development in east africa

International Infrastructure Expansion & the African economy

The Infrastructure Consortium of Africa (ICA) believes that 40 billion potential work hours are lost each year owing to people being unable to open a tap in their homes for water and instead needing to fetch water from another source. From the perspective of land transport, roads account for 80% of goods and 90% of passenger transport on the continent.

African governments have historically relied on donor aid and external borrowing to finance their fiscal deficits. At the same time, many states have financed infrastructure spending out of their fiscal budgets, resulting in fixed capital growth being dependent on available government finances.

In 2013, KPMG interviewed executives from 165 engineering and construction companies around the world. The respondents’ annual revenue varied in size from turnovers of US$250 million to more than US$5 billion, and served a range of markets including energy, power, industrial, healthcare/ pharmaceutical, manufacturing, mining, education and government. A general upward trend in backlogs and margins is giving cause for optimism across the industry, with further growth anticipated. However, most respondents feel that any real breakthroughs could take as long as 2-5 years, adding a touch of realism to forward planning.

In the 2013 Global Construction Survey conducted by KPMG, the following were responses when asked about areas for expansion: in which direction are the waves breaking:

Many are targeting international expansion

Respondents to the global survey appear to be open to new sources of business. Forty-seven percent say that they plan to move into new geographies, and 44 percent are prepared to enter new sectors of the industry. The most popular region for expansion is Africa, followed by the US and Canada, with the Middle East third. Engineering and construction companies from the Americas are the big exception, with 64 percent placing the US and Canada as their first choice.

Growth Strategy

 

For more details, please get a free copy of our 2015 Construction and Infrastructure Sector Report

David Okwara

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