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PRO€INVEST (www.proinvest-eu.org) est un programme de partenariat Union Européenne - pays ACP (Afrique, Caraïbes et Pacifique) développé et entrepris par la Commission Européenne au nom des pays ACP pour la promotion de l'investissement et les transferts de technologies dans les entreprises des secteurs les plus porteurs dans les pays ACP à travers le renforcement des organisations intermédiaires ACP du secteur privé et le développement des partenariats interentreprises. Sa mise en oeuvre est confiée au Centre pour le Développement de l'Entreprise (CDE) sous la supervision de l'Office de Coopération EuropeAid de la Commission Européenne. Le Centre pour le Développement de l'Entreprise (www.cde.int) est une institution du Groupe des Etats ACP (Afrique, Caraïbes et Pacifique) et de l'Union Européenne, dans le cadre de l'Accord de Cotonou. La mission confiée au CDE par les dispositions de l'Accord de Cotonou est de contribuer à la lutte contre la pauvreté par la création de richesse, en épaulant les différents acteurs du secteur privé des pays ACP notamment avec l'appui des entreprises des pays de l'Union Européenne. Le CDE apporte son appui à la création et au développement des entreprises ACP ; à des institutions intermédiaires telles que les organisations professionnelles et/ou sectorielles ; aux sociétés de conseils.

Europe and the new partnerships for the Construction and Civil Engineering sector in Africa

(Central and West Africa – CWA)

State of the art perspectives and strategies

December 2006

BERNARD KRIEF CONSULTANTS /80

The present document has been prepared by the company Bernard Krief Consultants.

The view and opinions expressed herein do not necessarily reflect those of Pro€Invest – CDE.

Pro€Invest – CDE does not guarantee the accuracy of the data included in this document, in whole or in part, in

whatever form, is authorized except for commercial purposes and provided credit is given to the source (Pro€Invest – CDE 2006 ©)

TABLE OF CONTENTS

1.

OBJECTIVE____________________________________________________________ 4

2.

INTRODUCTION_________________________________________________________ 6

3.

A NEW DEAL FOR CONSTRUCTION AND INFRASTRUCTURE IN AFRICA_______________ 7

3.1. Infrastructure Consortium for Africa (ICA)__________________________________ 9

3.2. The EU-Africa Partnership on Infrastructure _______________________________ 10

3.3. The EU Infrastructure Trust Fund for Africa _______________________________ 12

3.4. The Africa Catalytic Growth Fund of the World Bank Group__________________ 13

3.5. Equity Funds __________________________________________________________ 14

4.

MARKET, PRESENT AND FUTURE__________________________________________ 15

4.1. Past and present situation in the C&CE sector in CWA countries_______________ 17

4.2. Present situation and prospects in Infrastructure and Civil Engineering _________ 18

4.2.1. Road Infrastructure _________________________________________________________ 19 4.2.2. Railway infrastructure _______________________________________________________ 21 4.2.3. Port and airport infrastructure ________________________________________________ 22 4.2.4. Water infrastructure_________________________________________________________ 23 4.2.5. Energy infrastructure ________________________________________________________ 24

4.3. Present situation and prospects in residential and non residential building _______ 25

4.3.1. Housing sub-sector __________________________________________________________ 25 4.3.2. Functional building __________________________________________________________ 30 4.3.3. Building materials ___________________________________________________________ 32


5.

ACTORS AND ROLES IN C&CE IN CWA____________________________________ 35

5.1. Construction companies _________________________________________________ 35

5.2. Engineering and design main key players ___________________________________ 39

5.3. Housing main key players ________________________________________________ 40

5.4. Intermediary organisations in the C&CE sector _____________________________ 41

5.5. Other relevant actors in C&CE ___________________________________________ 43

5.6. Relevant non EU players and regional Dynamics_____________________________ 45

6.

POSSIBLE SETUP FOR PARTNERSHIPS______________________________________ 48

7.

APPENDIXES : C&CE EUROPEAN MARKET OVERVIEW_________________________ 53

7.1. EU Construction and Civil Engineering sector overview_______________________ 54

7.1.1. Core industry_______________________________________________________________ 54 7.1.2. Related sectors______________________________________________________________ 57

7.2. EU Market Structure____________________________________________________ 60

7.2.1. Residential sector ___________________________________________________________ 62 7.2.2. Non residential buildings _____________________________________________________ 65 7.2.3. Civil engineering ____________________________________________________________ 66 7.2.4. Public Private Partnerships ___________________________________________________ 67

7.3. New challenges for the EU C&CE _________________________________________ 68

7.4. Description of the main EU players ________________________________________ 70


1. OBJECTIVE

This document aims at showing the trends, opportunities and constraints of Construction and

Civil Engineering (C&CE) sector in Central and West African countries (CWA) in order to

bring to light potential avenues for partnerships in the area of business, technological know-

how, and services transfer, and especially Investment and Inter-Enterprise co-operation

Agreements (I&ICAs), between companies or between intermediary organisations from the

region and Europe.

In this respect, the specific purposes of the report are to:

� briefly describe the “new deal” environment favourable to the C&CE sector in the

CWA region

� describe the current markets, present and future in the WCA region

� identify main stakeholders (business operators, intermediary organisations, etc), in

the main C&CE sub-sectors

� identify / summarise the foreseeable profiles of potential I&ICAs, for :

o companies already active in the CWA region

o companies currently inactive but potentially open to such perspectives.


Report Structure

� In the first section of the report a general overview of the new environment of the

CE&C sector is described in terms of both industrial and market structure with

specific reference to the African and EU situation.

� In section 2 a comprehensive overview of past and current activities and

foreseeable development for the CE&C sector in CWA countries is analysed.

� In section 3 the main stakeholders involved in the sector are described in terms of

their role, activities and competitive position. A focus is made on the new entrant

players in the region giving rise to a new dynamic in the C&CE in CWA countries

� In section 4 description of the possible partnerships is discussed with reference to

the identified business potentials and target EU enterprise categories.


2. INTRODUCTION

This document represents an overview of the market, perspectives and strategies in the

Construction and Civil Engineering sector in the West and Central Africa (WCA) Region,

where Africonstruct 2006 focuses its initiative, within the broader context of the economic

development drivers of the African continent.

WCA presents attractive opportunities for actors (companies, intermediary organisations, and

institutions) involved in Construction and Civil Engineering. As widely recognised, civil

engineering, infrastructure and construction building are central to economic development in

general and a leverage for the competitiveness of most economic sectors. In the WCA

region, this industry contributes actively to GDP’s growth (around 5% in Mali, Senegal, and

Burkina Faso, 6% in Mauritania and 17% in Gabon). Prospects for the extension of

infrastructure, residential and non residential buildings, for rehabilitation, maintenance and

services, in the medium term, are excellent.

Political will in the region is aimed at extending, renovating and upgrading infrastructure and

construction buildings; it results also in newly gained independence of road funds from state

budgets, and privatisation of state owned enterprises will reduce the public share in the

demand for construction works. In this context there is potential for partnership across the

construction value chain to boost capacity, develop skills, improve performance, introduce

sustainable technologies and provide new materials and modern equipment.


3. A NEW DEAL FOR CONSTRUCTION AND INFRASTRUCTURE IN AFRICA

The new environment which is currently shaping up in Africa, through strong and

committed positions of International Institutions in favour of the sustainable development of

the continent, places the C&CE sector at the centre of the debate. As widely recognised,

infrastructure and building construction are central to economic development in general and

a leverage for the competitiveness of most economic sectors. The European Commission’s

latest initiatives in support to infrastructure in Africa, endorsed by the G8 declarations and re-

invigorated by the revival of the Europe Africa Forum confirm that the highly promising

environment for the C&CE sector in Africa is now materializing.

Moreover, the increasing demand for raw material from the Western and especially Asian

countries, transforms the inter-continental relations giving the African continent a new weight

on the international scene. This economic trend, provides a new opportunity for Africa to

attract large investments in the mining sector which will have sharp spin-offs on related

sectors such as the C&CE sector with the need to satisfy the overall construction

requirements: energy plants, land-based and water-based transport, industrial buildings,

housing…This new situation evokes the one’s which prevailed over the 60s and 70’s

decades where profit made by raw materials development was not build on living conditions

increase for populations. In fact, this situation rest upon a new scope where many African

leaders have launched good governance programmes under the aegis of international

financial institutions.

The Heavily Indebted Poorest Countries (HIPC) initiative, which concerns several countries

(Cameroon in 2006, Niger in 2004, Mali in 2003, Burkina Faso and Mauritania in 2002…),

has provided new scope for international grants and will favour the implementation of large

scale infrastructure.

This new situation is also characterized by a re-emergence of African organisations in charge

of construction and infrastructure, through enhanced Government awareness. New

partnerships are emerging between the public and private sectors, thus demonstrating re-

invigorated intra-regional synergies, illustrated for example by the growing importance of

South African companies, often accompanied by European partners.


