In the back of skyrocketing population in Africa, participants at the African Construction and Totally Concrete Expo in Johannesburg have expressed the need to look into ways of housing millions in Africa.
“Africa’s biggest challenge is that we’ve got to build cities three times the size of the American population in the next 35 years,” said Kevin Odendaal, PPC‘s business development executive.
Odendaal highlighted the opportunities available for construction industry growth that exist in Africa as a result of growth in population expected in the coming 35 years.
According a report by the Mo Ibrahim African Urban Dynamics, Africa will have to accommodate close to 900million new urban settlers by 2050, when it is projected that Africa will have one quarter of the total global population. The current Africa’s population stands at 1.2billion, with about 40% of this living in cities.
This means the Africa will be required to build infrastructure to accommodate this growth.
For PPC, this growth in population and urbanization present opportunities.
The current average consumption of cement per capital in Africa is 175kg per person against a world average of 500kg.
Because of the population growth predictions for Africa, Odendaal says cement manufacturers should be ready to supply cement equal to 1000kg per person in the coming 35 years because Africa will have to house the equivalent of another China.
PPC, in its effort to gain the continent market share, has a one-million-ton cement factory under construction in the Democratic Republic of the Congo, and a million-ton plant under construction in Bulawayo in Zimbabwe, with a small but growing manufacturing establishment in Harare.
The company has also invested in a 1.4-million-ton plant in Ethiopia, which will be commissioned halfway through 2017.
PPC has invested 165-million (about R2.4-billion) in a plant, schools roads and a clinic. Its investment has thus transformed Rwanda from a net cement importer to a net exporter.
Odendaal cautions against sidelining the full effect of urbanization and putting all attention on mega structures. “Investment tends to be skewed towards transport, energy and the power sector, but Africa is also in desperate need of housing, sanitation and water.”
Doing business in Africa comes with a lot of challenges for companies such as PPC and those companies looking to Africa for investment opportunities, such as Stanlib’s Infrastructure Private Equity Fund, headed that is by Greg Babaya.
A big challenge that construction companies face in terms of long-term infrastructure projects is that the period of the project is not in line with political cycles, which adds an element of uncertainty.
Odendaal adds that one way of avoiding this is for the private sector companies to work with governments to get an understanding of “the security of the investment in terms of government policy” and the motivation behind these policies. The private sector should then work to ensure that policy takes the time span of infrastructural projects into consideration.