With $326 billion worth of ongoing construction projects, Africa is clearly on the rise!


When the new, expanded Suez Canal was inaugurated on August 6, the world marveled at the endeavor and single-mindedness that had born — and bored — 72 kilometers of new waterways through the Egyptian earth.

The $8 billion project was initially scheduled to take three years, but was completed in one. Three quarters of the world’s dredgers and 41,000 workers, operating around the clock, moved half a trillion cubic meters of earth by June this year — the equivalent of 200 Great Pyramids — meaning the canal will raise $13 billion annually by 2023 according to government projections.

But whilst the numbers are mind-boggling, they’re a drop in the ocean when it comes to major construction projects across Africa.

A report by Deloitte projected that in 2014 the value of major construction projects on the continent totaled over $326 billion — an increase of 46% on the previous year.

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Covering energy and power, transport, mining, water, oil and gas, real estate, health care, manufacturing and technology, media and telecommunications, the report outlines “megaprojects” with an average value of $1.27 billion (up from $689 million) — all key drivers behind an African economy projected to grow 5.7% in 2015.

But with “megaprojects” in 2015, the distinctions between these sectors are becoming ever more blurred.

“Energy is still going to be a big player, but we will begin to see transport and interconnectedness a lot more,” says Jean-Pierre Labuschagne, Associate Director of Public-Private Partnerships at Deloitte South Africa.

Many projects such as the 500 kilometers Mbalam-Nabebea iron ore freight railway in Sudan and theKribi Deep Sea Port, Cameroon, are overlapping multiple sectors, and long-term megaprojects such as the East African Railway Master Plan are set to further open up the continent for business.

“The energy constraints that our economies are facing is really driving home the importance of huge projects,” says Labuschagne. The way the continent is rising to the challenge is of particular interest.

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“Renewable energy is coming to the fore,” argues Labuschagne, and Africa is “ahead of the curve implementing renewable technologies.” Last year 65% of new energy and power projects on the continent were renewable, and advances in geothermal technology in Kenya and new wind farms in Ethiopia are setting a precedent globally.

 


“Coal will still be a significant generator” of both energy and income, and two new large coal-fired plants in South Africa at a cost of $37.4 billion mark a significant investment, says Labuschagne.

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Despite this surge, however, there are still many challenges.

A new report from the Population Reference Bureau projects Africa’s population will more than double to 2.47 billion by 2050. Paired with a growing middle class and greater urbanization, there is the potential for a lack of water-based projects to become a future “crunch point for economies,” according to Labuchagne. Failing to invest in adequate water and sanitation upgrades is a cause for concern, and if little is done, the issue is “going to be critical” in the long term.


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