Photo by: Megan van Wyngaardt
With growth in the continent’s construction sector no longer being “just a by-product of mining activity”, Africa will be able to further promote its industrialisation agenda, while supporting economic diversification, Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development Lebogang Maile said on Tuesday.
Speaking at the opening of the 2015 BAUMA CONEXPO AFRICA, in Johannesburg, Maile noted that the expo gave industry players an opportunity to find ways to aid African countries in increasing local economic development, including attracting investments in the local manufacturing of supply inputs for the extractives industry.
“We have every reason to believe that the construction industry is fast proving itself to be Africa’s treasure trove,” he said, citing KPMG’s Construction Survey Africa report, which stated that investments in real estate already accounted for 43.8% of capital investments and generated 33.6% of foreign direct investment jobs on the continent.
Africa also ranked high as an investment destination for construction companies, with nearly half of the 165 global leaders in construction and engineering industries surveyed in 2013 indicating the desire to venture into the continent.
“This investment affinity towards the continent is strongest among smaller companies with a turnover of less than $5-billion – meaning that small companies, especially those located in Europe and the Middle East, see a dynamic link between their growth prospects and Africa’s future,” Maile stated.
He added that, paired with a growing middle-class, which was estimated to increase to 107-million by 2030, and increasing emphasis on dealing with the infrastructure deficit, Africa was becoming more attractive to the global construction industry and investment would grow exponentially.
"There is also growing public sector investment in infrastructure, such as South Africa’s R1.4-trillion investment into infrastructure projects,” he noted.
However, Maile pointed out that there was further room for improvement.
“One of our key concerns is that the industry is far too monopolistic. Local players have a marginal stake in the value chains of the industry. Here, too, questions about using the sector to build Africa’s industrial base, along with building local skills and capacity, assume prime focus,” he noted.
The MEC believed that these challenges could be overcome by promoting linkages between Africa’s dominant industries, such as mining, to build a manufacturing base for the continent.
He added that creating regional linkages and value chains – a development that would not only create jobs and increase income but also consolidate the regional market for locally produced goods – gave impetus to the development of regional economic infrastructure and, consequently, boosted intra-Africa trade.
“A combination of these factors will make the continent less vulnerable to the whims of global economic markets,” he said.