Africa is facing challenges in the Construction Industry despite it being the fastest developing continent and the construction industry is an area of focus and has been drawing positive attention and top heavy weight companies are now fully focusing in the African construction industry.
In Africa things are looking up a bit for the construction industry. New construction starts have been strong in recent months, construction spending rose throughout much of 2014, the production of construction materials has been up for six months in a row, and large companies such a as Caterpillar that are already on the African ground have posted strong earnings reports for the past couple of quarters–a hopeful sign that small and mid-sized companies will also do better.
However there is no doubt the industry still faces plenty of challenges and both big and small companies are still struggling to counter the challenges and here we find out some of the top five challenges facing the construction industry in Africa.
1) The constant rising of Project Costs:
This is one of the problem that is facing Africa’s construction industry, there is a constant rise in project costs. This is practically due to the rise in prices of steel and oil, caused by the weakening of local currency against the dollar.
Most companies give a quote for a project only to realize the project has cost more than they budgeted for.
2) Corruption Issues
When talking of developing countries corruption is a term that has to appear as a factor that is causing development to lag behind.
The construction industry is one of the industries in Africa where also corruption plays a role like the rest of the world and has suffered a lot at the hands of corrupt individuals and organized crime. Some companies for instance are allegedly paying top African government officials to receive tenders which have brought the construction industry in to disrepute.
3) Lack of Skilled Labour
Lack of skilled labour cannot be underestimated when talking about the problems facing the African construction industry , for instance When construction opportunities rise in African countries some contractors are forced to go looking for skilled labour from other counties who always demand too high salary wages .
Currently the continent is unable to produce enough skilled labor or professionals who have the ability and knowledge to handle the job. The latest incidence is in the construction of East Africa’s standard gauge railway where the Chinese contractor was forced to bring over 10,000 workers on board from China to help the locals in building the railway.
4) Safety On Site:
Another crestfallen problem that the African construction sector is encountering is safety on site. There is high demand for insurance and compensation claims from serious injuries caused on sites. Since the industry is spending more on insurance and compensation, there will not be enough funds to boost productivity.
5) Capital Supply Constraints:
As more projects are coming up in various countries in Africa, It is clear that more conservative measure to lending by the banks limits investor confidence due to increased difficulty and recession in access to credit. It is difficult for money lending firms to extend their hands of service. This is because almost all the lending services in the continent have lost confidence in borrowing construction firms’ fund.