African governments maintained spending on infrastructure, despite Covid-19 and rising debt levels.
At the same time, West Africa has, for the first time since 2016, led the continent in both the number and value of Infrastructure projects.
These are some of the findings of the Deloitte ‘African Construction Trends 2021 Outlook’, that tracks infrastructure and capital projects (I&CP) activity across Africa.
The report analyses who owns, who funds and who builds infrastructure projects. This activity has included monitoring continental, regional and sectoral trends of I&CP projects of at least $50-million in value that had broken ground but had not yet been commissioned by June 1 last year.
The report covers 462 projects with a total project value of $521-billion.
The number of projects in 2021 increased by 20%, from 385 projects in 2020.
The total value of projects under construction increased by 30.7%.
Deloitte highlights transport and energy and power projects as having consistently been key contributors to the sectoral mix of projects that are under way, with the real estate sector – most prominently commercial real estate – emerging as a critical sector in recent years.
“African government continue to play a critical role as owners of infrastructure projects and both public and private investors have managed to help increase spending even through the pandemic,” says Deloitte Africa I&CP leader Alex Moir.
African governments own 73.8% of projects under review.
African governments have also consistently been the top funders at 31.8%, with international development finance institutions (DFIs) and African DFIs as important financiers too.
The share of projects funded by China stood at 10.6% in 2021, the single largest by country or region. China remained the largest builder on the continent with 21.4%.
In this edition, West Africa is, for the first time since 2016, leading by the number and value of projects, with 153 projects valued at $172.8-billion.
Southern Africa recorded the second-largest project share by value at $147.7-billion, followed by North Africa at $132.2-billion.
East Africa’s high growth and economic development saw the region lead in terms of the number of projects yearly over the three-year period from 2018.
In the Southern African region, in value terms, the real estate sector recorded a share of 52%.
The high value of projects in the real estate sector was fuelled by investments in some megaprojects in Mozambique and South Africa.
Energy and power accounted for 27.3% of the projects under way. Despite the transport sector having recorded the most projects, the sector came third in value terms, contributing 8.6% in Southern Africa.
The pandemic intensified the pressure to transform, testing capital injection resilience more than ever.
“While governments have big decisions to make about how they address mountainous deficits, how they build more sustainable economies, and the future of growth, interestingly, the majority of the projects in Southern Africa over the period were government-owned (75.5%), a sign that recovery and interface between companies and government were on the rise,” Moir indicates.
Governments around the world have seen an increase in debt levels over the past two years as they were looking to fight the pandemic but also maintain infrastructure spend.