A real opportunity is emerging for the economic development of companies in the C&CE

sector, at a time when the European Commission is strengthening its aid policy for

development and investments in Africa.

Many Development Agencies and institutions, such as the AfDB and UNECA, support

NEPAD (New Partnership for Africa’s Development) and the Regional Economic

Communities. AfDB, in particular, has developed an approach based on three pillars: an

infrastructure Short Term Action Plan (i-STAP) to kick-start the process, an Infrastructure

Project Preparation Facility (IPPF) to bring NEPAD infrastructure projects to bankable levels,

and finally a Medium-to-Long-Term Strategic Framework (MLTSF) to define a solid

framework for the future.

Moreover, on 24 May 2005 and based on a proposal by the European Commission, the

European Council established a new intermediate collective target for Official Development

Assistance (ODA), 0.56% of Gross National Income (GNI) by 2010, in order to reach 0.7% by

2015. By fixing the ODA collective target to a level of 0.56% by 2010, the EU will ensure

additional funding of some €20 billion as from that date. It was also decided that at least

half of this additional funding will be dedicated to Africa.

In this context a new framework for Construction and Civil Engineering in Africa has

emerged and should be a catalyst for new partnerships between European and African

companies and Intermediary organisations.


3.1. Infrastructure Consortium for Africa (ICA)

The G8 summit in Gleneagles in 2005, gave high priority to infrastructure in Africa. The G8

agreed to a further set of measures to reduce poverty and promote growth in partnership with

the African Union and NEPAD. In this framework, the Infrastructure Consortium for Africa

(ICA) was inaugurated in October 2005. The Consortium is a major new effort to accelerate

progress to meet the urgent infrastructure needs of Africa in support to economic growth and

development. Infrastructure is key to accelerating growth, reducing poverty, promoting

regional integration and achieving the Millennium Development Goals

The Infrastructure Consortium for Africa aims at coordinating actions between African

institutions and donors. The African members will be led by the African Development Bank,

while the African Union, NEPAD and the Regional Economic Communities will participate as

observers. The objective of the ICA is to make its members more effective in supporting

infrastructure in Africa by sharing efforts in selected areas such as information, project

development, and good practice. Although the Consortium is not a financing agency, the

Consortium should mobilise financial and technical resources for regional

infrastructure projects. Therefore ICA’s activity will be in line with African priorities and in

particular on the NEPAD Short Term Action Plan (STAP) and the Medium to Long Term

Action Plan (MLTAP) for infrastructure development in Africa. In this framework, the EC

brings to the Consortium a strong EU voice and a common vision and strategy.


3.2. The EU-Africa Partnership on Infrastructure

In October 2005, the European Commission proposed a new EU Strategy for Africa in order

to give the EU an integrated framework for its relations with Africa at different levels (African

Union, regional organisations and at country level). The overall objective of this strategy is to

support African countries in order to reach the UN Millennium Development Goals (MDGs).

Today the EU has a joint strategy for development shared by all its Member States and by

the Commission alike.

The EU Strategy for Africa makes concrete suggestions to promote joint programming, an

alignment of procedures and increasing budgetary aid. The Commissioner for Development

and Humanitarian Aid, Louis Michel, stressed that, “if adopted by the Council, the EU

Strategy for Africa will mark a true turning point to help Africa help itself. One of the EU’s

most central challenges in Development cooperation remains to ensure a coherent and

effective approach between 26 different actors, the 25 Member States and the European

Commission, with 26 Development policies.”

Several initiatives are under implementation since the beginning of 2006 through the EU

Strategy for Africa framework such as the Governance Initiative, the Euro-Africa Business

Forum and the Euro-Africa Partnership on infrastructure.

The EU-Africa Partnership on Infrastructure objective is to improve inter-connectivity, to

facilitate regional integration and to promote South to South trade.

The Partnership responds to the development goals defined by the African Union and the

NEPAD. It aims at promoting EU investment to improve infrastructure in transport, water,

energy and ICT. The operational scope is at three levels:

� Continental: the selection of projects will take into account the priorities listed by the

NEPAD and by the African Union.

� Regional: in line with established regional strategies

� National: in accordance with existing country strategies


The funding of the EU-Africa Partnership on Infrastructure will originate from two main

sources:

� The European Development Fund (EDF). The 10th EDF, covering the period 2008-

2013, will earmark approximately 5.6 billion Euros1 for the Partnership.

� The EU-Africa Infrastructure Trust Fund. This new instrument will enable the

European Commission and the EU Member States to co-finance projects with the

EIB and with African and European financial and development institutions.

1 Source: The Council of the European Union, Infrastructure and Partnership for Africa –

www.cinsilium.europa.eu


3.3. The EU Infrastructure Trust Fund for Africa

The Partnership on Infrastructure will be supported by a new EU Infrastructure Trust Fund for

Africa, which is set up together with the European Investment Bank (EIB).

In February 2006, the European Commissioner for Development and Humanitarian Aid,

Louis Michel and the President of the European Investment Bank, Philippe Maystadt, signed

a Memorandum of Understanding for the creation of this new financial instrument of the EU-

Africa Partnership on Infrastructure.

In the start-up phase (2006-2007) the EU-Africa Infrastructure Trust Fund will receive €60

million from the 9th EDF. In addition, the EIB will provide an initial allocation of €260 million

for loan financing. The Trust Fund is an innovative tool whereby the EC and interested

Member States can co-finance with EIB and European and African Development Financial

Institutions. The grant resources of the Trust Fund will be provided by EC and any EU

Member State willing to contribute.

Trust Fund grants are envisaged to cover:

� interest rate subsidies,

� co-financing with EIB and other banks,

� risk guarantee mechanisms currently not covered by existing instruments,

� grants for project preparation and capacity building activities.

In short, EU grants will attract and lever additional funds from other donors and private

investors.

In view of the expected increase of European development aid, which should reach

approximately 20 billion Euros by 2010 (half of which is to go to Africa), the Trust Fund will

be substantially increased as from 2008, to meet the requirements of projects lined up by

Euro-African partners.


3.4. The Africa Catalytic Growth Fund of the World Bank Group

The World Bank Group’s Africa Catalytic Growth Fund (ACGF) was launched in February

2006 and has been welcomed buy the European Commission. Both institutions are

determined to support and accelerate shared economic growth and to assist African

countries in achieving the Millennium Development Goals that have proved difficult to reach.

The World Bank Group Trust Fund is complementary to the European Trust Fund on

infrastructure. This Fund has been created in order to stimulate investment in infrastructure

and can collect up to $1 billion per year for projects undertaken under the aegis of the African

Development Bank, the African Union, the Economic Community of West African States –

ECOWAS, the New Economic Partnership for Africa Development (NEPAD), the EC, the G8

and The World Bank.

In September 2005 The World Bank also implemented an Action Plan to support Africa. To

establish synergy and complementarity between the two strategies, both institutions are

engaged in frequent consultations through “Limelette” workshops for closer co-operation in

key areas such as infrastructure, regional integration and trade and public finance

management are currently being discussed. The two Trust Funds will allow to rapidly channel

additional resources from other partners to Africa with the aim to accelerate progress

towards reaching the Millennium Development Goals.


3.5. Equity Funds

Several equity funds have emerged recently and are dedicated to the development and the

improvement of infrastructures in Africa:

� The South Africa Infrastructure Fund sponsored by the African Development

Bank, Standard Investment Corporation and other South African institutional

investors, the fund was launched in 1996 with an approximately 130 million USD

commitment.

� The New Africa Infrastructure Fund set up in 1999 with 350 million USD

sponsored by the Overseas Private Investment Corporation (OPIC), a US

Government agency.

� The AIG African Infrastructure Fund instituted in 2000 by AIG - the US based

insurance company - with the International Finance Corporation and other investors

with 400 million USD in commitments.

� The Emerging Africa Infrastructure Fund is a public-private financing partnership

initiated in 2002 by the Private Infrastructure Development Group, whose founding

members are the UK Government’s Department for International Development, the

Swedish Government acting through the Swedish International Development Co-

operation Agency, the Netherlands Minister for Development Co-operation and the

Swiss State Secretary for Economic Affairs of the Government of the Confederation

of Switzerland.


4. MARKET, PRESENT AND FUTURE

CWA’s building and construction sector promises to be at the forefront of the region’s

economic development within the new partnership framework. Despite some slow-down

periods, the industry has shown an overall trend of improvement since 2000 in many

countries. This C&CE contributes around 5% of GDP in several countries such as Mali,

Senegal, Burkina Faso and this rate has reached 17% in Gabon.

In Sub-Saharan countries, the C&CE sector is highly dependant on public investments and

infrastructure programmes for transport, energy and water development. Private project

owners confine themselves to a limited share in housing and office building.

