Deloitte report: large infrastructure projects slowdown in EA

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Deloitte yesterday released its third African Construction Trend Report 2014 which highlights how capital intensive infrastructure development is progressing on the continent. It also tracks project updates and flag trends that require attention by project owners, funders and builders. According to the report it indicates that there has been a huge capital infrastructure drop significantly in 2014. According to the report only 51 projects were identified compared to 93 recorded the previous year. This is unlike other continents which recorded an increase in value of projects that were executed during the year.The total value of the projects slid from US$67.688 billion to US$60.671 billion.

The head of infrastructure and capital projects Dr. Mark Smith says that they are significant projects that have not yet reached financial close and are not reflecting in the statistics of projects under construction and therefore the report focuses on projects that are physically under construction, with construction crews on-site at the annual cut-off date. The report thus tracks the value of construction projects underway at 1 June of each year.

In 2014, 257 projects qualified for inclusion, in comparison to the 322 projects collected in 2013. While the number of projects dropped, the total value of projects under construction increased to US$ 325 828 million in 2014 from US$ 222 767 million in 2013.

Kenya contributed the bulk of large capital infrastructure projects implemented in East Africa in 2014 followed by Uganda,Ethiopia, Tanzania and Rwanda respectively. With 59% of the share of projects, Transport dominated the East Africa sector mix, while 37% of projects were focused on Energy and Power capacity development. The southern African region contributed the biggest share of the projects,accounting for 46% of all the projects in the continent, valued at US$ 145 billion. It was followed by West Africa, East Africa, Central Africa and North Africa.

The International Development Finance Institutions were the top financiers of majority of the projects, while new foreign investors emerged including private Israeli companies, public owned funds and organizations from UAE as well as private Australian companies. The level of government funding increased by a significant 15 per cent while foreign institutions showed reduced appetite for funding this year, with a 9 per cent drop in this investor category.

Sustainable new energy is the cornerstone of future sustainable socio-economic growth for Africa. Some of the standout African countries with a focus on renewable energy are Angola, Kenya, Sierra Leone, South Africa and Uganda.

The African Construction Trends report confirms continued, intensive construction activity though the journey may not be high speed but it is unfolding at a steady pace and especially a good performance overall across regions apart from East Africa.

Article by Wacuka Kangethe.

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