COMMENT
POLITICAL CHANGE
A BOOST TO BUSINESS
T
he political change in southern Africa
has resulted in renewed optimism.
Sweeping changes across the whole
continent, in fact, bodes well for the
construction and infrastructure sectors and
suppliers in the value chain – including quarries
and cement companies – should keep an eye on
developments in West and southern Africa.
Liberia and Sierra Leone’s economies are
expected to grow after the appointment of
new leaders, however, recent developments in
southern Africa promises exciting developments.
South Africa, Angola and especially Zimbabwe
are expected to bloom over the next three or four
years. The Zimbabwe government has awarded
more than 100 new exploration licenses to
various mining companies over the past three
months, and a host of mines (especially in the
battery mineral space) are about to be developed.
This naturally means that new infrastructure
will need to be constructed and – with the
commodity cycle on the rise and South Africa
and Angola joining the race to lure investors – it’s
starting to look rosier that it did a year ago.
Despite Trump’s and China’s trade war,
the global economy is in a growth phase, and
alongside that, the appetite to take on new
infrastructure projects. This is well reflected in
the 2017 results released by the leading global
cement companies recently. Last year was a year
of growth for most of them. HeidelbergCement
saw its revenues advance by 13.8% year-on-
year, while China's Anhui Conch reported
sales growth of 34.7%. Nigerian giant Dangote
recorded an improvement in revenue of 31%
while Cemex, Buzzi Unicem, Vicat and CRH all
saw more marginal expansions of between two
and 5.1% year on year. The only major to report a
fall in sales revenue was LafargeHolcim, dipping
2.9% as its cement volumes contracted by 10.2%
year-on-year to 209.5Mt.
Much of the growth seen by the leading
players is driven by a strong US market and
the ongoing recovery in Europe. Although the
figures for Africa in 2017 were not as good as
expected, this is bound to change as the political
winds of change start making an impact.
Predictions are that strong GDP growth and new
housing projects are set to bolster the African
markets. Higher energy and raw materials prices,
however, remain an ongoing challenge.
In 2017 the African cement market was
dominated by falling demand in Nigeria, where
Dangote saw its cement volumes decline by
15.9% year on year, as consumer spending
tightened, despite the country coming out of
recession in the quarter two of 2017. South
Africa's economy also remained subdued,
leading to muted activity in the domestic cement
market. Elsewhere, Cameroon performed well
with cement consumption driven by housing and
infrastructure projects, while Ethiopia saw its
construction sector boom, fuelled by the housing
market with 2.4 million homes due to be built
between 2015 and 2020.
Meanwhile, in South Africa, the construction
sector continues to outperform the economy
by a considerable margin, with the Afrimat
Construction Index (ACI) having expanded by
25.4% since the third quarter of 2010 (the base
period). This is substantially higher than the rate
of growth of 15.8% for the economy over this
period (in real terms).
The ACI is a composite index of the level of
activity within the building and construction
sectors, compiled by renowned economist
Dr Roelof Botha on behalf of Afrimat. Botha
says the composite index provides a balanced
and realistic view of the level of activity in
the construction sector as it evens out the
contradictory trends of conditions in the sector
often portrayed by the individual indicators that
comprise the index.
According to Botha, improvement in the ACI
bodes well for the sector’s growth prospects
in 2018, particularly due to the change in the
country’s political leadership. ■
Leon Louw - Interim editor
[email protected]
QUARRY SA | MAY/JUNE 2018 _ 1