The road sub-sector accounts for a large part of the share as it is the key element for

economic development to transport goods and facilitate trade. Consequently road transport

has been the first concern of all Structural Adjustment Programmes that have been set up by

Governments, assisted by international donor agency funding.

Prospects for the extension and rehabilitation of infrastructure, maintenance and services are

excellent. In the building sub-sector, where the needs are paramount, the situation is more

heterogeneous. In Senegal and Mali, the C&CE is stimulated by the building and

construction sub-sectors whereas the situation remains difficult in many other countries

where the building sub-sector suffer from a lack of organized construction sector.

The C&CE positive market prospects are supported by three key elements:

� The debt relief through the HIPC initiative2 exists for several countries, combined

with the return of International Financial Institutions and Cooperation Agencies, is

2 In 1996, International Development Association (IDA, the World Bank’s concessional lending arm for

poor countries) and the IMF launched the Debt Relief Initiative for Heavily Indebted Poor Countries (the HIPC Initiative). The aim of this initiative is to provide a fresh start to countries struggling to cope with foreign debt that places too great a burden on export earnings or fiscal revenues. Debt relief from participating creditors becomes irrevocable at the Completion Point.


providing a new framework for launching significant public investment policies

aiming at developing infrastructures, housing and non-residential public buildings

for health, and education

� The mining and fossil energy sectors are new leading trends for the C&CE. With the

increasing demand in energy and raw materials, identified deposits that seemed

not cost-effective in the past are now of interest for investors (oil in Chad, iron in

Gabon, Guinea…). The type of construction work required includes excavation,

access roads, operations bases, dwellings for workers, industrial plant building,

extension of harbours etc.

� The strong economic growth, in excess of 5% per annum for many countries, is

generated by the renewal of the secondary sector activity and especially by the

development of the tertiary sector. Within this framework construction

requirements for commercial buildings and offices is a growing trend in many

countries (Cameroon, Senegal, Ghana, Nigeria…).

Eight countries have reached the completion point: in the CWA region: Benin, Burkina Faso, Cameroon, Ghana, Mali, Mauritania, Niger and Senegal.


4.1. Past and present situation in the C&CE sector in CWA countries

The sector experienced a large presence of foreign companies from European countries with

strong historical links with Africa, between 1970 and the early 1980’s. For instance, French

major operators have been leaders for the construction of large scale projects in francophone

countries. The best example is in the water sector, where the three largest French water

companies have been promoting private participation since the 60’s.

The insolvency of the traditionally state controlled major companies in the C&CE sector has

had a negative impact on the sector and led many international operators to withdraw from

the region in the late 80’s.

Since then, several Structural Adjustment Plans were launched with the support of

International Financial Institutions to modernize the economies. The substantial progress of

many WCA countries in terms of public debt reduction, structural reforms, as well as the

comeback of international financial institutions and cooperation agencies have initiated, since

2001, a new development phase of the C&CE sector.

These international institutions aim at ensuring the rehabilitation of existing infrastructures

and the construction of new ones: roads, railways, harbours, and especially utilities such as

water and waste water treatment or energy. The C&CE sector plays a central role within the

framework of the NEPAD’s regional infrastructure development, in the areas of road, energy

and communication networks. Between 2002 and 2004, US$531.8 million have been

allocated to these infrastructure projects.

Contrary to infrastructure, the building sector remains in a difficult situation in most

countries. This is not only due to the investment capital required but also to the lack of

structured professional construction trade in many countries able to cope with the

coordination of the stakeholders involved in construction activities. The role of each

stakeholder taking part in the construction activity needs to be clarified and specified, in order

to allow the housing programs to develop within a rational framework, which is necessary to

raise long term funds in the various construction sub-sectors.


4.2. Present situation and prospects in Infrastructure and Civil Engineering

With the support of International Financial Institutions and Cooperation Agencies, a large

number of countries from the CWA region are launching significant public investment

policies aiming at developing infrastructures in the transport, energy and water sectors.

Construction & Civil Engineering European and African companies should contribute actively

to the materialization of these opportunities. Implementation of new rules and regulations

(legal framework) in the transport sector, in accordance with enforced international

agreements (ref. to IMO, port regulations, rail and road conventions, axle load, etc.) will

facilitate the access to the CWA market for EU investors and increase PPP projects meeting

technical and financial feasibility conditions.


4.2.1. Road Infrastructure

Road has the largest share in the transport sector and this share is increasing faster than the

GDP. It accounts 70 to 90% of transportation in WCA. With the exception of countries with oil

revenues, the density of the road network is still low. Only a small share of the networks is

made of paved roads. Consequently, road development has been the priority of all Structural

Adjustment Programmes set by governments, supported by international donor agency

funding such as :

� PPAR (Programme d’Aménagement du Réseau Routier - Road Network Planning

Programme) in Gabon

� PST2 (2ème Programme Sectoriel Transport - 2nd Sectoral Transport Programme)

in Senegal

� PAST-CI Programme d’Ajustement Structurel des Transports de la Côte d’Ivoire -

Structural Transport Planning Programme in Cote d’Ivoire…

The weak regional transport infrastructure between CWA countries is an obstacle to regional

integration. In this respect, landlocked countries are the most handicapped for accessing to

coastal countries and for exporting their goods. Therefore, most road infrastructure

projects mainly funded by international institutions are prioritising interconnection transit

roads between neighbouring countries. This is the case for the main transport corridors to

landlocked countries (Burkina Faso, RCA, Chad, Mali and Niger).

Although the extension of road infrastructure is a priority in most countries, maintenance

and road upgrading has been neglected in the past years due to lack of funding and public

transport policy. As a result, the existing road network has rapidly deteriorated. For that

purpose, many countries have created “Fonds d’Entretien Routier (Road Maintenance

Funds)” with the support of the EU for road refurbishment and maintenance.


Ongoing and identified projects in the road sub-sector account for a great part of

infrastructure investments. Several of these projects are listed below:

� In Benin, many projects financed by international donors have been approved,

such as the Banikoara-Kandi road network (North - East Benin ) which will

improve cotton transport. Other road projects are envisaged: Kandi – Sègbana

(115 km) ; Burkina Kérémou-Banikoara (53 km) ; Kétou-Savé (97 km) ;

Godomey/Bohicon Hignway.

� In Burkina Faso, several projects are being implemented, such as the asphalting

of the Ouagadougou-Koupéla and Bobo Dioulasso-Boromo roads with the support

of the EU. Other projects are also ongoing: Kaya-Dori, Bobo Dioulasso-

Dédougou, Ouagadougo-Kongouss. The Ouagadougou-Bitou road network is

expected for 2007.

� In Cameroon, the EU contributes to the consolidation and rehabilitation of the

Garoua-Figuil and Mutenguene-Kumba roads and the World Bank is supporting

the Douala Infrastructure Project which focuses on rehabilitation of roads leading

to port and industrial areas.

� In the Central African Republic, the EU planned to finance 150 km of asphalted

road to facilitate the connection with Cameroon.

� In Chad, over a 15 year period, the asphalted road coverage increased from 27

km to 650 km in 2005. The Government, is expecting to reach 2000 km of

asphalted roads by the end of 2007.

� In Congo, the main project is the rehabilitation/construction of the Pointe Noire-

Brazaville-Ouesso road. The EU is financing the first section between Brazaville-

Kinkala.

� In Cote d’Ivoire, the Abidjan and Yamoussoukro motorway construction is

supported by the Islamic Development Bank.


� In Ghana many large motorway constructions are expected such as the Accra-

Kumasi (233 km), Accra-Yamoransa (134 km) and Accra-Alheo (82 km) sections.

� In Gabon, the Islamic Development Bank is funding over 100 km of road

construction and 600 km of road infrastructure are planned.

� In Guinea, interconnection roads are planned with neighbouring countries such

as Mali (217 km), Burkina Faso (100 km) and Senegal (302 km).

� In Guinea Bissau, the San Vicente bridge construction over the Rio Cacheu is

financed by the EU and will facilitate the connection with Senegal.

� In Senegal, the UE is financing the rehabilitation of the Mbirkelane and

Tambacounda (137 km) roads and 90 km of road infrastructure in Casamance.

� In Togo, several road constructions and civil engineering works are planned with

the support of the WADB, WB and IDB.

4.2.2. Railway infrastructure

The railway sub-sector has been neglected for a long time. Most lines are single track and

operated with diesel engines. In cases where the railway is operated through a Public Private

Partnership scheme, the infrastructure can be considered to be in a relatively good condition.

