Construction Sector in Africa
Why Africa’s Construction Market?
Africa’s Construction Market Report is segmented by sector (commercial construction, residential construction, industrial construction, infrastructure (transportation) construction, and energy and utility construction), Construction type (additions, demolition, and new construction), and Region (Eastern Africa, Western Africa, Southern Africa, and Northern Africa).The African construction market size is estimated at US$58.42 billion in 2024, and is expected to reach US$74.81 billion by 2029, growing at a CAGR of 5.07% during the forecast period (2024-2029).
Despite near-term challenges, the medium- to long-term outlook remains positive. Over the short term, investment in the construction industry may be driven by government spending in the infrastructure sector. The African construction industry is the target destination for most large economies because of accruing benefits, such as the availability of natural resources, huge investment opportunities in energy and infrastructure, cheap labor, and a fast-growing consumer market.
African cities are changing with several major projects, ranging from magnificent skyscrapers to megacities built from scratch. These multimillion-dollar construction projects in Africa are giving its cities a much-needed transformation.
Over the last two decades, China has established a significant economic presence in most African countries. Its lucrative economic investment package, flexible political approach, and focused big-ticket development projects under the Belt and Road Initiative (BRI) provide a massive opportunity to African countries.
In recent years, Nigeria received relatively large funds from China for railways. China is backing two major standard-gauge rail projects, a line from Lagos to Kano and a coastal railway from Lagos to Calabar.
China also building railways in Kenya, Ethiopia, and Zambia. For instance, the Chinese Export-Import Bank provided 85% of the funding for the US$475-million Addis Ababa Light Rail, which serves the city’s 4 million residents. The investments in energy, though mainly made up of oil and gas investments, comprised investments in clean energy such as hydropower.
The African construction market is less competitive, with major international players holding large market shares. The African construction market presents growth potential during the forecast period, which is expected to boost market competition. With a few players holding a significant share, the market has an observable level of consolidation. The major players are Vinci, Bouygues, TechnipFMC, China Communications Construction Group Ltd., and China Railway Construction Corp Ltd.
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Countries with the highest potential
Egypt
Egypt leads the market in construction projects across Africa, with over 300 active projects valued at US$338 billion. The country is recognized for hosting high-value infrastructure developments, cementing its position as a leader in the region.
South Africa
South Africa ranks second in Africa for active construction projects, with investments worth around US$207 billion. The country’s focus on large-scale infrastructure projects demonstrates its commitment to economic development and modernization.
Nigeria
Nigeria has ongoing and upcoming projects valued at US$200 billion, solidifying its position as a key player in Africa’s construction market. Despite being one of the continent’s largest crude oil producers, the country relies heavily on petroleum imports due to the poor state of its refineries. However, the Dangote Refinery, located in the Lekki Free Trade Zone in Lagos State, aims to revolutionize Nigeria’s refining capacity. As the largest single-train refinery in the world, it can process 650,000 barrels of crude oil per day. Spanning 2,635 hectares and estimated to cost over US$12 billion, the refinery is a landmark development in Nigeria’s energy infrastructure.
Kenya
Kenya is making significant investments in infrastructure, with the construction industry contributing 7% to the country’s GDP and serving as a major driver of economic growth. A standout initiative is the Konza Technopolis, Kenya’s flagship smart city project located near Nairobi. Spanning 2,000 hectares, this tech hub is part of the government’s Vision 2030 and is projected to cost US$14.5 billion. Upon completion, it is expected to generate approximately 20,000 jobs. The first phase of horizontal infrastructure development was finalized in 2022, marking a key milestone in the project.
Ghana
Ghana, alongside Nigeria, is noted for its significant number of construction projects within the West African region. These projects are diverse and contribute to the country’s economic growth, although they are not as high-value as those seen in Egypt.
FAQs about Construction sector in Africa
The construction sector in Africa is experiencing rapid growth, driven by increasing urbanization, population growth, and demand for infrastructure development. Countries like Nigeria, Kenya, South Africa, and Egypt are leading the market with multi-billion-dollar projects in transportation, energy, and housing. The sector contributes significantly to GDP, particularly in economies like Kenya (7%) and South Africa, showcasing its importance for economic development.
Africa’s construction industry offers significant opportunities in residential housing, commercial real estate, and large-scale infrastructure projects such as roads, railways, and energy plants. Additionally, green building technologies and sustainable construction practices are gaining momentum, attracting investors focused on eco-friendly solutions. Urbanization and government policies promoting public-private partnerships further enhance opportunities in this sector.
The African construction sector faces challenges such as limited access to financing, inadequate infrastructure, and political instability in certain regions. Supply chain disruptions and reliance on imported materials can also delay projects. However, growing foreign direct investment (FDI) and government-backed initiatives are addressing these issues, making the sector increasingly attractive for investors.