China dominated East Africa construction in 2014

March 10, 2015
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The third edition of the annual Deloitte African Construction Trends Report 2014 indicates China was responsible for building 31 percent of all infrastructure projects in the region in 2014 up from 19 percent in 2013 owing to growing Chinese presence in the construction sector/FILE
The third edition of the annual Deloitte African Construction Trends Report 2014 indicates China was responsible for building 31 percent of all infrastructure projects in the region in 2014 up from 19 percent in 2013 owing to growing Chinese presence in the construction sector/FILE
NAIROBI, Kenya, Mar 10 – China dominated the construction sector in the East African region in 2014, according to a new report released by Deloitte East Africa.

The third edition of the annual Deloitte African Construction Trends Report 2014 indicates China was responsible for building 31 percent of all infrastructure projects in the region in 2014 up from 19 percent in 2013 owing to growing Chinese presence in the construction sector.

Europe and the United States contributed 18 percent of the construction, down from 37 percent in 2013 followed by the government at 13 percent up a significant improvement from one percent in 2013.

Intra Africa entities built eight percent of the construction in 2013, a rise from the three percent in 2013.

“We expect Europe and the US investors to play catch up in 2015 with key interest in new technology and geothermal power projects, “explained Mark Smith, Head of Infrastructure and Capital Projects at Deloitte East Africa.

Government owned 59 percent of the projects in the region followed by private domestic firms that rose to 23 percent in 2014 up from five percent in 2013.

Intra Africa entities owned eight percent of projects while the United Arab Emirates entered the market in 2014 owing 2 percent of the projects. China owned two percent of the projects.

International Development Finance Institutions were the top financiers of majority of the projects at 37 percent up from 27 percent in 2013 followed closely by the government at 17 percent, while new foreign investors emerged including private Israeli companies.

According to the report, Kenya had the most infrastructure projects in 2014 in the east African region followed by Uganda, Ethiopia, Tanzania and Rwanda respectively.

“The transport sector accounted for the largest share at 59 percent of all the projects in Kenya, representing a growth of 17 percent, while 37 percent of projects were focused on energy and power capacity development,” the report states.

Deloitte East Africa Director of Infrastructure Gabriel Ouko says that there are still a large number of significant projects in the planning phase that have not yet reached financial close.

“Politics has also been a huge hindrance towards infrastructure, there are major projects that are facing resistance from the public and are being used as a political tool, the court system needs to be improved so as it doesn’t delay starting off major infrastructure projects,” he said.

Among the major infrastructure projects in the country include the construction of the Standard Gauge Railway by China Road and Bridge Corporation, Construction of the Lamu Port, Southern Sudan, and Ethiopia Transport Corridor Project (LAPSSET), Konza Techno City, Olkaria Geothermal power projects, Lamu Coal Power plant among others.

Overall, the value of mega projects under construction across Africa in 2014 stood at US$326 billion (Sh29.8 trillion), a 68 percent growth from US$222 billion (Sh20.3 trillion) the previous year.

The Southern Africa region contributed the biggest share of the projects, accounting for 46 percent of all the projects in the continent, valued at US$145 billion (Sh13.2 trillion). It was followed by West Africa, East Africa, Central Africa and North Africa.

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