In most other cases, the railway infrastructure is in poor condition. However, the ongoing

privatisation and restructuring process in many CWA countries such as Cameroon, Côte

d'Ivoire, Ghana, Mali, Nigeria and Senegal should attract foreign investments. Moreover,

prospects of new ore exploitations have emphasized the need to construct new lines in

several countries:

� In Gabon : new railways tracks between Belingua and Booué (North-East),

� In Senegal : new standard spacing railway tracks to transport ore from iron and

phosphate mines


� In Guinea with the major Transguinean project (1000 km) which is still planned for

the transport of Iron ore

4.2.3. Port and airport infrastructure

Ports play a vital role in coastal countries. Some ports have been upgraded and extended

in the past years in order to address the growing maritime trade flows: the Autonomous Port

of Conakry, the ports of Takoradi and Tema in Ghana, ports in Nigeria… However the

political crisis in Cote d’Ivoire has changed the deal in the Western region, as the port of

Abidjan played a major role in terms of traffic. With the increasing traffic demand in

neighbour ports due to this new situation, and with the mining sector development,

renovation, extension and construction of new ports are projected in the CWA region.

Main expected projects are:

� In Senegal: extension of Dakar’s port and construction of the mining port of

Bargny (Phosphate)

� In Benin: port of Cotonou extension

� In Gabon: construction of deep water harbours (transport of iron and

manganese ore)

� In Congo (Rep.): refurbishment of the Pointe Noire port.

Although, air transport has been stagnant for 15 years, recent studies have pin-pointed the

fact that the CWA region will have the highest traffic growth rate of the continent over the

period 2006-2015. The annual rate is expected to reach 10.5% every year compared to

South, North and East African regions which are all under 8% per annum. In this respect, the

extension, modernisation of existing airports and construction of new airports have

started or are expected in several countries. Main projects encompass:

� Congo: the construction of the Ollombo international airport by the Portuguese

Escom company is under completion


� Gabon: construction of the Malibe II international airport (study phase)

� Ghana: rehabilitation of two airports Sekondi-Takoradi and Tema (study phase)

� Burkina Faso: construction of the new International airport of Ouagadougou

(study phase – funded by the Islamic Development Bank)

� Mauritania: construction of the new international Nouakchott airport (study

phase)

� Senegal: construction of the new international Dakar airport (bidding phase)

4.2.4. Water infrastructure

In urban areas, only 60% of the populations have access to fresh water and 70% have

access to sanitation. In rural areas, the rates are much lower. International donor agencies

are supporting the Water sector development programme in most countries (World Bank,

EU, AfDB and bilateral agencies from Denmark, France, Germany, Japan, the

Netherlands…)

Maintenance and upgrade of existing infrastructure

Although large investments in water infrastructure have already been made in a number of

countries, equipments are rapidly degrading and maintenance is poor, due to lack of funds.

Nigeria is benefiting from hydraulic projects of a EUR 230 million programme from the EU/

EDF and for a similar amount from the World Bank. In Senegal, funding of USD 247 million

has been secured for water distribution, waste water treatment, water reservoirs or ground or

underground water maintenance.

The water sector scenario in WCA is thus opening up important investment and business

opportunities in the next years entailing expanding infrastructure and rehabilitation of existing

systems to cope with increasing demand.


Regarding the construction of water infrastructure, upcoming opportunities in WCA

involve:

� Public Private Partnerships. Concession of water services to the private sector in

the form of PPPs is under preparation in several countries (i.e. Ghana, Nigeria,

Burkina Faso)

� Build Operate Transfer (BOT) projects. Construction of new water production

works and wastewater treatment plants to meet the growing demand for water

services

4.2.5. Energy infrastructure

For many CWA countries, connecting populations to electric power supply remains a priority

goal. Attracting investment into the region has been difficult in this sector. In many African

countries, only a small percentage of the population has access to electricity.

Nevertheless, efforts have continued in several countries, both to attract international

investment in the electric power sector in general and to expand access to power through

rural electrification programs. It is expected that net electricity consumption in Africa

should more than double between now and 2025, to reach 800 billion kilowatt-hours. The

move towards privatisation has been initiated in several countries in order to attract foreign

investment for infrastructure. The most important projects in civil engineering works in the

electricity sector are the hydroelectric dams in Congo, Cote d’Ivoire, Gabon, Guinea, Ghana,

Mauritania and Nigeria. Large projects in electricity transport infrastructure are also planned

in Burkina Faso, Congo, Gambia and Guinea Bissau.

The oil and gas sector is a major source of demand for the construction sector in Cameroon,

Gabon and especially Nigeria where works are related to the construction of industrial

complexes (e.g. gas in Bonny, Port Harcourt). The oil and gas industry is still the only

provider of civil works contracts of the country (USD 4 billion).


4.3. Present situation and prospects in residential and non residential building

4.3.1. Housing sub-sector

Many CWA towns, and more precisely capital cities, are facing a strong increase of urban

population due, for a large part, to rural migration and to population growth. Lack of urban

development policy and housing supply combined with uncontrolled town population growth

has led to shanty towns characterised by extremely precarious accommodation conditions.

For instance, in Gabon the urban population grew by 3.2% over a ten-year period, from

742,000 to 1,014,000 inhabitants, wich more than 40% of the population in Libreville alone.

In Nouakchott, it is estimated that 38% of the population is living in precarious areas.

A huge potential market

Thus the housing issue has become a major problem. The gap in housing is evaluated at 14

million housing units in Nigeria, 2 million in Congo DR, 1,2 million in Ghana, 500,000 in

Cameroon, 400,000 in Ghana and 120,000 in Mali.

Important limiting factors hamper the development of the housing sector are the following:

� Land policy issues : urban planning tools (master planning, zoning, plot

development regulations) are inadequate for making land available to meet the rapid

urbanization pace, resulting in insufficient land supply and increased land prices. The

operations of land and property markets are largely informal.

� Solvency issues and loan management inefficiency: housing loans are not

available in all countries and households have to use their own savings or a traditional

system such as the “tontine”. Banking services are not adapted to housing credit as, in

many countries, credit is based on short term loans. For many low-income households

savings are difficult as in most cases monthly incomes are irregular and hardly

sufficient to satisfy basic requirements.


� Lack of affordable housing: the gap between low incomes and affordable

housing remains hard to close as construction costs are not adapted to market prices.

In fact, a large part of construction costs are burdened by the lack of efficiency between

stakeholders throughout the construction process, small scale projects and lack of

availability and cost of building materials

However, many countries are trying to address this issue by implementing a new housing

framework starting with public policy support and modernisation of the housing schemes.

The creation of “Housing banks” (Banque de l’Habitat) to support property developers has

been a strong catalyst to boost housing construction. In Senegal, the BHS (“Banque de

l’Habitat du Senegal”) has invested €60 million each year in average in the past years. In

Ghana, a new housing policy is being implemented to increase new housing construction.

Although the housing situation is particular to each country, three categories can be

identified:

1. The housing sub-sector is dynamic, and accounts for a large part of the construction

industry growth where the financing of access to ownership has been addressed. In

this category the housing sector is stimulated by State policy and also by the

private sector and should follow the same trend. This category concerns Ghana,

Senegal and Mali.

2. The housing sub-sector is in transition where main key players are present for a

large part but actors are insufficiently structured and organized. In this category,

housing construction is weak compared to the existing potential. In many cases

public authorities have implemented new housing framework policies which should

provide many opportunities in the next few years. Benin, Burkina Faso, Cameroon,

Congo, Cote d’Ivoire, Gabon, Guinea, Mauritania, Niger and Nigeria can be classified

in this section.

3. The housing sub-sector is under-developed but is strongly confronted with financial

issues, lack of public housing policy and/or the instable economic situation. The

sector is largely dominated by informal constructions. Among this category some

countries are launching new housing framework policies. Countries classified in this

section are: Central African Republic, Chad, Congo DR, Equatorial Guinea, Guinea

Bissau, Liberia, Sierra Leone, Togo.


Demographic Trends

Total population (millions)

Urban population (% of total)

Country

2002 20151 2002 2015

1

Cape Verde 0.5 0.6 55.1 64.8

Equatorial Guinea 0.5 0.7 47.1 58.2

Gabon 1.3 1.6 83.1 89.1

Sao Tome and Principe 0.2 0.2 37.7 40.3

Ghana 20.5 26.4 45.0 51.1

Cameroon 15.7 18.9 50.6 59.9

Togo 4.8 6.4 34.5 43.3

Congo 3.6 5.2 53.1 59.3

Nigeria 120.9 161.7 45.9 55.5

Mauritania 2.8 4.0 60.5 73.9

Gambia 1.4 1.9 26.1 27.8

Senegal 9.9 13.2 48.9 57.9

Guinea 8.4 11.2 34.2 44.2

Benin 6.6 9.1 43.8 53.5

Côte d’Ivoire 16.4 19.8 44.4 51.0

Chad 8.3 12.1 24.5 31.1

Dem. Rep. of the Congo 51.2 74.2 31.2 39.7

Central African Republic 3.8 4.6 42.2 50.3

Guinea-Bissau 1.4 2.1 33.2 43.5

Mali 12.6 19.0 31.6 40.9

Burkina Faso 12.6 18.6 17.4 23.2

Niger 11.5 18.3 21.6 29.7

Sierra Leone 4.8 6.4 38.1 47.6

1 Data refer to medium-variant projections.

Source: UN-Habitat

Prospects in the housing sub-sector

Paradoxically, prospects in the short and medium term are encouraging due to new

initiatives in housing policy support launched by public authorities and also to the awareness

of “Housing Banks” which have been restructured or newly established. The main

opportunities are to be found in countries where the financing of access to ownership

has been developed.


