Chinese projects in Africa primarily on infrastructure

CHINA funds about 4 percent of the infrastructure projects in Africa but constructs about 15 percent of the projects on the continent, according to Deloitte’s 2015 Africa Construction Trends Report.

However, JP Labuschagne, the Africa infrastructure and capital projects leader at Deloitte South Africa, said yesterday that China’s role in Africa varied considerably across the various regions on the continent.

Labuschagne said China was the owner of only one project in Africa but was funding 13 projects, and was heavily involved in the construction of 42 projects on the continent.

He said China was involved in 15 percent of infrastructure projects in southern Africa and was heavily involved in other regions, particularly in east Africa and central Africa.

The report said the government was the second-highest provider of funding after international development finance institutions, followed by the amalgamation of the participation of all singular countries’ financing, and then by China on a stand-alone basis.

This is the third edition of the report, which tracks infrastructure trends in Africa based on projects that are included on public databases, valued at more than $50 million (R719m) and in construction by June. The number of projects increased 17 percent to 301 this year from 257 last year with the total value of projects under construction increasing 15 percent year on year to $375 billion from $325bn.

The majority of projects fall into the transport (37 percent) and energy and power (28 percent) sectors, with water projects accounting for 8 percent of the total number of projects, mining 7 percent, oil and gas 6 percent and real estate 6 percent.

He said 63 percent of projects were old and ongoing while 37 percent were new projects, which represented good prospects for the future.

The report said anticipated challenges in terms of water security in Africa were not reflected in the investment volumes and neither was social development, which included health, education, water and sanitation, being prioritised at this level of capital expenditure in infrastructure.

Labuschagne said in compiling the report, they had seen the impact of the liquidity crunch and commodities downturn and how it had affected projects and expected this to have an impact on infrastructure projects next year and in subsequent years.

He said there had been a slowdown in the number of infrastructure projects in southern Africa to 109 this year from 124 last year, but the value had remained similar at about $140bn this year compared with $144bn last year.

However, Labuschagne said escalating prices for projects and changes in the value of currencies had to be taken into account. He said the number of new projects coming in the southern Africa market was also slowing down, with 75 percent of the 109 projects in the region being those projects that had been in the database for a while and only 25 percent were new projects.

He added that the southern African region had primarily been focused on energy projects but this had slowed to 34 projects this year from 44 projects last year and there had been an escalation in transport projects.

Labuschagne stressed the importance of transportrelated projects from an intraregional trade perspective.