Massive boost for building material manufacturers.
As construction gains momentum across Africa, the demand for building materials Building materials used in the construction industry to create .
These categories of materials and products are used by and construction project managers to specify the materials and methods used for . is giving a much-needed lift to Africa's materials manufacturing sector. Demand for a wide range of building materials, from cement and roofing to pipes and door frames, and the profit-making opportunities for companies that produce them, has increased.
The expanding catalogue of fast-growing building manufacturing firms on the continent is testament to the intensification of activity in the sector. Lafarge, a leading producer of building materials, especially cement, is a major example of a successful company targeting the mass market for building supplies. The firm reported an increase in sales of almost 25% in the Middle East and Africa in 2010 and has installed around 25 plants in 13 countries, representing around a quarter of total cement capacity on the continent. In December, the company launched a new cement production line in Nigeria, effectively doubling capacity to 4.2 mt. In August 2010, the company also doubled its production capacity in Uganda to 850,000 tonnes per year.
Julius Berger Nigeria Plc Julius Berger Nigeria PLC is a German construction company in Nigeria, a subsidiary of Bilfinger Berger. It is known for constructing most of Nigeria's infrastructure, such as the Third Mainland Bridge, major expressways, and even some residential buildings for the Chevron Nigeria , Nigeria's leading construction firm, which also manufactures building supplies, has been experiencing rapid growth as well. It projects a 46% rise in profit levels in the first quarter of 2012, with an impressive increase in net income year-on-year, based on first quarter figures, from N78im ($5m) in 2011 to N1.14bn ($7m) in 2012.
At the other end of the spectrum, higher-end building materials manufacturers have also been prospering. One such company is AHI AHI,
n.pr See Aviation Health Institute. Roofing Ltd, a subsidiary of one of New Zealand's biggest companies, Fletcher Building Fletcher Building Limited (NZX: FBU, ASX: FBU) is currently the second largest listed company in New Zealand, after Telecom New Zealand, with a market capitalisation of over NZ$4.5 billion. Ltd. AHI Roofing, under the brands Decra and Gerard Roofing, is the world's leading steel roof tile manufacturer. The company first entered Africa in 2000 without any sales history. By 2011, it reached sales of $3om. The company projects doubling this figure within three and a half years by increasing its market share in existing markets and extending its operations into French and Portuguese-speaking countries.
Moreover, although firm figures on the production of the wide range of different building products being used within individual countries are not available, statistics on the processing and production of a few key building materials offer a strong indication that the sector is experiencing healthy levels of growth. For example, the production of cement is also booming in Africa (see the cement manufacturing section, page 38). In addition, although the production of steel, a core construction material, is still largely limited to South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. , production is nonetheless accelerating in many major African countries to meet construction demand.
In Nigeria, production has been rising modestly in recent years. Although the country's two leading steel producers, Ajaokuta Steel and Delta Steel Company, are not working at full capacity, Joseph Odumodu, director general of the Standards Organisation Nigeria, recently stated that Nigeria is close to achieving self-sufficiency in the production of reinforcement steel bars, a key building material.
The Angolan government has also demonstrated strong interest in boosting the country's steel sector; the sector has seen massive improvement in recent years, since the privatisation of Angola's two largest steel processor, Fabrica de Tubos de Angola (FATA) and Metalurgica de Angola. Steel production is also being expanded by the Kenyan government, which has plans to open a new Sh5bn ($44m) plant. The production of galvanised sheets in Kenya, another vital building material, has also steadily increased in recent years, from 188,260 metric tonnes in 2007 to 201,410 metric tonnes in 2010.
Local or foreign?
The encouraging progress that Africa is making in manufacturing for construction industry is in sharp contrast to the struggles of other African manufacturing sectors, from textiles to sugar production.
