SOURCE: Frost & Sullivan

March 09, 2011 01:30 ET

Frost & Sullivan: Rapid Urbanisation and Governments' Commitment to Infrastructural Development Spur Growth of the East African Construction Industries

CAPE TOWN, SOUTH AFRICA--(Marketwire - March 9, 2011) -  The east African construction industries are primarily driven by government initiatives to eliminate urban slums that are characterised by lack of access to clean water, sanitation and adequate housing. Additionally, the high economic growth in this region is stepping up the need for urban transport networks.

New analysis from Frost & Sullivan (http://www.buildingtechnologies.frost.com), Growth Opportunities in East Africa's Construction Industries, finds that the total east African construction industry was valued at $5,994.3 million in 2009 and estimates this to reach $9,371.2 million in 2016. The countries covered in this research service are Kenya, Tanzania and Uganda.

 "In 2009, most governments in the East African region allocated a large portion of their annual budgets to the construction of housing, roads, and civil works," says Frost & Sullivan Environmental & Building Technologies Research Analyst Derrick Chikanga. "Approximately 60 percent of Kenya's urban population resides in slums that are deemed unfit for human residence, thereby driving the need to provide more housing to the urban population and eliminate all slums around Kenya's urban centres."

Various institutional reforms to promote the development of the construction industries are being implemented in east Africa. For example, the Kenya Slum Upgrading Programme (KENSUP) is an initiative to eliminate the housing problem in Kenya. Such programmes are expected to address Kenya's infrastructural backlog and promote growth of its construction industry.

However, intense competition from Chinese construction companies and the high cost of borrowing are some of the major obstacles to the development of the east African construction industries.

"Chinese construction companies are largely preferred over local companies due to their comparatively low bidding prices," explains Chikanga. "Major contracts are awarded to these companies that make the construction business highly competitive."

Stringent building planning regulations and high infrastructural standards are boosting companies to implement best practices for greater chances of receiving contracts in the east African construction industries. Therefore, participants that offer superior construction materials are more likely to receive government contracts in the long run. Furthermore, the projected high economic growth is expected to ensure continued growth of the construction industries in east Africa.

"The East African construction industry has a poor reputation of producing sub-standard infrastructure," says Chikanga. "The implementation of best practises by utilising high quality construction material will give companies an edge and enhance their construction business."

Growth Opportunities in East Africa's Construction Industries is part of the Building Management Technologies Growth Partnership Services programme, which also includes research in the following market: South African Construction Industry. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

If you are interested in more information on this study, please send an e-mail to Christie Cronje, Corporate Communications, at christie.cronje@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country.

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Growth Opportunities in East Africa's Construction Industries
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