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The dynamism of the construction sector has been driving Ivorian growth for several years now. The sector now represents 4.3% of national GDP and 21% of secondary GDP. From 2015 to 2021, it grew by 5% per year, and the sector's consumption grew by 15% per year. This growth momentum in the sector is backed by solid fundamentals. Companies that compete there benefit from growing demand in all market segments, but also face rapidly growing competitive intensity and exogenous forces such as the COVID and Russian-Ukrainian crises that have impacted both supply, demand and financing conditions in the sector.
The construction sector relies on attractive fundamentals...
Public investments represent 6 to 7% of GDP. Public construction contracts now represent more than 3,000 billion CFA francs. Several structuring projects have stimulated and continue to impact the growth of the sector:
- Infrastructure works in Greater Abidjan (Y4, interchanges, 4th and 5th bridges)
- The work of the CAN; in particular the four stadiums and the surrounding infrastructures
- The revitalization of the social housing program, with a target of 20,000 homes
- The national road program supported by Agéroute, including coastal rehabilitation
- Major economic infrastructure projects such as the PK24 and Akoupé industrial zones, the Gribo Popoli dam or the Atinkou thermal power plant in Jacqueville
As for private investments, they represent 24% of GDP and are also growing strongly. They come from several market segments:
- Strong demand for residential real estate: the need is estimated at +62,000 homes per year, less than 10% of this need is currently served by supply.
- Strong demand for commercial real estate with 6,000 - 7,000 business start-ups annually, including 700 new manufacturers. We list nearly 70 commercial real estate projects in commercial hubs in Abidjan in 2023 (Sources: OnPoint Analytics Geographic Survey Base, 2023 Commercial Real Estate Report).
- A trend towards the formalization of commerce through the GMS (Large and Medium Surfaces) segment, which has been modernizing large-scale distribution since 2012. Two new major shopping centers are under construction in the Cocody area.
- The rapid development of the mining and oil sector with the discovery of the Whale deposit by the Italian ENI and the world-class gold deposit discovered in the departments of Kani and Dianra.
The market structure is constantly changing
At the same time, the structure of the market and the game of players is constantly changing. Between 2015 and 2020, 3,053 construction companies were created. Among the most pronounced trends, we note:
- Increasing competitive intensity with the entry into the market of major players from the Gulf countries, Europe, Maghreb, Turkey, Lebanon and China
- Increased customer sophistication that raises standards
- The emergence of integrated actors from all levels of government on major projects
- The industrialization of the concrete sector and the modernization of construction techniques in general
The sector is impacted by exogenous factors including:
- The COVID-19 crisis, which resulted in the slowdown of major projects, as well as significant inflation in input costs; factors that contributed to the weakening of the fabric of existing SMEs
- The growing importance of energy savings and environmental constraints in the construction of buildings (green building)
- The evolution of regulations in the real estate sector, which is increasingly restrictive
- The tightening of the market - extending payment terms and slowing investment growth - due to the challenge of financing the state budget in a global context of the Russian-Ukrainian crisis
- Increase in rates and the continuation of the implementation of Basel regulations in the banking sector, which will impact the availability and conditions of credit for SMEs.
This environment is forcing SMEs and large companies in the sector to completely rethink their management systems. Indeed, to take advantage of emerging opportunities, they will have to adopt positions and implement strategies that revolve around the themes illustrated below:
To meet these challenges, five success factors should be explored by companies in the sector:
- Upgrade their operating model with a focus on the efficiency of their operational processes
- Put digital technology at the center of their operational transformation by investing in integrated management systems (SGI/ERP)
- Investing more in their human capital
- Rebuild their banking relationships and better study the financing tools made available to them by financial institutions
- Integrate market intelligence and intelligence into their decision-making processes as well as their commercial approaches in order to take advantage of market opportunities
Choisir son système de gestion intégré
Pourquoi les entreprises basées en Afrique choisissent l'ERP OBC pour réusir leur transformation digital?
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