West and Central Africa Infrastructure Report Q3 2012
- ID: 2201028
- June 2012
- Region: Africa, Central Africa
- 56 pages
- Business Monitor International
The West and Central Africa Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on West and Central Africa's infrastructure industry.
Gabon BMI View: Despite the fact Gabon is one of West Africa's oil producing countries, with respectable output of 243,000b/d in 2011, oil windfalls have not translated into investment in the country's deteriorating infrastructure. Over Q112, there was a virtual absence of activity in the sector in terms of new project announcements or developments. Gabon relies on official development assistance and foreign funding to support infrastructure projects, a pattern we believe will continue in the coming years as oil output declines. Low industry value and minor expansion make for an unimpressive construction sector growth story to the end of our forecast period in 2021.
Key developments in Gabon’s infrastructure sector include:
- The news that Indian infrastructure firm RPP Infra Projects has secured funding from ECOBANK of Libreville and BDEAC Bank for the first phase of a EUR250mn (US$356mn)
housing project in Gabon is a positive development in a country where access to finance remains prohibitive.
- We believe Gabon's construction sector will continue to rely heavily on official development assistance.
- French infrastructure companies spearhead foreign involvement in Gabon. Major players active in the country's infrastructure sector include Bouygues, EDF and Veolia. However, bilateral ties with China and India have strengthened, with China's Sinohydro having been awarded the largest road reconstruction contract: the PR1 highway project.
- A small construction industry and prohibitive business environment limit the potential returns from Gabon's infrastructure sector. In BMI's infrastructure risk/reward ratings (RRRs), Gabon scores 28.9 out of 100, the second lowest in Sub-Saharan Africa (SSA).
- Political risk is a pivotal consideration in Gabon. The situation deteriorated in August 2011,
when Gabonese President Ali Bongo Ondimba dissolved the main opposition party, reversing previous minor democratic successes. We estimate that Gabon recorded real GDP growth of 5.6% in 2011 on the back of elevated oil prices, but this figure will begin to tail off from 2013 onwards, in line with declining output from maturing fields.
We have revised up our forecasts for Gabon’s construction industry value, following a significant revision of historical data. Construction industry value has increased from our previous forecast of XAF192bn (US$0.4bn) to XAF302bn (US$0.6bn) for 2012. Our revised forecast suggests that by 2016, Gabon’s construction industry value will increase to XOF343bn
(US$0.7bn), with annual average growth of 0.5% forecast between 2012 and 2016.
Ghana BMI View: Ghana has a nascent oil and gas sector which, as it grows, will drive demand for auxiliary infrastructure. This is fully in line with BMI’s view that mining in frontier markets will drive investment in transport and energy infrastructure in order to support the demands of extracting and, crucially,
exporting minerals. A second, though certainly not secondary, driver of infrastructure development –
which is closely linked to the development of the oil and gas industry – is Chinese credit, which has buttressed infrastructure spending in other resource-rich countries in Sub-Saharan Africa (SSA).
Key themes for Ghana’s infrastructure sector:
- The merits of a US$3bn Chinese credit facility to finance gas pipelines and other infrastructure remain at the centre of political debate in Ghana, with the opposition New Patriotic Party (NPP)
aiming to renegotiate the loan if it to win a closely fought presidential election in December 2012. Though this development throws a spanner in the works for several projects that were to receive financing from this loan, it also highlights in our view the checks and balances in the Ghanaian policy making process that ensure a higher level of transparency compared to its peers.
- Due to the collapse of the STX housing project and the likely stall of the Chinese credit agreement, we have revised down our forecasts. We are estimating real construction industry value growth of 21.3% for 2011 and forecast a moderation in growth for 2012, with industry value set to expand by 10.5%. In light of the project’s demise – and given its significant size –
we have also downwardly revised our forecasts for the country's construction sector between 2013 and 2015. Buttressed by one of the strongest business and political environments in SSA,
Ghana has good prospects and will develop its infrastructure sector by attracting foreign expertise and capital. With a greenfield airport PPP in the planning stages – which is likely to act as a litmus test for the PPP model – the market could emerge as one of the most desirable infrastructure investment destinations on the continent.
- BMI holds a bullish outlook on Ghana’s macroeconomic prospects. The country's objective of securing a middle income level by 2015 (predicated on successful oil windfall management)
suggests Ghana is likely to rapidly outperform other markets in SSA.
- BMI's risk/reward ratings (RRRs) suggest Ghana has a favourable business environment, with scores for components such as the level of institutional quality and market orientation indicating the country is a clear outperformer in Africa and the Middle East.
- However, there are a number of risks, most notably the ‘oil curse’ trap, which has been responsible for the decay of governance and stability in several oil-rich West African markets,
particularly Nigeria and Angola. Efforts have been made to implement standards, checks and balances, to avoid problems arising from Dutch Disease, rent-seeking behaviour and the entrenchment of patronage networks. SHOW LESS READ MORE >
BMI Industry View 5
SWOT Analysis 7
Gabon Infrastructure SWOT 7
Ghana Infrastructure Industry SWOT 7
Market Overview 8
West Africa Competitive Landscape 8
Table: Domicile and Number of Contractors In West Africa, 2011 8
Building Materials 12
Global Overview 12
Regional Overview 15
Cement Forecasts 19
Table: Gabon Cement Production and Consumption Data, 2008 - 2016 19
Table: Gabon Cement Production and Consumption Long Term Forecasts, 2013 - 2021 19
Table: Ghana Cement Production and Consumption Data, 2008 - 2016 20
Table: Ghana Cement Production and Consumption Long Term Forecasts, 2013 - 2021 20
Industry Forecast Scenario 21
Table: Gabon Construction And Infrastructure Industry Data, 2008 - 2016 21
Table: Gabon Construction And Infrastructure Industry Long Term Forecasts, 2013 - 2021 21
Construction And Infrastructure Forecast Scenario 22
Table: Ghana Construction And Infrastructure Industry Data, 2008 - 2016 24
Table: Ghana Construction And Infrastructure Long Term Forecasts, 2013 - 2021 24
Construction And Infrastructure Forecast Scenario 25
Transport Infrastructure 26
Regional Transport Infrastructure Outlook And Overview 26
Major Projects Table – Transport 28
Table: Largest Transport Infrastructure Projects in West Africa 28
Energy And Utilities Infrastructure 29
Regional Energy And Utilities Infrastructure Outlook And Overview 29
Residential/Non-Residential Construction And Social Infrastructure 32
Regional Residential/Non Residential Building Outlook And Overview 32
Risk/Reward Ratings 37
Regional Overview 37
Table: Regional Infrastructure Risk/Reward Ratings 38
Gabon’s Risk/Reward Ratings 40
Ghana’s Risk/Reward Ratings 41
Global Overview 43
Industry Forecasts 50
Construction Industry 51
Data Methodology 51
Capital Investment 53
Construction Sector Employment 54
Infrastructure Business Environment Ratings 54
Table: Infrastructure Business Environment Indicators 55