According to the African Construction report by Deloitte, the number of construction projects in East Africa has risen by 65.1% between 2016 and 2017 while the increase in the total value of projects has been much lower, but still considerable at 20.7%.
Kenya has the largest number of projects in East Africa with 23 versus Ethiopia’s 20, however, the total value of projects in Ethiopia is almost twice that of the value of projects in Kenya.
Two of the three largest sectors in the construction industry recorded an increment last year. The percentage of real estate projects in East Africa in 2017 increased to 14% from 11% in 2016 while transport projects also increased by from 47% to 52%. The portion of projects in energy and power decreased from 26% to 23%.
The report also states that the transport sector continues to be the largest sector, accounting for more than half of projects in 2017, with 27 Road & Bridge projects currently underway. These include the various cross border projects currently underway including the construction of the 1,672km standard gauge railway linking Rwanda, Burundi and Tanzania.
Once completed, the project which is valued at US$7.6bn, will provide both freight and passenger services between Dar-es-Salaam and Kigali, forming part of the Central Corridor. Such large-scale cross-border projects will drive both international trade and interregional trade which is at it’s lowest in Africa compared to other continents. LAPSSET, for instance, includes port projects, highways, railways, an oil pipeline and airport projects.
Energy & Power projects are also significant, accounting for nearly a quarter of all projects in East Africa.
A majority of the projects (90.1%) are owned by government while roughly, only one in 10 projects are not government-owned. Governments in East Africa are most proactive in driving projects through both national and regional infrastructure development plans. The ownership statistics also show that private domestic firms only own 4.2% of projects while private firms from China, Singapore, the UAE and the US own the remaining 5.6% of projects.
Regarding funding, governments only provide 15.5% of the project’s funding. Most of the funding comes from the Chinese who have taken the lead in funding large-scale construction projects in East Africa, financing one in four projects in the region. International DFIs follow with 19.7%, and have overtaken African DFIs, which fund 16.9% of projects.
The Chinese however, don’t stop at funding. China is also the most visible developer, now constructing over half of all projects. Private domestic firms are responsible for building 11.3% of projects while firms from the Middle East and other European countries each take care of 8.5% of projects.
The Grand Ethiopian Renaissance Dam (GERD), worth US$4.1bn, remains the most valuable project in the region. The second largest project in 2016, the Mombasa-Nairobi Railway, was opened in May 2017 and the Tatu City Project, 2016’s fourth largest project, is currently between phases and so not undergoing construction. The Lake Turkana Wind Power Project, the single largest private sector investment in Kenya’s history, is set to go live in early 2018.
Even so, half of the projects in the top ten are new projects. A number of the largest projects from 2016 have either been completed or replaced by new larger projects.