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$223bn in megaprojects under way in Africa – Deloitte report

Medupi power station
Photo by Duane Daws
Medupi power station

27th November 2013

By: Irma Venter
Creamer Media Senior Deputy Editor

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The infrastructure boom in Africa had seen investment in 322 megaprojects reach $222.7-billion, said professional services firm Deloitte on Wednesday as it released its ‘African Construction Trends’ report in Johannesburg.

Deloitte Southern Africa infrastructure and capital projects leader André Pottas said the report focused on projects valued at more than $50-million, which had already broken ground, but had not yet been commissioned, as of June 1, 2013.

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The report showed that most of the money-pot was being spent on energy (36%, 97 projects) and transport (25%, 82 projects), with the Chinese not as dominant as popular thinking would expect.

Overall, 59% of the megaprojects were owned by governments, 2% by public–private partnerships, and 29% by private investors.

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European and US investors owned 17% of the projects.

Ownership by Brazil, Russia, India and China was currently limited, said Pottas, and Eastern and intra-African investors held only 2%.

However, this picture was somewhat different when it came to funding and building the megaprojects.

The majority of project-funding came from China, at $43.6-billion. Development finance institutions were responsible for $43.4-billion of funding, Europe and the US $36.1-billion, and domestic governments $17.4-billion.

China was funding fewer projects, but at a higher value, noted Pottas.

Europe and the US were building 115 projects, private domestic companies 45 projects and the Chinese only 38 projects.

This showed that European and US construction groups were still dominant on the continent, and that South African construction groups were not as active as would have been expected, said Pottas.

Africa was not an easy market to be in, noted Pottas, with South African construction companies active on the continent faced with some stiff global competition.

Region by Region
East Africa was home to 93 of the projects in the Deloitte report, representing 29% of the spend covered in the report, with a value of $67.7-billion.

The currently unstable North African region accounted for only 7%, or 22 projects, of the infrastructure development surveyed in the report, valued at about $6.7-billion.

West Africa had attracted megaproject investment totalling $49.8-billion, representing 21% of the continent’s major projects.

Central Africa, also fairly unstable politically speaking, hosted 5% of the continent’s projects, valued at roughly $15.3-billion.

Southern Africa led in the numbers, with 124 projects, valued at $83.1-billion under way.

South Africa hosted the two largest projects under construction, by value, in Africa, said Pottas.

At least $20.3-billion was being invested in Eskom’s Kusile power station, with the Medupi power station receiving more than $10.8-billion.

Pottas said some of the main drivers for the increased spend in African infrastructure included a move to cater for the people of the continent, rather than following the decades-old pattern of mining Africa’s resources and transporting it to ports for shipment to former colonial masters.

“The growing African middle class is a big factor here, as is urbanisation.

“New energy generation hubs are being forged, transport and logistics corridors are being built and basic social infrastructure is being invested in,” he added.

“Telecommunications connections are being strengthened and development is now starting to touch the commercial property sector on the continent.”

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