Africa Cup of Nations boosts Angola 1Q infrastructure results

Africa Cup of Nations boosts Angola 1Q infrastructure results
14 April 2010

A recent report on Angola’s infrastructure shows latest quarter saw activity in the domestic construction sector reach its peak on the back of the Africa Cup of Nations 2010 games. Although, held in January, the games are still providing a momentum for infrastructure projects and will push growth in the sector to 22.71% in 2010. 

Angola attracted international attention this quarter, as it hosted the 2010 games as well as the latest OPEC meeting, and both exemplified contradictions in a country that has become one of Africa’s leading oil exporters.

The games helped boost construction and tourism in Angola, while the fatal attack on the Togolese team in Cabinda demonstrated the continuing security risk in the country and marred its business environment. Meanwhile, Angola’s first-time hosting of the OPEC meeting illustrated the country’s increasing importance as an oil producer but also highlighted its lack of compliance with called for production cuts, partly as a result of its dependence on oil revenue for infrastructure development. In any case, Angola is set to continue as one of Sub-Saharan Africa’s growth areas.

South Africa-based Pretoria Portland Cement (PPC), saw increased demand from Angola between October and December 2009, compared with the same period in the previous year. While PPC expects regional demand to drop in 2010, with improvement expected in the following year, we see Angola’s construction sector growing to US$4.03bn in 2010. 

Much of this growth is a result of preparation for the 2010 games, from which impetus for overall infrastructure development is spilling over into subsequent years. Outside the hydrocarbon markets, Angola’s push to modernise its airports continues to drive its construction sector. A series of airports across the country saw progress in development in the latest quarter, while little or no activity was seen in the road, rail and port sub-sectors.

As this spill-over subsides beyond 2010, growth in Angola’s construction sector will drop in 2011 and ease YoY thereafter. We expect growth to decelerate sharply to 13.55% in 2011, from 22.71% in 2010. 

The growth of the country’s construction industry and wider infrastructure sector has been partly hinging on negotiations with the IMF, which has allowed consideration of infrastructure spending as it approved a US$1.4bn loan in November 2009. News of the loan came shortly before the government announced its aim to pay debt owed to construction firms beginning in 2010 after at least a year of deferred payments. While oil output is set to rise in the next several years, the country moves sluggishly towards becoming an electricity exporter and, although hydropower provides around 70% of the country’s total electricity supply, this source is still underdeveloped. After expansion in Angola’s construction industry drops sharply in 2011 compared to 2010, we expect the rate of growth to hover just above the 11% mark in 2012 and 2013, before easing again to 10.89% in 2014 when the sector will be worth US$9.86bn.

Source: Angola Infrastructure Report Q2 2010
( and OfficialWire)
Published under Cement News