Indeed, many researchers and international organizations have investigated the role of construction in economic growth and development in various low-income countries.
Interestingly, even though the industry has faced several challenges over the past few years, last year’s COVID-19 crisis doesn’t seem to have hindered its growth.
A report released by Deloitte Kenya shows that the African construction market will continue to expand through 2020 and beyond. The COVID-19 crisis may have dealt a blow to the global economy, but the expansion of Africa’s construction industry appears unstoppable. Let’s take a look at how construction delivers the best economy in Africa.
Construction and its economic role in Africa
The construction market is one of the most important contributors to economic growth. For example, according to a report by Statistics South Africa, the country employs more than 1.18 million people in the construction industry on a permanent or contract basis. The report shows that the South African government also received 19% of the value generated by the industry in 2014, all of which came from direct taxes and taxes on employee salaries.
In South Africa, the construction industry remains dominated by large, well-known companies. The largest listed construction companies in Japan by market capitalization are:
Pretoria Portland Cement Company Murray & Roberts Aven Wilson Bailey Homes Obcon (WBHO) Lauvex Group Five Distribution and Warehousing Network Stefanutti Stock and Sefak Afrimat
These players may also expand into other African countries. They both undertake public infrastructure projects and private real estate construction, and are the two major growth drivers of South Africa’s construction industry, which is overseen by the Department of Public Works.
The Department of Public Works acts as the state’s handyman and regulates the industry. Basically, it is responsible for managing state-owned infrastructure. The department oversees the Public Works Expansion Program, a job creation initiative that employs unskilled and semi-skilled workers to carry out public works projects.
African construction market, trends, impact and forecasts
The construction industry is facing a major paradigm shift in growth, with sub-Saharan Africa expected to grow at a compound annual growth rate of 6.6% from 2018 to 2022. This has made the region the world’s fastest growing construction hub and is why Africa will be one of the major players in infrastructure over the next five years or so.
It is noteworthy that the continental construction market has been segmented by region, sector, and construction type to better understand its economic role.
Region – Southern Africa, West Africa, North Africa, Eastern Africa Sector – Residential Construction, Commercial Construction, Industrial Construction, Infrastructure (Transportation Construction, Energy and Utilities Construction) Construction Type – New Construction, Demolition, Extension
The region with the highest number of recorded projects is reported to be East Africa. Regionally, North Africa accounted for the largest share of projects by value, reportedly at 31.5%. These projects are spread across 43 of Africa’s 54 countries. The only country with the most projects is Egypt, accounting for 9.5% of projects across the continent, followed by South Africa and Nigeria.
The sector with the highest number of projects is transportation at 22.7%, with a total of 186 projects underway. This was followed by power and energy projects, accounting for 24.4% of the total.
Based on projected annual growth rates, the top four countries leading the African construction market are:
Ethiopia – 12.7% Tanzania – 9.3% Zambia – 7.7% Nigeria – 4.6%
While 4.6% may not seem like a lot, it is worth noting that Nigeria has the largest population in Africa. The estimated 4.6% growth rate is likely to account for 60% of construction activity in West Africa, potentially making Nigeria the best economy in Africa.
With these developments, key industry stakeholders are concerned about project, implementation, and management costs. This is where construction technology comes into play. This will be briefly discussed in the next few sections of this post.
Construction technology in the African market
The introduction of modern construction technologies is expected to increase productivity in Africa’s construction industry by up to 40%. Some construction companies have adopted the following tools in their operations to improve productivity:
wearable technology
This technology goes beyond Fitbits, 3D clothing, and armbands to enable workers to commute and move around the job site efficiently without physical instruction manuals. Wearable technology also makes it possible to locate construction workers, especially in the case of a fall from height. It’s worth investing in these technologies to create safer work plans for your field workers.
building information modeling
Many construction stakeholders believe that Building Information Modeling, or BIM, can improve design insight. This tool helps you at every stage of your project, from creating and managing project information to execution. Essentially, BIM includes a digital description of every aspect of a project.
BIM improves vision, communication, sharing, and collaboration between teams. It also makes it possible to estimate construction costs efficiently. From 3D visualization of pre-construction projects to collision detection and improved site coordination, this technology makes the construction process easier and faster.
Modularization
Modularity makes execution of construction projects 50 times faster and safer. This construction tool involves assembling the building off-site using a standard process before proceeding with on-site construction, leading to reduced construction costs and time. It also provides an environment-friendly working environment for employees.
Modularity allows construction companies to use recyclable construction materials and reduce health risks associated with traditional construction environments.
The conclusion is
Africa’s construction industry may be experiencing a slowdown due to the coronavirus crisis, but it is likely to recover soon. There are new opportunities for small businesses and large infrastructure projects (particularly in the transportation and utilities sectors) that could secure the industry before the end of the decade. Needless to say, private housing construction will continue to expand and provide economic stability.
ConstructAfrica compiles reports on the construction industry in various African countries, providing valuable insights into the industry in these countries and highlighting opportunities and roadmaps to access these opportunities. These reports are available on the Insights page of our website or by clicking here.
For the latest information and news about Africa’s construction industry, check out ConstructAfrica. Please visit our website for more information.
Photo: Panorama of Luanda, Angola, showing construction cranes (Siempreverde22 | Dreamstime)
