Additionally, the high economic growth in this region is stepping up the need for urban transport networks.
New analysis from Frost & Sullivan (buildingtechnologies.frost.com), Growth Opportunities in East Africa's Construction Industries, finds that the total east African construction industry was valued at $5,994.3 million in 2009 and estimates this to reach $9,371.2 million in 2016. The countries covered in this research service are Kenya, Tanzania and Uganda.
"In 2009, most governments in the East African region allocated a large portion of their annual budgets to the construction of housing, roads, and civil works," says Frost & Sullivan Environmental & Building Technologies Research Analyst Derrick Chikanga. "Approximately 60 percent of Kenya's urban population resides in slums that are deemed unfit for human residence, thereby driving the need to provide more housing to the urban population and eliminate all slums around Kenya's urban centres."
Various institutional reforms to promote the development of the construction industries are being implemented in east Africa. For example, the Kenya Slum Upgrading Programme (KENSUP) is an initiative to eliminate the housing problem in Kenya. Such programmes are expected to address Kenya's infrastructural backlog and promote growth of its construction industry.
However, intense competition from Chinese construction companies and the high cost of borrowing are some of the major obstacles to the development of the east African construction industries.
"Chinese construction companies are largely preferred over local companies due to their comparatively low bidding prices," explains Chikanga. "Major contracts are awarded to these companies that make the construction business highly competitive."
Stringent building planning regulations and high infrastructural standards are boosting companies to implement best practices for greater chances of receiving contracts in the east African construction industries. Therefore, participants that offer superior construction materials are more likely to receive government contracts in the long run. Furthermore, the projected high economic growth is expected to ensure continued growth of the construction industries in east Africa.
"The East African construction industry has a poor reputation of producing sub-standard infrastructure," says Chikanga. "The implementation of best practises by utilising high quality construction material will give companies an edge and enhance their construction business."
Growth Opportunities in East Africa's Construction Industries is part of the Building Management Technologies Growth Partnership Services programme, which also includes research in the following market: South African Construction Industry. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
If you are interested in more information on this study, please send an email to Christie Cronje, Corporate Communications, at christie.cronje[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country.
About Frost & Sullivan
Frost & Sullivan (frost.com), the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents.
Growth Opportunities in East Africa's Construction Industries / M5A3