Different institutes are concerned, reaching from traditional insurance companies, savings

banks, social security, to more innovative institutions such as the Company for Habitat and

Housing in Africa (Shelter Africa)3 which has become a reliable source of housing financing

in Africa. Shelter-Africa dedicates 70 per cent of its resources to housing and related

activities with cumulative investments of some $78.5 million as of 2001. Loan approvals

averaged USD 9.6 million per annum during the last planning period (2003-2005).

International and bilateral donors are also contributing to the funding of housing.

� In Benin, the government intends to develop social and economic dwellings and

to implement a construction program for 13,000 dwellings in the next years. To

this effect, actions have been undertaken with a view to encourage promoters

such as: making lands available by the State, tax exemption for imports of

materials and development of building sites.

� In order to deal with the increasing urbanization, public authorities in Burkina

Faso launched several construction of social housing and building plots projects

in particular in the outskirts of the capital city. Real estate investment is strongly

stimulated both by the urban renovation programme engaged by the Government

and by the private sector.

� In Cameroon, many construction programs have started or are planned such as

the building site of 10.000 units in the South of Yaounde, the construction of 7.000

social housing units in Douala by the Company for the Development of Douala

(SAD) or the major urban centre project "Sawa Beach" which plans to construct,

in particular, 10.000 dwellings (total cost: €762 million).

� In Chad, a project of housing construction was launched in march 2006,

cofinanced by the Chadian Government (US$11.800 million) and UNDP

(US$2.045 million) which aims at building at least 5.000 social housing and the

3 “La Société pour l'Habitat et le Logement Territorial en Afrique (Shelter-Afrique)” is a Pan-African

regional housing finance and development institution created in 1982 by African Governments, the African Development Bank, the Commonwealth Development Corporation Group and African Reinsurance Corporation (AFRICA-RE). Shelter Afrique is headquarted in Nairobi, Kenya and active in 22 African countries since 2001.


rehabilitating several urban districts in Djamena. This program has also as

objective to give access to housing with basic infrastructures to low income

households.

� In Cote d’Ivoire, since the beginning of the crisis, the construction of dwellings

decreased by 50% (from 8,000 to 4,000), whereas the estimated needs exceed

40,000. The needs for residential construction are estimated at 100 USD million

by the World Bank which would be ready to support this rebuilding program,

within the framework of a post-conflict assistance. Moreover, 15,000 dwellings are

planned in Yamoussoukro within the framework of the PSTCY project (Special

Programme for the Transfer of the Capital from Abidjan to Yamoussoukro)

� In Equatorial Guinea, the Government planned to produce 2,300 dwellings in

Malabo and a project of 10,000 houses has been signed by a Chinese company

� In Gabon, new initiatives to promote social housing in urban areas were

undertaken by the Government, among which the development of new

constructible zones and the acceleration of the delivery process of property rights.

3.500 housings are planned in Libreville

� In Ghana, recognizing that the access to housing is too expensive for many

inhabitants, the Government launched initiatives to reduce land and building

material costs as well as to develop long-term financing. Within this framework, a

large number of ongoing and/or planned projects could reverse the trend where

only 25,000 housing units are constructed out of 140,000 annually planned. The

Government announced that 100,000 housing units would be provided for

workers throughout the country by the end of 2008.

� In Mali, the Government initiated a program of 3,500 social housing, of which

more than a half is already completed. Private operators also carried out a

program of 3,300 houses over the same period. New international private

operators wish to support the Government in the construction of 100,000 social

housings in the next years.


� In Mauritania, SOCOGIM has launched, either with its own funds or in

partnership with local banks, several projects such as the construction of 1000

average standard housing units in Nouakchott and the sanitation of 1118 parcels

in Rosso. The production of 3000 housing units is also planned.

� In Nigeria, the housing policy was revised in 2004. The major objective of the

Revised National Housing Policy includes the provision of adequate incentives

and of an enabling environment for greater private sector participation in housing

construction.

� In Senegal, important construction achievements made by private promoters are

partly due to the support of housing co-operatives created by the Government in

order to facilitate the access to housing to a broader number of households. The

bulk of the construction activity should come from the BHS which financed

annually an average of €60 million these last years in housing projects.

Housing construction is mainly carried out in small units which create additional costs in

urban infrastructures (roads, water sanitation and electricity). Only large scale projects of at

least 5,000 housing units could create an economy of scale in urban infrastructure

development and create a suitable environment for urban planning, technical skills upgrading

and housing funding policy required to address the housing issue in the Region.

4.3.2. Functional building

Main large scale non housing construction projects in WCA are initiated by the public

sector and related to health and education public utilities. In the private sector, the main

large scale projects originate from the mining sector such as in Burkina Faso (Gold mines),

in Congo, in Guinea (bauxite deposits), in Nigeria, in Senegal (phosphate, iron and gold

mines), in Equatorial Guinea… However, in countries such as Ghana and Senegal, the non

housing construction sub-sector is also stimulated by the construction of commercial and

industrial buildings as well as tourism facilities. Among the numerous construction

projects, the main opportunities can be listed as follows:


� The construction of new capital cities in Senegal (Thiès), in Cote d’Ivoire

(Yamoussoukro) and in Nigeria (Abuja), continue to be an attractive market. In

the case of Yamoussoukro, the PSTCY (2003 to 2010), evaluated at €4,24 billions

has planned the construction of many buildings such as ministries, educational

and health public buildings, leisure facilities, and commercial buildings.

� In Burkina Faso, several functional building projects are planned up to 2010 with

the construction of a dry port, an international trade road station, a new industrial

area near Ouagadougou, a modern business district for commercial and

administrative activities and the construction of an industrial and commercial area

close to the new airport

� In Cameroon, the main projects include educational and health buildings. The

local communities are also building village markets and the territorial authorities

plan to build markets.

� In Congo, schools, educational, health and administrative buildings that where

strongly damaged by the successive conflicts or by lack of maintenance are

subject to rehabilitation programs. In this context, the Government has launched

the "accelerated municipalization" whereby the city benefits from public

investments to modernize and develop urban infrastructures and functional

buildings

� In Ghana, in addition to public buildings with an educational and medical

vocation, the private sector is also constructing many industrial and commercial

buildings: hotel facilities to meet the growing demand of the tourism sector,

industrial buildings, in particular in the agro-industry and the processing industry

(die drink, building materials, non-ferrous metals) and in the tertiary sector (trade,

services...). The same situation is also emerging in Guinea at a smaller scale.

� In Nigeria, Abuja and Lagos are still attracting many private investors to build

their regional headquarters where the building construction work is stimulated by

the oil sector.


4.3.3. Building materials

Building materials and finishing work benefit fully from the growth of the Construction & Civil

Engineering sector in the CWA region. Although the region has large mining deposits and

other useful resources for construction, the local production of building materials is mainly

limited to:

� cement and plaster,

� bricks and tiles,

� ceramics,

� painting,

� wood works,

� marble, sand, gravel, laterite and stone quarries,

� other raw materials for construction.

Countries in the region are not only facing a weak offer by local production but also the fact

that the market demand in building materials clearly exceeds local production. Therefore,

a large part of building materials is imported.

Thus the production of cement remains definitely insufficient to meet market needs in

particular in Benin, Congo, and Nigeria where the 7 cement manufactures produce only 25%

of the market demand. Moreover, some countries do not have cement manufactures and

totally depend on import. This is the case for Chad and the Central African Republic who

have to import cement from Cameroon.

Regarding other building materials, many countries are importing raw materials although they

have large mining resources. For instance, Benin imports most of its building materials while

the country has significant mining potential in building materials (loam, sand, limestone,

gravel, lateritic earth, marble, decorative stone etc...).


In fact, in many countries, the transport of building materials remains difficult due to weak

infrastructures (roads, railways…). In Cameroon, most aggregates used for road construction

are provided by local quarries such as sand, gravel and laterite. Their quarrying remains

complex because of access difficulties, and of the equipment costs requested. In Niger, the

geographical distance between quarries and construction sites generates high costs for

building materials. For example, in the area of Guigmi (south-east) the nearest gravel pit is

located at a distance of 600 km.

