Construction sector in the Sub-Saharan Africa (SSA) is set undergo a region-wide deep recession this year as a result of the COVID-19 pandemic driven by several headwinds. This is according GlobalData a leading data and Analytics Company.
Yasmine Ghozzi, Economist at GlobalData pointed out that construction output growth forecast for Sub-Saharan Africa this year has been cut down to 4.9% from previous forecast of 0.7% as a result to policies imposed to contain the spread of COVID-19.
“The closure of borders adversely affecting trade flows and tourism, the collapse of global demand and the disruption of supply chains have also impacted the SSA region. The lingering effects of COVID-19 on travel, trade and investment, along with governments’ limited fiscal space and soaring debt levels, will still be felt in 2021,” said Yasmine.
Output growth forecast
In Kenya, GlobalData has cut its growth rate for Kenya’s construction sector to 2.5% from an earlier estimate of 3.1% for 2020 – given disruptions to trade and commerce, a collapse in tourism, weaker investment and faltering consumption due to heavy job losses and curfews.
Other countries that have been affected include; South Africa whereby construction output in Q2 2020 and a strict six-week lockdown, the country’s construction industry is forecast to contract by 14.3% in 2020.
GlobalData has further cut its growth rate for Nigeria’s construction industry to -12.8%, and foresees that weak public investment alongside limited foreign direct investment (FDI) amid the global economic downturn is pushing Nigeria into a steep recession. Nigeria’s economy contracted by 6.1% year on year in Q2 2020 – the steepest in the last ten years. While the lockdown has been eased in the wake of heavy economic losses, continued rise in cases especially in Lagos meant the local economy is yet to fully re-open.
On the bright side Yasmine Ghozzi, said that construction output is expected to grow by 4.6% in 2021, as, once the industry is permitted to operate at normal or near-normal levels, there could be a sharp recovery in output levels compared to periods when works were not permitted or were severely restricted. This will particularly be the case in when comparing Q2 2021 output levels with those in Q2 2020 in South Africa and Nigeria, where activities were completely halted in time of imposed strict lockdown. However, despite the expected growth in 2021, output will still be below 2019 levels.
