GlobalData report says rising debt levels across Sub-Sahara Africa may stifle the growth of the construction industry in 2023.
The report by the data and analytics company showed that the construction sector in Sub-Saharan Africa grew by an estimated 1.7 per cent in 2022, compared to a growth of 3.2 per cent in the year 2021.
The report titled, ‘Construction market size, trends and growth forecasts by key regions and countries, 2022-2026’, also projected the industry to record a growth of 3.2 per cent in 2023 while stating that the significant downside risks persisted.
It revealed the region’s post-pandemic economic recovery had been halted since the second half of 2022.
The World Economic outlook of the International Monetary Fund predicted the Gross Domestic Product growth in Sub-Sahara Africa would remain subdued at 3.7 per cent in 2023 amid a deceleration to 3.6 per cent in 2022, with several countries in the region in debt distress condition or at high risk of debt distress, GlobalData said.
An analyst at GlobalData, Dhananjay Sharma, said, “With the gloomy economic backdrop, and additional challenges specific to the construction industry, notably high construction material costs, the region’s industry will remain subdued in the short term.
“Both public and private sector projects will face hurdles, with government’s revenue continuing to be directed at efforts to deal with immediate socioeconomic crises while high construction material prices will make projects unviable for the private sector.”
Sharma further added that the growth in the construction sector may pick up beginning from 2024 with the energy and utility sector outperforming others.
Sharma said, “In the short term, growth will be driven by increased activity in oil and gas projects due to continued higher prices, while longer-term investments will be driven by the shift towards green energy and the underlying potential of renewable in the region.
“Along with energy and utilities, investments in infrastructure and the institutional sector will be driven by the continued realisation of the inadequacies of the current transport and utility systems and education & healthcare facilities.”
Source: Punch Newspaper
