Out-Law News 2 min. read
12 Mar 2015, 5:28 pm
The third annual Deloitte African Construction Trends Report (28-page / 2.01 MB PDF) said the average project value rose from $689 million in 2013 to $1.27bn last year, an increase of 84%.
The report said Africa “continues to be a magnet for foreign direct investment and intra-African capital inflows”. “With a 76% completion rate of projects collected from our previous report, expectations remain high for infrastructure to provide the developing continent with much-needed market expansion.”
In 2013, only 16% of overall projects were above $1bn in value, “whereas in 2014, 27% of the total projects were above the $1bn mark in value, an 11% jump”, the report said. However, smaller projects ranging between $50m to $100m saw a 39% decline from 2013 to 22% in 2014, representing a 17% fall in value contribution of smaller scale projects.
In terms of the share of projects across the continent, the report said Southern Africa “was at the forefront in terms of construction activity” with 46% of the total projects by number. The value of total projects in the region amounted to $145bn. “West Africa overtook East Africa in terms of the number and value of projects,” the report said. “With 26% of the total number of projects valued at $75bn, the much spoken about economic growth potential in West Africa was reflected in the underlying numbers. East Africa saw a slight decline in its number of projects.”
Total project value rose significantly in Southern ($62bn), West ($25bn) and Central Africa ($18bn) in 2014, the report said. “Although only home to 5% of African mega construction projects (by number of projects), Central Africa’s project value climbed significantly to an impressive $33bn from $15bn in 2013.” This rise was “highly influenced” by transport projects in 2014 totalling $20.5bn. The report said: “North Africa accounts for only 3% of total projects on the continent (by number of projects) but the project value came in at $9bn, also showing an increase from $7bn in 2013.”
Considering project value per sector, the share of transport projects increased by 9% year-on-year, highlighting “significant investments in rail and ports”, the report said. Energy and power projects were just one percentage point behind transport.
“There are a number of oil and gas projects in the preparation phase, which do not appear in our numbers as they are not yet under construction,” the report said. “As a result, this sector is expected to move up the rankings in the coming three to five years. Water and waste management presented a sector needing more investment, as it will play a critical role in the near to medium, and long-term future of the continent and world at large.”
According to the report, 10% of projects were structured as public private partnerships in 2014, an increase from 4% compared to the previous year. “This is also encouraging, as we believe that significant private sector participation alongside government is required to enable Africa to close the infrastructure gap.”
The Infrastructure Consortium for Africa said in a report published last December that total infrastructure funding commitments in Africa increased for the second year running in 2013, with the energy, transport, water and information and communications technology sectors the key beneficiaries.
Chief executive officers from some of the world’s major companies met in the US last October to discuss forms of investment and support that could be made available to Africa for development projects. The Initiative for Global Development, which hosted the ‘Frontier 100 Forum’ on Africa, said initiatives discussed included potential investment in information and communications technology, financial services, infrastructure and power generation.
