BUSINESS
sectors in Africa. The results in Deloitte’s
report makes for interesting reading, and
its shows the lacklustre attitude of South
African companies when it comes to the
rest of Africa.
According to Bonnett, the energy
sector will be the main driver of growth in
the next few years, especially the oil and
gas sector, but also geothermal energy,
hydroelectricity and renewables like solar
and wind. “Estimates are that over the next
decade there are opportunities worth more
USD250-billion on the eastern seaboard of
Africa from Mozambique all the way north
of Ethiopia. Anyhow, it is an opportunity that
cannot be ignored,” Bonnett says.
Urbanisation in Africa will happen an alarming speed over the next 10 years. This
offers a range of opportunities for South African contractors and suppliers.
According to Deloitte’s Africa Construction
Trends 2020, Kenya, Tanzania, Egypt, South
Africa and Ethiopia are the top countries
by number of projects. East Africa has
the largest number of projects (40.3%
of projects and 29.5% of project value
[USD146-billion] followed by Southern Africa
(USD113-billion). The top three projects
are one in the oil and gas sector and two
projects in the energy and power sector.
These three projects alone account for a
total value of USD66-billion. The greatest
number of projects fall into the transport
sector (33.4%), followed by real estate
(21.9%), energy and power (17%) and
shipping and ports (8.4%). The energy and
power sector is the most valuable sector
across the continent at USD133.6-billion,
almost 27%.
According to the report, governments
across Africa continue to be the main
owners of projects with 338 projects
(75.5%), while China only owns 2.4%
of these projects. African governments
continue to fund the largest share of
projects across the continent, financing
103 projects (almost 24%). The second
largest source of funding is China. One in
every five projects are funded by China,
although the country funds more projects
in sub-Saharan Africa than government.
China continues to dominate as a builder
of projects in Africa and are involved in
the construction of 140 projects which is
31% of all the projects in Africa tracked by
Deloitte. Very importantly though is that
South African and Italian companies build
close to 3.8% of all the projects across all
With rapid urbanisation comes the need to upgrade key infrastructure like electricity.
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APRIL 2020
Getting a foot in the door
The big question is how do South African
companies actually get a foot in the door?
“On the one hand a company needs to get
goods into the country at a preferential rate
using the trade agreements, and on the
other it needs to add value domestically
in those countries it is selling into in order
to qualify for preferential procurement and
local content in those markets. Preferential-
trade agreements are not simply about
intra African trade. Mozambique, for
example, has signed an aid package
agreement with the UK, and the EU is
constantly negotiating with various African
groupings for more bilateral free trade, and
so is America,” says Bonnett.
The tariff preferences and benefits will
start dissipating over time as different
countries and entities outside of Africa
also negotiate with African countries.
So, it is imperative that South African’s
take advantage of their proximity and
knowledge of other African markets.
“The free trade agreement is a great
opportunity for South Africa, particularly
in West Africa, where there is a
burgeoning mining industry and a boom in
construction,” says Bonnett.
Developments in Mozambique
Right on South Africa’s doorstep, in
neighbouring Mozambique, one of the
biggest developments in African history
is currently taking place. Apart from the
international space station, the Liquefied
Natural Gas (LNG) project in the Rovuma
Basin of Mozambique is the biggest
investment in the world. Final Investment
Decision (FID) on two of the three key
projects have already been declared – and
that is about USD30-billion worth of business
– while there is another USD25-billion to
USD30-billion which will reach FID in the
first half of 2020. So, in total, that is about
USD60-billion to USD65-billion worth of FID.
Over the next decade, estimates are
that about USD128-billion will be invested
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