projects respectively.
China funded 8.6 percent and South African-based entities funded 4.3 percent of projects in Southern Africa, outside of South Africa.
Various other countries funded the remaining 16.1 percent of featured projects. This shows that there is a need for more investment in the private sector for the region to have a boost.
Southern Africa has seen a range of organisations from all over the world taking responsibility for the construction of large projects. Private domestic construction organisations built 30.1 percent of projects, while Chinese companies built 18.3 percent.
Chinese contractors are concentrated in Zimbabwe, where they are constructing five projects and in Angola where four Chinese-built projects are currently underway. International consortiums are more prominent in Southern Africa than in other regions, building 10.8 percent of projects.
International consortiums are defined as companies that have a combined expertise in order to tackle a specific project, where each company is responsible for the construction of a specific part or component of the project.
Portuguese firms continued to construct projects in Portugal’s former colonies, Angola and Mozambique, but have also continued with the construction of projects in Malawi and Zambia, constructing 8.6 percent of projects in the region.
South African firms also continued to be prominent in other countries in the region, also with 8.6 percent of projects. South African construction firms are involved in the construction of projects in Angola, Botswana, Mozambique, Zambia and Zimbabwe.
Italian firms built 4.3 percent and government-owned companies are responsible for 2.2 percent of projects respectively, stated the report.
Nonetheless, there is a positive forecast for the industry. According to the report, the construction sector is forecasted to grow by 3.4 percent on the back of the social housing, renewable energy and road infrastructure projects and other government-funded projects.
“We also believe that urbanisation and semi-migration will be a key driver of the growth of the sector. All things being constant amid political certainty investors are also likely to flow in the region which will also boost the industry,” the report said.