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SOTM March. Kenya’s construction and real estate sector

africon GmbH was contracted by one of our clients and we successfully conducted a research on the aluminium industry in Kenya. We found out that the key drivers of this industry are the construction and real estate sectors in Kenya. Findings revealed that these sectors have experienced positive growth rates within the last five years and are expected to expand even further.

Kenya’s construction sector expanded by 8.6% and contributed approximately 6% to the country’s GDP in 2017. It is also one of the major sectors attracting foreign investors to the country. 

According to Deloitte’s construction trends report, Kenya has remained the leading country with the highest number of projects in East Africa for four consecutive years, with projects increasing by 78% from 23 projects in 2017 to 41 projects worth $38.2 billion in 2018. The major construction projects are in real estate, energy and power, and transport, sources also reveal that the Kenyan government is spending billions of dollars on transport projects as Kenya is expected to become the logistics hub of East Africa.

Challenges to this Kenya’s construction sector include: the frequent use of substandard materials, long procurement procedures, low project completion rates, and low technological knowledge. Despite these apparent challenges, continuous growth is expected in the sector as the Kenyan government plans to build 500,000 houses by 2022, and also to reduce corporate tax for developers who construct at least 400 units per year.

Kenya’s real estate sector is the 6th largest contributor to Kenya’s GDP, and was valued at $5.5 billion in 2017. The sector expanded by 6.1% in 2017 compared to 8.8% in 2016, and this slowed growth rate is due to the elections and reduced credit supply (as a result of capped interest rates). The construction of new private residential buildings in Nairobi increased from 9,054 in 2015 to 10,002 in 2016, while new public residential buildings rose from 45 in 2015 to 1,062 in 2016. Some of the challenges faced by Kenya’s real estate sector include inadequate sources of funding, high land costs, and infrastructure development costs. However, government initiatives such as digitization of the land ministry, removal of land search fees, and inclusion of affordable housing as part of Kenya’s big four agenda is likely to boost real estate development over the next few years

Slide of the month showing the growth.

For more information, check out our other slides of the month and do not hesitate to contact us.

East african steel industry

africon’s editorial publication in the ITA journal

last October africon published its first editorial addressing the future of the Steel industry in East Africa at the 3rd journal edition of the International Tube Association. The article started by highlighting how East Africa distinguishes itself by economical growth and political stability in the region and being the least dependent on primary commodities such as gold or oil in comparison with other african regions. The East African region was projected to capture the highest regional economic growth over the past year in Africa. The article then went in depth to analyse those macro-economic factors and focused on the drivers of steel industry that promote economic growth in Africa and especially in East Africa.

Now you can read the full version of the editorial here or download it as a white paper

Automotive parts import Sub-Saharan Africa.

SOTM February. Automotive parts imports in Sub-Saharan Africa

africon conducted a market analysis on the automotive industry with specific interest in the automotive parts market in sub-Saharan Africa. Our focus was further narrowed down to the aggregate value of three main automotive service parts which are: Filters (consisting of air filters for internal combustion engines, as well as Oil or petrol filters for internal combustion engines), Spark plugs, and Brake parts. The total combined import value of these automotive parts in Sub-Saharan Africa was $753 million in year 2017. Brake parts recorded the highest import value worth $388 million which is 52% of the total import value of the three selected automotive parts combined, while spark plugs were the least of the imports valued at $58 million.

Based on our analysis of the available data on automotive parts imports in Sub-Saharan Africa, we found that South Africa, Nigeria, Angola, Kenya, and Ghana were the top five importers of filters, spark plugs and brake plugs into Sub-Saharan Africa in the year 2017. South Africa being the largest market, accounted for 47% of these automotive parts imports worth $355 million, while Ghana being the fifth largest market was worth $21 million.

The major export partners were China, Germany, South Africa, Belgium and USA. However, the data from year 2007 shows that Germany was the largest exporter of these automotive parts to the Sub Saharan Africa region until 2013 when China took over as the largest exporter to the region. Brake parts were also the largest exports (of the three parts) from China and Germany while Filters were the largest exports from South Africa, Belgium and USA.

SOTM. January

SOTM January. The automotive parts market in Nigeria

The Nigerian automotive industry appears to be an interesting market, as our research on the automotive parts market shows that the market size is worth USD 4.4bn or more.

The total vehicles in operation in Nigeria is currently estimated at 12.7 million, and Nigerian drivers spend an average of USD 350 on automotive parts per year.

Interviews conducted with various automotive experts in Nigeria also confirmed that the market for service parts accounts for the biggest share of the automotive market.

SOTM December

SOTM December. Aluminium market growth in Sub-Saharan Africa

africon recently conducted aluminium market research in Africa and this revealed that the Aluminium market in sub-Saharan Africa has been experiencing a steady growth in the past decade.

The major contribution to this, is the increased import of hollow profiles of aluminium alloys into Sub-Saharan Africa which has grown by 467%, from 23 mn tonnes to 107 mn tonnes between 2008 and 2017, compared to other profiles.

The non-alloyed profiles which has the lowest contribution seems to be dwindling in import size, as they only increased between 2009 and 2012, after which they began to decline.