LEAD STORY ECONOMIC OUTLOOK FOR CONSTRUCTION
How are we doing as an industry? Overall, Sub-Saharan Africa is forecast to deliver steady economic growth over the next two years but prospects will vary significantly from nation to nation, argues construction and consulting professional giant, MACE. Chayka1270/Pixabay and Infographic by MACE
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n their second half economic outlook paper entitled Mace SSA Market Review [Ref: https://www. macegroup.com/locations/sub-saharan-africa/southafrica], Kelvin Byres, MACE Director for South and West Africa argues that, ‘The central outlook for construction activity across Sub-Saharan Africa is cautiously positive but the overall picture conceals wide variation between nations. South Africa continues to face significant headwinds but the outlook for East and West Africa is brighter’. ‘In busier markets like Ethiopia, Rwanda and Ghana, tailoring procurement strategy to reflect localised capacity constraints, and early contractor engagement, will deliver the best project outcomes.’ Growth in Ethiopia, Rwanda and Ghana is expected to exceed 7% this year and the outlook for next year is equally buoyant, according to World Bank forecasts. 2019 proved more challenging for some nations. Downside risks threaten growth prospects across the region. High government borrowing may be problematic for some countries if measures to rein in spending to reduce current account deficits fail. Median debt as a percentage of GDP across Sub-Saharan Africa increased from less than 30% in 2012 to 49% in 2018 and some
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nations have accumulated a significantly higher debt burden. Government debt levels in Ethiopia, Kenya, Ghana and South Africa exceeded the Sub-Saharan Africa median in 2018. Progress has been made towards achieving the African Continental Free Trade Agreement – an unprecedented initiative to eliminate 90% of trade tariffs over five years. Implementation is likely to be slow but, so far, 54 out of 55 states have signed the agreement, marking a significant shift in the landscape. Currently, intra-Africa trade only accounts for 18% of African trade flows and the UN Economic Commission for Africa estimates that implementation of this agreement could double intraAfrican trade by 2030. A softer outlook for the pace of global economy expansion has eased pressure on commodities prices. At the same time, heightened tensions in the Middle East triggered a recent appreciation in oil prices. Across Sub-Saharan Africa, construction activity is forecast to grow at an average rate of 7% over the next two years. Upside risks remain but pressure on input prices has generally eased. But the cost of delivering construction projects across
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