It is a ‘boom’ as many people are describing the growth of East Africa Construction industry. Many investors have taken the advantage of the boom by shaking off their pockets to invest in skyscrapers, shopping malls, roads, schools, hospitals etc.
Both private and public sectors are in a hurry trying to satisfy the rising middle class and regional integration, and the E.A. governments still have the high stake in the sector. According to Frost & Sullivan research service titled Growth Opportunities in East Africa’s Construction Industries, the construction industry in East Africa is expended to expand in a value of US$3 billion in the next six years due to increased investments. The progress will be accelerated by the finances from the governments into housing, roads and civil works.?The construction industries in Kenya, Uganda and Tanzania are primarily driven by government initiatives to eliminate urban slums.
What driving the industry
Both the governments and the private sectors have been putting their money in major construction projects across the region. Major projects where the gamble is involved include construction of major roads, power plants, shopping malls, skyscrapers, hospitals etc.
According to the Business Liner Manger of Atlas Copco’s Road Construction Equipment sector, Peter Kimani, East Africa States are the key players in the major road and railway construction projects.
“Governments have remained the main investors in roads and railways projects,” Kimani notes, adding that in Kenya, the State has embarked on many roads projects.
Currently, Kenya has set off for the construction of a Ksh327 billion ($3.8 billion) new standard gauge railway (SGR) railway between Mombasa and Nairobi. The country has also inked a partnership with the World Bank of Sh17 billion funding for the development of several key roads. The funds will go towards upgrading of northern and western road corridors.Among the roads to benefit include, the Athi River- Machakos turnoff, Bachuma Gate-Maji ya Chumvi sections and Kisumu-Kakamega-Webuye-Kitale road sections. Construction of interchanges at three major junctions along Nakuru-Nyahururu, Nakuru-Njoro and Mau Summit-Kericho roads will also benefit from the funds.
Recently, African Development Bank Group (AfDB) approved US$109 million loan to the Government of Uganda for the construction sector. The money will be used for the transport service levels in south-western and eastern parts of Uganda. To achieve this, the Rukungiri-Kihihi-Ishasha/Kanungu and Bumbobi-Lwakhakha roads will be upgraded from gravel to bitumen standard. This will help to improve standards of living of the beneficiaries, support the tourism industry and promote regional integration and cross border trade.
“Yes, States have been in the front line putting money on major infrastructure development areas in East Africa,” says Isaac Jones, the General Manger of Douglas Projects Ltd.
However, Isaac argues that the gambling field in the construction industry is marred with high costs of operating. This as a result has seen many potential investors shying away mainly due the high taxes slapped on the activities involved in the industry.
