The recently released Deloitte Africa Construction Trends Report indicates that governments remain the single largest developers of infrastructure projects across the continent. This is supported by the fact that governments own between 57% and 90% of tracked projects per region.

From1 June 2017, 303 projects valued at $50m or above broke ground. In total, these projects are worth $307bn.

As a region, Southern Africa had the largest number of projects (93), while West Africa had the largest share of projects in terms of value, worth $98.3bn. South Africa is the single country with the most projects (44 projects) while Nigeria had the most projects by value (worth $69.1bn).

African governments own the lion“Investment in infrastructure tends to increase business confidence and lowers transaction costs, making it easier for companies to move people and goods, and to provide services. Governments that invest in enabling infrastructure are seen as more proactive and tend to attract more investors, ultimately making them more likely to achieve economic and export diversification objectives,” J-P Labuschagne, Deloitte Africa infrastructure & capital projects leader, says.

Research globally shows that an alarming number (nine out of 10) of megaprojects, valued at least at $1bn, run either over budget or over time. Emerging markets, with weaker governance institutions, tend to have significant time and cost overruns, according to Deloitte, and countries with stronger regulatory and institutional governance frameworks tend to have a lower risk of project overruns.

At the time of writing the report, the analysts said only seven of Africa’s top 20 projects under construction were likely to be completed on time. Government-owned projects were the worst offenders, with 83.3% of projects delayed. In contrast, three-quarters of private-owned projects are on time. “This shows a consistent pattern of overruns compared to global projects,” the report states.

The transport sector accounted for more than half of projects this year, but large-scale investment into social development projects remains low. Only 1.2% of total investment went to the water sector and even less was invested in education. Between 2016 and 2017, there were two fewer energy and power projects in Africa and three fewer healthcare projects, the report found.

Image credit: https://www2.deloitte.com/za/en/profiles/jplabuschagne.html


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