The strong demand for materials because of high need for new infrastructure is a fundamental reason: "In Africa there is an immense need for building materials," says Claire Mathieu, a group communication manager at Lafarge. According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. industry experts, the transport costs that can be saved from local production are also significant: "If you take cement, for example, Dangote has just built the biggest cement factory in Africa in Nigeria and it's a relatively low-value high-bulk product that you get much better returns from when making it locally rather than from importing it," explains Collins of African Supplies. "So you can save on a lot of the costs, a large percentage of which would be transport, by manufacturing locally. Clay roofing tiles or cladding are low-value high-weight so transport plays a large part in the cost; it makes much more sense to manufacture that locally,"
However, the allure of local manufacturing has its limits for more complex products: "Looking at our products which are steel based, in a 20-foot container you get 3,000 square metres of roofing so the freight proportion of cost is relatively low - it can be between 6 and 9%. So in order to make a saving, you would need to be making considerable savings on other parts to justify manufacture," says Collins. "There will always be an equation depending on the material that you are using to warrant whether there is a cost benefit or not."
It is also important to note that the boom in manufacturing building materials does not extend to the whole of Africa; in South Africa, a more mature market for the building materials industry, manufacturing is suffering as construction has slowed. The steel industry has suffered some significant blows in recent times. ArcelorMittal, one of the country's leading steel manufacturers, posted a plummeting of operating profits by 86% in 2011, due to hikes in electricity and raw material prices. Highveld The Highveld is a high plateau area of South Africa which includes the largest metropolitan area in the country, Greater Johannesburg Metropolitan Area. The area of the Highveld is the size of Belgium, starting east of the Johannesburg centre and stretching to the Swaziland border, Steel, another leading steel firm, similarly recorded a R1441TI ($14.3m) loss in its June 2011 interim report.
Moreover, the building materials manufacturing sector as a whole on the continent faces a number of challenges. In parallel with the construction industry, the shortage of skilled and semi-skilled workers is a headache for the manufacturing industry. According to a report published by the Construction Industrial Development Board (CIBD CIBD Chronic Inflammatory Bowel Disease
CIBD Central Iowa Barn Dance ): "High levels of skills, technical and organisational capability, and systematic sophistication so·phis·ti·cate
v. so·phis·ti·cat·ed, so·phis·ti·cat·ing, so·phis·ti·cates
1. To cause to become less natural, especially to make less naive and more worldly.
2. available in most Asian nation Noun 1. Asian nation - any one of the nations occupying the Asian continent
country, land, state - the territory occupied by a nation; "he returned to the land of his birth"; "he visited several European countries" are almost absent and have to be imported by African countries."
Some also point to the need for more investment in research and development. In addition, experts attest that the transport of raw materials for manufacturing and the movement of building products to construction sites still pose a serious challenge in Africa, where the development of road transport is still limited. The high price of building materials is another quandary. According to experts, the factors which converge to push prices up are numerous. Rising energy prices, labour costs and high local electricity and crude oil costs are frequently cited as responsible. The volatile prices of the initial raw materials from which building products are made is also problematic; because of world market fluctuations the cost of materials such as copper and aluminium can spike abruptly, which can be hazardous for the sector. The lack of business confidence and general feelings of uncertainty within the sector is another frequently cited stumbling block stum·bling block
An obstacle or impediment.
any obstacle that prevents something from taking place or progressing
Noun 1. , which hampers the production of materials. Some expert bodies suggest governments and authorities could supply higher quality and more detailed information on future infrastructure projects as a solution.
Another is the lack of confidence that manufacturing companies have in the likelihood of infrastructure programmes being followed through successfully, especially those which are publicly funded. In countries such as Angola or the DRC DRC Democratic Republic of Congo
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DRC Director(ate) of Reserve Components
DRC Disability Rights Commission (United Kingdom) , where governments have a mixed reputation for repayment for projects or completion of projects, this may pose a serious challenge in future.
It is also an issue for more advanced African countries. Commenting on South Africa, the CIBD report states: "Specifically, there is concern whether the public sector has the necessary procurement and delivery capacity to roll out the planned infrastructure investment programme as envisaged, and concern about the ability of the logistics infrastructure (and, in particular, transportation) to cope with demands placed on it."
