The construction sector in Sub Saharan Africa is on a growth trajectory but a number of challenges stand on the way, key among them is security threats, a new report has shown.
The report by Fitch Solutions indicates that a number of security threats in Sub-Saharan Africa in recent months have highlighted the risk posed to the construction sector from violent protests, terrorist attacks and insurgencies in the region.
In frontier markets such as Sudan, Zimbabwe,Mozambique and Somalia, construction projects have been targeted specifically, leading to company withdrawals, disruption and delays to completion timelines.
In other cases, a more general rise in violence will serve to deter foreign investment in the construction sector.
“We expect security threats to remain a major downside risk to infrastructure development in SSA over coming years,” reads the report in part.
“This is a trend which we expect to continue in some key and frontier markets despite a general improvement in the security environment across the continent over the last decade,” the report adds.
According to Fitch Solutions, construction projects are also a major target for terrorist groups in SSA. Large-scale developments which represent flagship projects for governments are an attractive target for separatist or terrorist organisations, particularly as they are often poorly protected by security forces and located in remote areas.
Construction workers on such projects are vulnerable to abduction for ransom and other security threats, particularly if they are non-citizens, while high-profile engineers or managers may be targeted for assassination.
In Somalia for example, a manager of United Arab Emirates-based DP World Company was shot dead in Bosaso port, in northern region of Puntland by suspected Alshabaab militants. Mr Paul Anthony Formosa construction project manager for DP World.
In February 2019, Strabag and Aveng announced that they were terminating their joint venture to construct the USD130m Mtentu Bridge in South Africa due to local opposition, including protests and violent threats, based on the perceived lack of local jobs created by the project.
The net effect of such security threats according to Fitch Solutions is that they significantly increase insurance premiums and security costs for foreign investors considering involvement in such projects.
The Niger Delta Avengers for example represent the clearest example of this, with their activities against the oil and gas sector in Nigeria causing severe disruption in 2016, while terrorist groups such as al-Shabaab remain active in East Africa and have the potential to target construction works in the region.