REGIONAL OVERVIEW

Africa

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OPPORTUNITIES

Growth opportunities beckon as Africa builds stronger foundations for investment

The growth potential of leading African economies is widely discussed and there are plentiful signs for optimism across the region. Although key markets like Nigeria continue to grapple with local economic instability – reflected in significant cost inflation in dollar terms (25.0 percent) connected to currency depreciation – the experience on the ground for most investments is by comparison more stable. Against this backdrop, there’s a growing opportunity to drive investment that supports economic diversification.

Good labour availability and access to materials have maintained low construction costs at an average of just US$1,188 per m² across the continent, with inflation in most locations manageable at low single figures. The challenge for stakeholders to tackle is therefore less around cost and instead around detailed choices over labour and logistics – making sure skills and materials are directed to where they are needed.

Breakdown data

Data: Tendering conditions

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Data: Key challenges

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Data: Supply chain

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Data: Labour

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Data: Digital (BIM)

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Top performing sectors

Residential and social housing

Commercial office development

Data centres

Navigating politics and policy – both in region and further afield

Africa has a comparable luxury of not being closely tied to American imports, limiting the expected effect of global trade negotiations. There may be specific impacts, such as the automotive market, which is strong in South Africa, or some moves to increase domestic refinement of materials like steel. However, tariffs are unlikely to have a significant short-term impact on the construction sector.

By comparison, project teams are mostly focused on navigating local conditions. Red tape and uncertainty around economic and political instability remain two of the most prominent barriers to investment and top our table of challenges for the region. Sectors that tend to spend in dollars, such as data centres, are less exposed to instability in local economies.

INSIGHT "Red tape and uncertainty around economic and political instability remain two of the most prominent barriers to investment and top our table of challenges for the region."

Mixed signals across key South African cities

South Africa, traditionally one of the strongest African construction markets, is seeing the benefits of overall economic recovery and a government of national unity, though inflation driven by high fuel prices remains a concern. Government and private investment in mixed-use regeneration, education, residential housing and energy, and power infrastructure is creating opportunity.

However, our data points to an uneven market across the major cities in the Rainbow Nation. Costs in Cape Town sit at an average of US$1,231 per m², rising at a rate of 9.0 percent through 2025. Increased competition for work in Johannesburg, by comparison, means the rate of construction cost inflation is set to fall this year to 3.2 percent, compared with 7.4 percent in 2024.

Foundations for growth – clean power and social infrastructure

Access to sustainable and resilient power is a high priority for markets worldwide, and an area where Africa sits in a position of strength. Government spending on renewable energy and grid resilience in east Africa is helping to keep power costs low – attracting energy-intensive sectors including data centres and advanced manufacturing. In Kenya, where costs in the capital average US$834 per m², this power availability is combining with a stable currency and low import duties to draw in investment.

Rwanda and Zimbabwe shift the model

Clean power isn’t the only way government investment is setting African countries up for success. In Rwanda, despite decades of instability, the government is embracing modernisation and urbanisation, including a focus on affordable housing and infrastructure. Bolstered further by further by a 21% increase in government spending announced in May 2025, the country remains the second most inexpensive construction market in Africa (US$979 per m²). This investment is providing a bedrock of construction work that’s strengthening supply chains, upskilling labour and encouraging new businesses to come to the country – fuelling further growth. So far, these trends sit largely in balance, with steady and a slightly falling rate of cost inflation forecast at 5.0 percent through 2025 and 4.0 percent in 2024.

There are also lessons to be learned about diversification from countries that have remained too reliant on specific industries. The global diamond downturn has impacted Botswana – which relied on diamonds for over 70 percent of exports and almost 40 percent of government revenue – particularly badly, leading to a general economic slump. On the other hand, Zimbabwe, which invested in recent years in a broader set of markets from tourism and leisure through to infrastructure, is expected to continue on its growth path despite having by far the highest costs in the region – US$2,042 per m², over US$800 more than Cape Town (US$1,231).

Increasing capacity and widening the supply pool

The counterpoint to growth is that it comes with supply chain challenges – making labour and logistics the priorities for clients.

The region has often seen relatively high competition for work, but important shortages are now emerging. A limited number of top-tier contractors able to take on the bigger programmes, notably in South Africa, risks reducing tender price competition. High unemployment could set the stage for more local retraining and upskilling to fill the gap in the market, but this is not yet commonplace.

A wider view on procurement practices – drawing on global experience – can help mitigate these challenges as they emerge. There’s also an opportunity for client organisations to take a more active role within this area to fill the gaps where there are shortages of top-tier contractors – directly investing in training local skills or bringing in international expertise where needed.

INSIGHT "With a growing population, significant advancement in clean power and exciting opportunities in sectors from tech to transport and rare earth metals to residential housing, Africa is well placed for investment. Now is the moment to get ahead of the pack."

More widely, this sits alongside a broader need for programmatic thinking to de-risk investment when taking greater ownership of construction infrastructure. Historic underinvestment in logistics networks remains a challenge, especially for large-scale investment in manufacturing and industry.

If these challenges can be managed, then the outlook for construction across the region is evidently brightening.