SA missing the building boom

2013-12-01 14:00

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Country is laying claim to only a tiny slice of Africa’s infrastructure development projects, writes Elma Kloppers

Construction projects are booming in Africa? –?but foreign contractors are beating South Africans in the race to take part on the infrastructure surge.

This is a boom time in infrastructure development in Africa with massive investments of $222.7?billion (R2?trillion).

There are 322 projects of more than $50?million each in progress, according to Deloitte’s latest research report on construction in Africa.

The leading sectors in terms of investment value are energy, transportation, mining, property, water, oil and gas.

“South African construction companies are being affected by cash shortages, which are having an impact especially when they are working outside the country’s borders,” says Sheldon Morris, Deloitte’s head of advisory services for capital projects.

“Large foreign contractors get more support from their governments for infrastructure development in Africa.”

European and American contractors are working on 37% of all the projects with 12% going to Chinese groups. The remaining projects are held by contractors from Japan, South Korea, Brazil, Australia and South Africa.

André Pottas, Deloitte’s head of infrastructure and capital projects for sub-Saharan Africa, says contractors cannot just work as they like in all African countries.

“In Mozambique, there is a restriction that only 5% of the workers may be foreigners.”

However, South Africa has the largest project on the continent?–?the Kusile power station near eMalahleni in Mpumalanga, worth $20.3?billion and part of the country’s R1?trillion infrastructure development programme.

On a regional level, Southern Africa is the leader with the largest percentage of the continent’s investment?–?a total of 124 projects under construction to the value of $83.1 billion.

Pottas says of all the regions, Southern Africa has the most shopping centres and mixed-use developments financed by the private sector.

“Most of the anchor tenants in the centres are South African retailers.”

He says the region is working hard to maintain its position as the gateway to Africa.

Southern Africa has a broad spectrum of activities with 31% of the projects in the energy sector, 19% in mining, 18% in transport and 17% in commercial property.

European construction firms are in the lead with 28% of the projects followed at 23% by a combination of consortiums from Africa.

East Africa, historically one of the poorest and most underdeveloped regions, is turning the heads of investors, construction groups and multinational companies with its aggressive development.

The region has 93 projects under way worth $67.6?billion.

Deloitte describes southern and east Africa as the continent’s Texas because of the large oil and gas discoveries over the past five years.

It says that in the context of these discoveries, infrastructure development will be crucial for Africa’s future.

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