Renewable Energy and Easing Inflation to help Africa’s construction sector in 2022

Turner & Townsend has released its International Construction Market Survey (ICMS) for 2022.


By Staff Writer on
18th July 2022

Turner & Townsend is an independent professional services company operating in the global real estate, infrastructure, and natural resources sectors.

The International Construction Market Survey is the company’s most extensive and in-depth report, drawing from data and experience from 90 global markets, and exploring the challenges and opportunities presented by the economic market conditions that affect the construction industry.

The survey finds that while most markets have recovered somewhat from the impact of the COVID-19 pandemic and the subsequent lockdowns, Russia’s invasion of Ukraine and renewed lockdowns in China are influencing construction markets.

In Africa, some cities have shown significant recovery, including Johannesburg, Cape Town, Gaborone, Harare, Nairobi, Kigali, Kampala, and Lagos. However, the market’s full potential requires more growth to restore gross domestic product (GDP) to pre-pandemic levels. Inflation across the continent will probably reduce consumer demand, further impacting growth throughout 2022.   

The report notes that activity in the construction sector has weakened over the last year. A major factor is the cost of construction, which has been driven higher by the supply chain bottlenecks caused by the pandemic and the war in Ukraine, as well as the rising energy costs.

These factors have resulted in higher risk for contractors, and project construction schedules have regularly increased because of material supply shortages. Project teams have been forced to mitigate this, including early procurement, payment to contractors, or contracts in which the client sources and issues material.

On the positive side, the ICMS survey shows that residential and social housing remains a robust African construction sector. The industrial, manufacturing, and logistics sectors are seeing some of their most substantial growth rates. The rapid growth of e-commerce sites in Africa has boosted warehousing and goods movement, and the rise of remote working has seen a growing requirement for data centres in most regions.

Africa’s potential for renewable energy growth presents many construction industry opportunities. The continent is rich in hydro, solar, and wind, and using renewables is a more attractive scenario for many African nations. There are many regions where the local population still has no access to electricity, and decentralised renewables offer the opportunity to provide cheap local electricity. Not only that, but a switch to renewables would also reduce reliance on imported fossil fuels for many nations while offering energy security in the future.

A construction-led recovery in Africa faces many challenges this year. The research notes that the IMF states that sub-Saharan Africa would need to double its forecast growth rate to match the growth seen in the post-pandemic period in other advanced economies. Foreign investment is repelled by high inflation and increased debt levels, and this has the knock-on effect of making financing conditions difficult.

Turner & Townsend predicts that 2022 will be another challenging year. But some drivers of inflation-easing – including costs for fuel, transport, imports, steel and raw materials and prices of imported goods – could greatly assist the African economies in resuming economic recovery.

Top Photo: Turner & Townsend’s International Construction Market Survey for 2022 sees renewable energy and easing inflation may help Africa’s construction sector on its difficult road this year. (Source - Turner & Townsend)

Add a comment

ConstructAfrica welcomes lively debate, but will not publish comments that are threatening, libellous or abusive.

Plain text

  • You can align images (data-align="center"), but also videos, blockquotes, and so on.
  • You can caption images (data-caption="Text"), but also videos, blockquotes, and so on.
  • Web page addresses and email addresses turn into links automatically.
  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol type start> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id> <img src alt data-entity-type data-entity-uuid data-align data-caption>