A recent Deloitte report‘African Construction Trends’ says the infrastructure boom in Africa has seen investment in 322 megaprojectsreach US$222.7 billion.
Deloitte Southern Africa infrastructure and capital projects leader André Pottas said the report focused on projects valued at more than US$50 million which had already broken ground, but had not yet been commissioned, as of June 1, 2013.
The report shows that most of the money is being spent on energyat 36 percent for 97 projects and transport at 25 percent for 82 projects with the Chinese not as dominant as popular thinking would expect.
Overall, 59 percent of the megaprojects are owned by governments, 2 percent by public–private partnerships and 29 percent by private investors. European and US investors own17 percent of the projects. Pottas said ownership by Brazil, Russia, India and China is currently limited and Eastern and intra-African investors hold only 2 percent.
However, this picture is somewhat different when it came to funding and building the megaprojects. The majority of project-funding comes from China at US$43.6 billion. Development finance institutions are responsible for US$43.4 billion of funding with Europe funding standing at US $36.1-billion and domestic governments at US$17.4 billion.
Pottas added that Europe and the US are building 115 projects, private domestic companies 45 projects and the Chineseonly 38 projects. This shows that European and US construction groups are still dominant on the continent and that South African construction groups are not as active as would have been expected.
Pottas noted that Africa is not an easy market to be in with South African construction companies active on the continent faced with some stiff global competition.
Region by Region
East Africa is home to 93 of the projects in the Deloitte report, representing 29 percent of the projects covered in the report with a value of US$67.7-billion. The currently unstable North African region accounted for only 7 percent or 22 projects of the infrastructure development surveyed in the report valued at about US$6.7 billion.
West Africa had attracted megaproject investment totaling US$49.8 billion representing 21 percent of the continent’s major projects. Central Africa also fairly unstable politically speaking hosted 5 percent of the continent’s projects valued at roughly US$15.3 billion.
Southern Africa leads in the numbers with 124 projects valued at US$83.1 billion under way. South Africa hosted the two largest projects under construction by value in Africa.
At least US$20.3 billion is being invested in Eskom’s Kusile power station with the Medupipower station receiving more than US$10.8 billion.
Pottas said some of the main drivers for the increased spend in African infrastructure included a move to cater for the people of the continent, rather than following the decades-old pattern of mining Africa’s resources and transporting it to ports for shipment to former colonial masters.
He added that the growing African middle class is a big factor here as is urbanisation. New energygeneration hubs are being forged, transport and logistics corridors are being built and basic social infrastructure is being invested in. Telecommunications connections are being strengthened and development is now starting to touch the commercial property sector on the continent.