Moreover, most value added materials and finished products used in construction are

largely imported from Europe such as electric and sanitary/plumbing materials, windows,

ironmongery…Similarly, building engines and machinery are imported from Europe.

Prospects for building materials

In many countries, Governments have decided to develop the use of local building

materials in order to minimize construction costs:

� In Burkina Faso, the “Locomat” project was launched to promote local materials

through SME support: Burkina Faso has deposits in limestone, plaster, marble,

granite, and various types of stones used for construction.

� In Mali, the Housing Agency (Office Malien de l’Habitat) supports local

construction materials projects. Mali has large limestone, marble and granite

deposits.

� In Togo, a Promotion and Development Funds for mining activities is to be

created. Among other objectives it aims at supporting local building materials for

housing construction projects.

� In Ghana, the Government is thinking of launching a new program to build houses

at half cost by using local building materials


Large raw material resources exist in the region and are partly or not at all exploited. For

instance, Gabon has mineral resources such as marble (Fougamou, Tchibanga,

Dousseoussou), limestones and clay. Chad has white marble deposits. Guinea and Congo

have considerable mining resources which could be used for the construction sector.

Senegal has granite, marbles and other quarries for ornamental stones that could be

developed with the expansion of the construction sector in this country.

In the cement industry, the creation of new factories is currently being examined in the

Central African Republic by a Chinese company, in Chad and in Guinea Bissau by a Spanish

company. In Nigeria, the European Investment Bank, signed a loan of €123 million in 2005 to

Obajana Cement Plc, for the construction of a new cement factory with a capacity of 4,4

million tons per annum. This factory, will be located in Obajana, in the State of Kogi, centre of

Nigeria. A new cement factory is also under construction in Mauritania with the support of the

World Bank.

In addition, opportunities exist for implementing small industrial or semi-industrial plants

related to processing and development of local materials. There is also scope for new

players, as the experience of a number of other European investors has shown in Senegal

and Cameroon for electric materials, paintings, sanitary equipment…

However, in order to produce more value added products for the construction sector, there is

a need to improve the quality at the production level and to develop local support

systems to encourage manufacturing and to improve skills. There is an expressed need

for developing locally quality building materials such as bricks, tiles, ceramics…


5. ACTORS AND ROLES IN C&CE IN CWA

5.1. Construction companies

Whereas major infrastructure projects have been implemented by European contractors, the

situation is different in the building sector, in many countries, where local companies are

more competitive and are involved in local biddings or as subcontractors.

Main European contractors have local subsidiaries in the CWA countries. Most of them

have maintained their presence on a reduced basis and are ready to take advantage of new

opportunities in the sector. In francophone countries, French contractors are dominant in the

markets. However, new European contractors are more and more present in these countries

within the framework of international tenders and bilateral cooperation programs.

Major EU Companies operating in the WCA region

� Vinci (France), the largest construction company in the EU, is active in the region

through :

o Sogea Satom, in Benin, Burkina Faso, Cameroon, Congo, Côte d'Ivoire, Gabon,

Guinea, Equatorial Guinea, Sao-Tome-and-Principe, Mali, Niger, Nigeria, Congo

DR, Senegal, Chad, Togo

o Dredging International Services Nigeria Ltd

� Bouygues (France), second in the sector in the EU, is present under several trade-

marks :

o Colas (road construction) has subsidiaries in Cote d’Ivoire, Benin, Burkina Faso,

Gabon, Mali, Niger and Togo

o ETDE (Energy), Benin, Nigeria, Enerco in Congo DR, GIE Lumen in Gabon, REA

in Cameroon, Sidelaf in Burkina Faso and Guinea, Sogec in Gabon and Sao

Tome,


o BNL Engineering & Construction Ltd, Dragages Engineering & Construction Ltd

(DECL) in Nigeria

o BY Bâtiment in Equatorial Guinea and Sedao in Cote d’Ivoire, Dragage TP

Cameroon,

� Bilfinger Berger (Germany) largest German construction company is present in Nigeria

with Julius Berger and with Razel in Cameroon, Guinea, Ghana, Mali and Senegal.

� Strabag (Germany) has a subsidiary in Nigeria

� Eiffage (France), the third largest construction group in France, owns Fougerolle in

Senegal

� Veolia (France), represented by Sade and Franzetti, active in water infrastructure

� Astaldi (Italy) is operating in Congo

� Salini Costruttori (Italy) is operating in Nigeria, Guinea and Sierra Leone

� Taylor Woodrow (UK) owns the largest construction company in Ghana, Taysec (UK)

with a turnover of $50 million

� Acciona Infraestructuras (Spain) has a subsidiary in Gabon with Necso Entrecanales

Cubiertas

� AMEC (UK) and Technip (FR) have subsidiaries in Nigeria in the oil construction

activity

� Apave, Bureau Veritas, SGS and Socotec are operating in the CWA region as quality

control agencies with local subsidiaries.


Local construction companies

In most countries, besides large international contractors, local construction companies

have progressively emerged using more qualified competencies. These companies are

working as sub-contractors within the framework of large infrastructure contracts.

However, some of these companies are more active in the building construction sector. In

Gabon, competition is fiercer in the private construction sector between these companies. In

Cameroon, some of them have obtained contracts in excess of €5 million.

Local companies suffer from organisational issues (training, management) and a lack of

financial capacity and modern equipment. Local companies often have difficulties in

obtaining the bank guarantees required in the tendering process. Access to bank credit is

difficult while public contracts usually require having a substantial cash flow in order to face

irregular payments by the State.

Besides these large local SMEs, the construction sector is made up of several very small

companies and jobbers, most of which are informal, therefore not officially registered. The

informal sector is widespread and estimated at 50% of the Senegalese companies and

almost 75% in Mauritania.

On a country basis, the main local construction companies are listed as follows:

� In Burkina Faso, local companies active in major contracts are Boutros, BTM,

Cogeb, Fadoul-Technibois et Kanazoe. Other companies such as COGEC, EIEF,

Fadoul-Technibois, EBOMAF operate in road constructions. In the building sub-

sector the main local companies are Sol Confort & Décor, Echa, Ecobaa, Lafchal,

Sosaf..

� In Cameroon, local companies fully contribute to the construction sector’s

development such as Asquini-Encorad (French-Italian), Bati Service, Buns,

Cacoco BTP, Fokou-Foberd Group and Scemar (Group Ketch).


� In Chad, the main local players are: Ger Tchad, Geyser, TPL, SMC and Setiba.

Several local companies work as subcontractors within the framework of the

pipeline construction project from Doba to Kribi.

� In Congo, few local companies are operating in the C&CE sector : CSN

Construction, Escom, Sobaco

� In Gabon, local companies benefit from a favourable development context but

also from the Gabonese legislation: within the framework of large building sites,

large contractors are required to sub-contract 10% of the work. 23 companies are

registered as members of the Professional Construction Federation (SEBTP),

among which only 4 companies have a turnover exceeding €22 million. The main

local companies are Entraco, Faco Construction, Gtab, Soco TP, Socofi, Vibec

� In Cote d’Ivoire, only two large local companies operate in large construction

projects: Sonitra, specialized in road infrastructure, and CMI in the building sub-

sector. Otherwise, the market encompasses many SMEs such as Sud

Construction and Sibagec. The C&CE sector comprises only a number of

registered companies.

� In Ghana, the local construction market encompasses many companies among

which Taysec, Interplast and De Simone are the largest.

� In Mali, new-comers from China (Covec), Senegal (CDE, CSE) and Burkina Faso

(Fadoul) have strengthened their position vis-à-vis local companies. Malian

construction companies operating as sub-contractors in large construction

projects are (Oter, Etic, GME, Somafrec) as well as in housing construction

projects (Somassaff, Askia construction)

� In Niger, few companies have a turnover exceeding €1 million: Abarchi Moussa,

Barka, Moussa Wazir, Getec

� In Nigeria the main local companies, often managed by expatriates from Italy,

Israel and Lebanon, are: Bulet International Nigeria, Dantata & Sawoe


Construction Company, De-Crown Nigeria, DEC Nigeria, SCC Nigeria Ltd, UTC

Nigeria…

� In Senegal, a number of local construction companies are able to work on large

construction projects among which: Consortium D’Entreprises (CDE), Compagnie

Sahélienne d’Entreprise (CSE), Jean Lefebvre Sénégal (JLS) and Société

Sénégalaise de Terrassement (SOSETER)….

� In Togo, the three main local contractors are ENTTP, Le Bâtisseur and UDECTO,

5.2. Engineering and design main key players

Major engineering projects are mainly implemented by International engineering companies,

mostly from the EU, such as Diwi Consult (GE), DHV (NL), BCEOM (FR), Gauff Ingenieur

(DK), Louis Berger (Fr), Progetti (IT), Techiplan Spa (IT), Canada (Tecsult) and South Africa

(Black & Veatch…). These companies operate with local engineering firms which are

gaining in competencies and skills.