Some experts also suggest that the industry faces serious challenges in terms of quality standards. With financial pressures on firms and governments to keep the cost of projects down, the desire for cheap building materials, which may not be of a sufficient quality, is high. "The challenge for the building industry and building products within the industry is not to be chased down the price route, says Collins. "I think you can see construction products in Africa have already been chased down that route. So far a lot of the products supplied are not fit for purpose. For example, a lot of plumbing products are almost guaranteed to leak. There isn't the better available product in the market because the market is being run by trading companies," he says.
Even in South Africa, where a sophisticated set of national standards have been put in place, concerns have been raised that the standards are not being implemented through inspections and enforcements adequately. As the demand for building materials has increased, discussion of the extent to which material should be allowed to be imported into African countries from abroad has also intensified.
For example, the Nigerian Society of Engineers (NSE NSE - Network Software Environment: a proprietary CASE framework from Sun Microsystems. ) called for a blanket ban on the importation of construction materials. In addition, the Angolan government has still not lifted its ban on cement imports from abroad. Nonetheless, industry experts maintain that the need for imported products to fill capacity shortfalls is still a reality, which prevents governments from implementing bans on a larger scale.
RELATED ARTICLE: Mambilla hydroelectric power hydroelectric power: see power, electric; water power.
Electricity produced from generators driven by water turbines that convert the energy in falling or fast-flowing water to mechanical energy. project, Nigeria
The Mambilla hydroelectric project, if successful, will result in the construction of the largest dam in Africa in terms of capacity. It should provide up to 2,600MW of energy by harnessing energy from the Mambilla plateau. The potential reservoir volume is estimated to be 4,100 cubic metres.
The project is estimated to cost around $lbn. There is heavy Chinese involvement, both in terms of the project's financing and also in terms of the execution of the project (involved parties include China Exim Bank Exim bank
See: Export-Import Bank , China Gezhouba Group Corporation and China Geo-engineering Corporation). China's expertise in dam building, due to its successful construction of the Three Gorges Dam Three Gorges Dam, 607 ft (185 m) high and 7,575 ft (2,309 m) long, on the Chang (Yangtze) River, central Hubei prov., China, 30 mi (48 km) W of Yichang. The largest concrete structure in the world, the dam was constructed from 1994 to 2006. , along with its huge network of around 2,000 dams, is widely seen to be a serious advantage. Nigeria's funding is from its Subsidy Reinvestment Reinvestment
Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash.
1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. and Empowerment Programme (SURE).
It is believed that the project would help address Nigeria's power shortage issues and promote the country's energy security. Other advantages that have been cited include increased opportunities for fishing and agriculture, thanks to a more abundant water supply, and the encouragement of the establishment of industry nearby, due to the newly available, reliable energy supply.
However, questions have been raised about whether the project will ever reach completion: there have been delays to its initiation.
RELATED ARTICLE: Sudan-Chad Railway Line
The $2bn Sudan-Chad railway line project will link Nyala nyala: see bushbuck.
Slender antelope (Tragelaphus angasi) of South Africa having a crest of hair along the back from head to tail and standing 3.5 ft (110 cm). , the capital of South Darfur
South Darfur (Arabic: جنوب دارفور; transliterated: Janob Darfor) is one of the 26 wilayat or , Sudan, with landlocked Chad's capital city, N'Damena.
This constitutes a massive overhaul for existing network lines - nearly three quarters of Sudan's railway tracks are more than 80 years old and have suffered from decades of underinvestment, after a boom period in the 1960s and 70s.
Trains will be able to reach speeds of 120 km per hour on the new track. It is expected to boost trade between the two countries and deliver a much-needed economic lifeline to landlocked Chad. The country lacks access to the sea and the new network will allow goods to be transported to and from the Red Sea quicker and more cheaply. The project is being partly funded by the Export Import Bank of China.
If successful, the project will potentially reinforce the improvement of relations between Sudan and Chad, which have, in the past, engaged in conflict against each other (2005-2007) and supported hostile rebel groups against each other.
East and Central African Central African may mean:
The value of the project is $4,7bn and construction will commence in 2014.
Another railway line, the Tanga-Arusha-Musom-Kamapala line, which will trace its way through Uganda and Tanzania, is also under way and is set to be finished by 2013.
The Kenyan government has plans to open a new Sh5bn ($44m) steel processing plant