Constructing the African Future: Africa Is the Site of Choice for Construction Companies from around the World as New Projects, from Airports to Large-Scale Affordable Housing Proliferate - despite the Economic Crunch. Neil Ford Presents an Overview of the Sector around Africa

By Ford, Neil | African Business, July 2009 | Go to article overview

Constructing the African Future: Africa Is the Site of Choice for Construction Companies from around the World as New Projects, from Airports to Large-Scale Affordable Housing Proliferate - despite the Economic Crunch. Neil Ford Presents an Overview of the Sector around Africa


Ford, Neil, African Business


Some construction companies are even suggesting that the global economic crisis will encourage them to step up their property acquisitions in Africa because lower valuations offer good long-term value.

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Dubai real estate firm Deyaar has identified markets in Africa and the Middle East where it will concentrate its resources. The company's chief executive, Markus Giebel, said recently: "We have been negotiating in five different countries right now and we hopefully will be able to announce the first one or two deals in the next couple of months. The mature countries are not good for us. We need underdeveloped and developing countries to invest in." Property prices have tumbled in many Gulf states over the past year and so a range of investors from the region are looking to Africa and even further afield for alternative investment targets.

Any slowdown in investment could be partly mitigated by a wave of new financial support from the multilaterals. In particular, the World Bank's new Infrastructure Recovery and Assets (INFRA) fund and the Infrastructure Crisis Facility (ICF) have been allocated billions of dollars to promote infrastructural projects in developing countries. Both are to be managed by the International Finance Corporation, with the INFRA budget stretching to $45bn and the ICF expecting to distribute $10bn, both over just the next three years.

Apart from power, water and transport projects, the money will be used to finance low cost housing, which is a growing focus of aid and investment funds, and other construction schemes in Africa.

Robert Zoellick, the president of the World Bank, commented: "As developing countries are facing the trials of the global economic crisis, it is vitally important that economic stimulus packages in the developed world are accompanied by support to those that cannot afford multibillion bail-outs."

Indeed, while the poor state of infrastructure has often been blamed for the economic frailty of many African states, housing and other buildings has rarely topped the list of construction priorities. However, there is growing pressure to put more effort into turning the informal settlements that have built up on the outskirts of African cities into more formal housing suburbs.

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In June, the first Africa, Caribbean and Pacific (ACP) conference on urbanisation and poverty reduction was held in Nairobi to discuss means of bringing this about.

At a ministerial session at the conference, the executive director of the UN's Human Settlements Programme (UN-Habitat), Anna Tibaijuka, argued: "Slums must be seen as a result of failed policies, bad governance, corruption, inappropriate regulation, dysfunctional land markets, unresponsive financial systems, and a fundamental lack of political will."

Indeed, governments have often not given sufficient priority to improving construction standards nor to clarifying land ownership regulations. The two often go hand in hand, as any doubts over land ownership discourage higher quality construction methods and materials.

John Kaputin, the ACP secretary general concluded: "There is therefore a compelling case for action on the vicious cycle of urban poverty. Consequently, ACP countries need to re-examine urbanisation afresh and devise proactive urban management strategies to utilise the opportunities and attendant challenges in a sustainable way."

Yet the biggest challenge will be to ensure that the large construction firms that currently focus on luxury housing and headline-grabbing infrastructural projects turn their attention to mass residential schemes.

Another growing concern within the construction industry, particularly in more prosperous African states, is health and safety. Regulatory safeguards are often far weaker in Africa than in the industrialised world and little money is invested in inspections to ensure that even those safety standards that do exist are actually implemented. …

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Constructing the African Future: Africa Is the Site of Choice for Construction Companies from around the World as New Projects, from Airports to Large-Scale Affordable Housing Proliferate - despite the Economic Crunch. Neil Ford Presents an Overview of the Sector around Africa
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