� Cameroon: B.E.C La Routière, BETA Consult, ECTA BTP, SADEG and SCET

Cameroon

� Congo: CGI, Denko Engineering, Foraid Congo and JBG

� Cote d’Ivoire: CICOP CI, ETECO, ICI-CI, SCO and LBTP

� Guinea: BAEC, CARIG and Isoris

� Mali: BEDIS, BEGEC, BETA, BETI, BETICOP…

� Mauritania: Afrecom, Baher, Bica, Faar, Sinergie

� Gabon: CEE Engineering, Geri, SNGE and STTAF

� Senegal: AFID, BACG, BAERA, BATIR, BDA, Burest, CET Route, EERI…


5.3. Housing main key players

In the public housing sub-sector, a small number of state owned or controlled project

owners develop housing projects with the support of housing financing institutions:

� In Burkina Faso, several project owner organisations have been implemented to

support the housing policy such as : SONATUR (Société Nationale

d’Aménagement des Terrains Urbains), SOCOGIB (Société de Construction et de

Gestion immobilière du Burkina), CEGECI (Centre de Gestion des Cités),

Housing funds and more recently the Housing Bank of Burkina Faso (Banque de

l’Habitat du Burkina Faso - BHBF).

� In Cameroon, MAETUR is in charge of public urban planning and building site

works for housing construction; SIC is responsible for social dwellings

construction and property development for the State and CFC (Crédit Foncier du

Cameroun) collects and distributes funds for housing operations, by fostering

access to housing for low-income households..

� In Congo, the Government intends to create the National Fund for Housing and

the Housing Bank of Congo;

� In Gabon, SNI (Société Nationale Immobilière) and CRH-Gabon (Compte de

refinancement de l’Habitat du Gabon) are supporting the residential sector.

� In Ghana, the Tema Development Corporation (TDC), State Housing Corporation

(SIC) and the Social Security and National Insurance Trust (SSNIT) are the only

public sector agencies involved in the land market. Recently, the Ghana Real

Estate Developer Association (GREDA) and some private developers have

played an active role in land development. The two main actors in housing

financing are the Home Purchase Mortgage and the Bank for Housing and

Construction which is in charge of funding new housing.


� In Mauritania, Socogim (Société de Construction et de Gestion Immobilière) is in

charge of social housing development

� In Niger, SONUCI (Société Nigérienne d‘Urbanisme et de Construction

Immobilière), is a key player in property development. Housing financing

institutions are represented by Crédit du Niger and CPCT (Caisse de Prêts aux

Collectivités Territoriales) which are active for loans to local authorities.

� In Nigeria, the housing sub-sector is enhanced by National Housing Fund (NHF)

operations. The Federal Housing Authority creates anenabling environment for

sustainable mass production of dwellings.

� In Senegal, a public housing policy has been implemented by public property

development organisations such as (SICAP, SCAT Urbam and SNHLM) with the

financial support of the Housing Bank of Senegal.

5.4. Intermediary organisations in the C&CE sector

Although some Intermediary organizations exist in the region, their activities are embryonic.

A strong will is emerging in CWA countries to strengthen these intermediary organizations in

order to give a more professional vision, to develop common methods and tools, improve

quality constructions and materials, upgrade competencies and skills…

� Professional Organisations and Federations: in most CWA countries there is no

relevant professional organisation to strengthen the C&CE sector. However, when

these intermediary organisations do exist, they have a small scope of activity. The main

professional associations encompass : GIBTP and CHANIE in Cote d’Ivoire, the

SYNABAT in Mali, SEPBTP in Gabon, SNBTP and SPEBTPS in Senegal or ABCCG in

Ghana and FOCI in Nigeria


� Orders of Architects: present in most countries some of them are members of the

International Architects’ Union such as the Order of Architects in Benin, Cameroon,

Cote d’Ivoire, Mali, Senegal, Niger, Chad and Sierra Leone. Currently there is no sub-

regional coordination between these entities.

� Other intermediary organisations :

o Road Maintenance Association: FECAP-TP and Aneer-TP in Cameroon and

Association of Road Construction (ASROC) in Ghana, are emerging associations

aiming at strengthening the capacity of their members. For instance, Cameroon’s

FECAP-TP ambitions are to support road maintenance companies in equipment

selling or hiring (creation of a mutual guarantee, leasing structure) and in training.

o Engineering institution/Association: several of them are established in the

region such as :

� The Nigeria Society of Engineers in Nigeria

� The Engineering Institute of Ghana (GHIE)

� The National Order of Civil Engineers (NOCE) in Cameroon,


5.5. Other relevant actors in C&CE

Executing Agencies

The Construction and Civil Engineering sector is characterized by the involvement of a large

number of different actors (funding institutions, contractors, sub-contractors, public players,

etc.) and their relatively complex interaction. Among other factors, this complexity impacts

heavily on construction costs, if not adequately addressed. In this framework, some countries

have implemented “Executing Agencies” to facilitate management contracts in

infrastructure and public building construction projects. These specialized Agencies have

become well known in the region for managing labour-intensive public interest works projects

with transparent, streamlined procedures, and for significantly improving the management of

donor funding.

In Senegal, the Public Works and Employment Agency (AGETIP) was the first agency to be

implemented with the support of the World Bank. This pattern has been successfully

replicated in several African countries in order to play an important role as project contract

management for public works financed by the state and international donors : AGETIP in

Benin, AGETIPE in Mali and Guinea, AMEXTIPE in Mauritania, GAMWORKS AGENCY in

Gambia, AGETUR in Togo, ATRACOM in Central African Rep., AGEOPPE in Guinea

Bissau, AGECABO in Cape Verde, Faso Baara in Burkina Faso, and NIGETIP in Niger.

Road maintenance Funds

Governments and donors recognised the importance of maintenance, repair, and widening

of roads. This has lead WCA countries to create autonomous funds :

� Fonds Routier in Cameroon,

� Fonds d’Entretien Routier (FER) in Côte d’Ivoire,

� Agence d’Exécution pour l’Entretien Routier (Ageroute)

� Agence Autonome des Travaux Routiers (AATR) in Senegal, etc.


These funds collect their own resources and must become independent from the public

budget. Warranting and steadying the activities of repair and maintenance not only gives

some visibility to the companies but also strengthens a cluster of local SMEs in terms of staff,

skills, investments, equity and partnership with internationally operating groups reluctant to

carry out this type of activity. Within this framework, a large number of local companies

have emerged. However, most of them suffer from a lack of experience in tendering as well

as logistical and financial means.

For instance, in Cameroon, over 200 companies are registered for road maintenance but

only 50 of them are really involved in road maintenance. Given the current concern for

maintenance and widening of existingrather than building new ones roads, this type of

operators are bound to cluster with larger ones to join technical, financial and human

capacities.

Building materials

European groups are dominating the cement production sector in the region. Lafarge Group

is the first cement producer and has subsidiaries in Benin, Cameroon and Nigeria.

However the privatization and the reorganization of the sub-sector have changed the pattern

in the last years. For example, the Scancem Company (Heidelberg Group) owns partly or

totally several local manufacturing units such as CimGabon, Ghacem in Gana and SNC in

Niger. Additional players have also entered the market: Holcim in Guinea, the Vicat group

with the buy out of Sococim in Senegal.


5.6. Relevant non EU players and regional Dynamics

Chinese companies: a fierce competition in the market

Although the C&CE market was for a long time dominated by European actors, new

international contractors have appeared on the scene. The arrival of Chinese companies,

which are strongly present in all C&CE sub-sectors, has clearly modified the deal. In fact,

driven by the quest to find a new balance in its raw material supply, China engaged, 10 years

ago, a market conquest strategy towards the African continent. This diversification strategy

has proved successful as shown by statistics: in 2004, 20% of African ore was exported to

China and the Sub-Saharan region provided 20 % of its imported oil to China.

In this framework, the C&CE has been strongly impacted as one of the strategies

implemented by Chinese players was to create a synergy between construction of

infrastructures and raw material development. The Eximbank, located in Khartoum, has

given financial support to Chinese companies and to local governments in order to build

roads, and oil, energy and water infrastructures. The Chinese construction companies are

very competitive and are serious competitors to foreign based companies in Africa for large

scale construction projects. Most relevant examples are:

� in Congo, the Chinese company CMEC in charge of the Imboulou dam

� in Gabon, with the construction of railway and road infrastructures to quarry new

iron ore (Belinga), manganese ore and develop wood exports. SINOPEC has

received two oil permits in 2004 in the Port-Gentil area

� In Congo DR, copper and cobalt ore development

� In Guinea, with the construction of the Souapiti Dam and the bauxite and iron ore

development by Chinese companies

� In Equatorial Guinea, 15 Chinese companies will build 10,000 housings in

Malabo and 2,000 km of roads. At the same time, the China National Offshore Oil

Corporation (CNOOC) recently signed production-sharing agreements with the

Government


� In Mali, Sinopec Corp has been given the right to explore potential oilfields.

