Global Construction Companies Are Increasing Marketing Budget To Intensify Focus In Africa - ConsTrack360

The African construction industry is one of the fastest growing regions globally. The growth in the region is expected to be broad-based with increased construction activity across residential, commercial, institutional and infrastructure sectors. Most countries in the continent are progressing with various government initiatives as well as regional investments that are backed by foreign investment. In line with other emerging markets, the growth is driven by ongoing infrastructure projects that are funded by public-private partnership model.

African construction industry is expected to increase at a CAGR of 6.9%, over the forecast period. Infrastructure construction in East African countries, namely Ethiopia, Kenya, Rwanda, Mozambique and Tanzania, is expected to post robust growth over the forecast period.

Construction industry is becoming a key driver for African economies, accounting for 10-15% of GDP. The development in the region is attracting investment from all over the globe, which is further creating opportunities and boosting workforce in the construction of residential, commercial, institutional, and industrial buildings. There is also increased focus on prefabricated construction and sustainability.

Affordable housing, a part of residential development, is one of the key pillars of growth that aims to transform the construction industry.

The construction industry in Morocco is likely to grow in line with the country's economic expansion. Whereas, Morocco's construction industry is projected to rise at a CAGR of 7.0%, over the forecast period.

Infrastructure construction in West African countries such as Nigeria, Ghana, Senegal, and Ivory Coast also shows steady acceleration during the forecast period. The push comes in line with the government plans that aim to revitalise the economy. Construction industry in these countriesare expected to record CAGR of over 8.5% during 2019-2023, according to ConsTrack360.

Of the US$ 120 billion investment in infrastructure spending across 92 projects, Nigeria gets a share of 61% and that which accounts to nearly US$ 73 billion, second only to South Africa.

The year 2017 and 2018 had been remarkably challenging for construction industry in South Africa. Due to political and policy insecurities, key South African construction companies have recorded sharp fall in their share prices. The economy has somewhat shown positive growth in H2 2018 and it is expected to bounce back in 2019 though concerns on macroeconomic fundamentals remain.

The current growth challenge in South African construction industry is partly due to lesser new infrastructure projects. Due to slow economic growth, the government didn't roll out any major infrastructure projects, leading to value erosion across the value chain. Uncertain policies have added to the woes of construction industry. With South African construction industry not so promising, two big players in this industry, Esor and Basil Read have decided not to trade their shares on JSE, following the announcements of business rescue.

However, the government is striving to stabilise the economy besides the demands of private sector investment. ConsTrack360 expects construction activity to pick up over the next four quarters though macroeconomic growth challenges are likely to persist. A budget of over ZAR 800 billion has been proposed aiming public infrastructure development. An additional 25% of proposed budget has been allocated for energy sector to spend on electricity, expanding public transport, up gradation of roads, advancement of health sector and schools.

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