Description
African projects market at a turning point
With $2.4tn of major projects planned or underway, including about $1.1tn of projects under execution, Africa offers substantial opportunities for project companies and investors. The continent is home to many high-growth emerging markets with rising populations and significant infrastructure needs. The G20’s Global Infrastructure Outlook programme estimates that Africa needs about at $6 trillion of infrastructure investment between 2018 and 2040.
But Africa’s project plans also face many challenges, from political instability through to poor infrastructure and a lack of finance. The G20 estimates that Africa is facing an investment gap of about $1.7 trillion on its infrastructure requirements.
Covid-19 has added to the challenges. The pandemic hit African economies hard and led to a sharp market correction in project activity in 2020 and 2021. The World Bank estimates that, amid the Covid-19 crisis, Africa’s economy contracted in 2020 by -3.4 per cent to $2.36tn.With government priorities focused on the public healthcare crisis, there was less bureaucratic bandwidth to deal with the challenges of developing the continent’s infrastructure.
Similarly, travel restrictions meant that private sector clients and contractors found it hard if not impossible to get staff to project sites or keep them there, and imports of essential equipment also became more time-consuming and expensive.
Post-Covid recovery
But the continent is set for a strong recovery, with the IMF forecasting real GDP growth of 4 per cent in 2022. This rebound is likely to spur an increase in project investment.
Population growth is the primary driver of infrastructure investment in Africa. The continent’s population is expected to rise to about 1.35 billion in 2022, up from around 605 million in 1990. In 2021, Africa’s population expanded by 2.4 per cent, according to the IMF. This is expected to continue.
Growth markets
Africa’s projects are not evenly distributed across the continent. The continent’s five biggest projects markets – Egypt, Nigeria, South Africa, Tanzania and Algeria – account for more than half of all projects in the continent. Several of the ‘big five’ economies are major oil and gas exporters however, and project activity often follows the trends in global oil prices. On a regional basis, North Africa accounts for over 30 per cent of the value of all projects in Africa, with about $711.9bn of projects planned or underway.
Reviews
There are no reviews yet.