Skip to Main Content
Access your saved content
South Africa’s construction industry faces challenges from subdued margins, increased competition, higher volatility, uncertaintly, and weak growth. Increasingly, firms are looking to emerging opportunities in sub-Saharan Africa to establish high-performance alternatives for much-needed growth.
Accenture explores how such opportunities’ potential can be unlocked, as sub-Saharan construction industry sector investment also come with risks that needs careful “no-regret” planning and “future-proofing” strategies.
With construction investment opportunities in South Africa being forecast as progressively volatile and weak, seeking growth prospects in sub-Saharan countries is an increasingly attractive strategy. With that strategy, however, come other risks, so careful planning needs to be in place to mitigate challenges along governance, supply chain, and talent lines.
In addition, firms seeking emerging opportunities in sub-Saharan Africa should familiarize themselves with Accenture’s research on four future construction market scenarios and begin planning for each potential outcome, all while favouring small-scale strategic investments over large ones as a way to stay nimble in a rapidly shifting market.
South Africa is facing decreasing appeal for construction project investment following a decade of successful growth due largely to government spending, 2010 World Cup preparations, and booms in commercial and residential construction.
The focus is shifting to opportunities in sub-Saharan Africa. Historically categorized by volatility, the region has benefitted, recently, from large-scale projects such as airports, ports, dams, and rail. That growth has been tempered by much uncertainty. Legal and political challenges in certain sub-Saharan countries have made it more difficult for businesses to thrive. Many parts of the continent face difficulties keeping up with demand for specialized skilled labour, are hampered by supply system bottlenecks, and continue to see infrastructure strains from migration, urbanization, and population growth.
The good news is firms can achieve high performance in the African construction sector with a well-defined growth and investment strategy. That strategy involves applying three critical moves: creating a governance model for risk management, optimizing the supply chain, and enhancing workforce skills. Once those factors are in place, a robust response plan for alternative futures can be implemented.
Construction opportunities in sub-Saharan Africa can open up high-performance growth, but as a region with a traditionally volatile past, it is prudent to adhere to a forward-thinking strategy to maximize that growth and create systems capable of adapting to challenges in the region.
First, firms should build a foundation of “no-regret moves”:
Enterprise Risk Management. Margin increases can result from a systematic approval process for tenders, clearly defined standardized processes for risk management during construction and execution, and well-defined policies for document retention and claims management.
Supply Chain Optimization. Avoid rising construction costs with a well-balanced sourcing and procurement model with local and global dimensions and a total cost of ownership approach.
Talent Enhancement. Hire, develop, and retain the best talent through the implementation of talent strategies and operate globally through multi-lingual capabilities.
Following foundation building, firms should apply “future-proof” strategies for alternative scenarios:
Selective small-scale strategy: Cautious small-scale investments can act as platforms for later large-scale investment if markets turn favourable along the lines of “future-proof” strategies.
October 17, 2013
Skip Footer Links