In the building and civil engineering sector, Chinese construction companies are also very

present. The financial support (zero interest loans) in addition to low price contracts have

attracted the attention of local Governments:

� In Yaoundé, in Cameroon, the “Palais des Sports” is under construction by

Chinese companies and has been partly (33%) financed by China.

� In Mali, the China State Construction Engineering Corporation (CSEC) has

actively participated in the construction of the Administrative City

� In Gabon, after the construction of the National Assembly and Senate buildings,

Chinese companies, such as CMEC, are constructing the Communication City

building. A similar building is also under construction in Equatorial Guinea

� In Mauritania Chineese companies have built Law Courts, the Museum of

Nouakchott and the new airport

Although, local companies are not, for the moment, in competition on their market with

Chinese companies, this situation can be expected to change as Chinese companies move

down–market into smaller scale projects, such as housing, once the demand for large-scale

works decreases.

Emerging African companies in the CWA region

South African companies are also playing a growing role in the region. Large construction

companies have opened up subsidiaries or are involved in construction projects from their

regional/national base. Since the beginning of the 90’s and the abolishment of sanctions,

South African companies havetravelled extensively throughout continent. After successful

acquisitions Southern African countries, South African contractors are tackling the CWA

region. As in many sectosr, Construction companies from South Africa are mainly present


in Nigeria, where they are starting to operate on a regional basis. Today the large South

African construction companies active in the region are mainly the following:

� Aveng Companies, operating in Nigeria, Guinea and Mali. The sister Grinaker-

LTA Construction Company located in Nigeria has 18,000 employees.

� Group Five operates in Congo RD, Nigeria and Ghana. The company has been

awarded its largest-ever project in West Africa (a $90 million contract for the

design, supply and construction of a 180 megawatt (MW) gas power plant)

� Other companies such as WBHO Construction and Murray & Roberts, have

spread out in the southern region and should extend their activities in the Central

African region

The successful capacity of South African contractors to tackle large scale projects in new

markets and compete with present players mainly in Anglophone African countries, could

provide a strong opportunity for European actors but no WCA experience to target in a

more secured position, these emerging and promising markets. Partnerships with South

African companies could be a relevant lever with their competitive asset such as:

� astrong knowledge of the African market and mining sector as this is a new

impulse for the construction sector

� South African Funds able to accompany South African companies in venture

capital operating

� a strong regional presence

At another level, North African construction companies are also increasing their presence

in the C&CE sector in the region. Companies from Morocco and Tunisia (Chaabi Group,

Bouzguenda Company…) are competing with local construction companies in Western

francophone countries. The Egyptian Arab Contractors Group is implemented in Nigeria with

a staff of 1,200 employees and has also subsidiaries in Chad, Benin…


6. POSSIBLE SETUP FOR PARTNERSHIPS

Taking into account market trends and prospects in the Construction & Civil Engineering

sector in CWA and the relative targets of potentially interested EU enterprises, an analysis of

the most likely forms of Investment and Inter-enterprise Co-operation Agreements (I&ICAs)

between EU – African partners has been carried out.

Opportunities of Partnerships in the C& CE in CWA

Business partnership opportunities in C&CE between EU/CWA intermediary organisations

� European Construction Federations/Professional organisations could create partnerships with local counterparts to help in the implementation of local associations in the strengthening existing ones through different means of intervention:

o training and know-how transfer

o technical assistance for the professionalization of intermediary organisations

o technical assistance for best management practices

o technical assistance for the implementation of rules, standards and technical documents

o recommendations for the use of local building materials and human resources

� European intermediary organisations could facilitate sub-regional partnerships between national intermediary organisations.


Business partnership opportunities in C&CE between EU/CWA enterprises

� Large European construction companies and European building subcontractors and SMEs might consider establishing co-operation agreements with WCA local counterparts for sub-contracting activities in large scale building projects.

o Active players in the region can expand their presence in new areas through cooperation partnerships at a low investment cost

o Large EU companies with relevant international operations but no WCA experience have the capacity and the resources to tackle large scale projects in new markets and compete with present players. Partnership with local companies could be a strong leverage to enter these new markets. Moreover, partnership with South African companies in a Continental strategy could be a more secure way to deal with the CWA market.

o EU SMEs in the construction sector, which do not have the ability to undertake major assignments, may offer flexibility and innovation in the establishment of cooperation and technology exchange projects with African counterparts and create sub-contracting opportunities in large scale projects

� EU Engineering firms, wishing to develop reliable local expertise in the framework of upcoming projects in the region, could be interested to co-operate with local firms with the forseeable increase related to International donor tendering. Within this framework, opportunities for partnerships with local enterprises exist in the following fields:

o planning, engineering studies

o technical assistance and technology transfer

� EU companies working in building materials or building equipments could look for partnerships with local counterparts:

o securing new markets through out the CWA Region by selling or producing locally given the availability of local raw materials, the cost of imports and the growing demand for building materials

o technical assistance in equipment maintenance

o technical assistance in production of building materials (skills, know how improvement)

� supporting local companies in providing, maintaining, renting a fleet of construction equipments (scrapers, graders, engines…) as well as addressing credit and import/export issues to expand on the regional.


Swot Analysis of Target EU C&CE companies

Strengths

� Players already active in WCA (Vinci, Bouygues, Bilfinger, Amec…) maintain a

clear competitive advantage linked to their long-term presence, their political and

commercial connections, their knowledge and understanding of local

conditions. They also may take advantage of the economies of scale resulting

from their current activities in the region to lower their costs and optimise

deployment of human resources.

� Large companies with relevant international operations but no WCA experience

have the capacity and the resources to tackle large scale projects in new

markets and compete with present players. They learn from the negative

experiences of other competitors in defining their development strategies.

� Other players, newcomers and medium/small companies in the construction

sector, do not have the ability to undertake major assignments but may offer

flexibility and innovation in the establishment of cooperation and technology

exchange projects with African counterparts.

Weaknesses

� The major players’ approach is well known by contracting authorities and donors

who may appreciate and favour new competitors and different attitudes. Their

exposure to local risks is already high limiting their scope for development and

commercial aggressiveness.

� Construction companies dealing with international operations but with no african

experience have to face well-established competitors and significant

development costs required to enter a new market. They may not exploit

synergies and economies of scale.


� Other players may not feel strong and comfortable enough to engage in

international projects in the WCA region, giving up existing business

opportunities.

Opportunities

� Players already active in WCA may be interested in all the upcoming projects with

the significant number and scope of infrastructure projects and with the

expected increase of the international donors’ support. Transport infrastructure

construction projects should be the most attractive market taking into account

prospects and strong EU support

� They also will be in the position to better exploit new tendering opportunities

from international funders in infrastructure construction. It can be expected that

the French groups will continue to play a major role in francophone countries

while other European players will have more opportunities in former British

colonies, mainly in Nigeria and Ghana.

� Construction companies with no WCA experience may also be interested in the

region, in line with their geographical expansion and diversification strategy.

� Medium-sized companies should be welcome to sign cooperation agreements

with local counterparts, as reliable sub-contractors are requested by large

contractors

� It can be expected that medium/small companies, with no international experience

but open to technology exchange and cooperation, will be interested in

developing new investment projects taking advantage of the newly launched.


Threats

Threats apply equally to all categories of EU enterprises.

� It is known that a number of uncertainties hinder the involvement of the private

sector in the construction sector, namely political/social opposition, limited

suitable legal/regulatory frameworks and institutional capacity, risk sharing and

insurance, financial guarantees, country instability and safety issues.

� It is expected that EU enterprises may be cautious in evaluating ventures in Africa

in view of the perceived risks for overseas operations and the prevailing current

Europe-oriented strategy linked to the abundance of closer opportunities both

with the opening up of infrastructure markets and the accession of new Member

States. This may lead to the loss of market shares in WCA.

� The increasing presence of Chinese competitors who do not take into account

the international institutions’ viewpoint might be considered by local Governments

as an alternative to the good governance requested by these institutions and

result in the gradual withdrawal of European contractors.


7. APPENDIXES : C&CE EUROPEAN MARKET OVERVIEW

Taking into account market trends and prospects in the Construction & Civil Engineering

sector in CWA and the relative targets of potentially interested EU enterprises, an analysis of

the most likely forms of Investment and Inter-enterprise Co-operation Agreements (I&ICAs)

between EU – African partners has been carried out.


7.1. EU Construction and Civil Engineering sector overview

7.1.1. Core industry

Construction is strategically important providing, on one hand, the buildings for living and

working, and on the other hand, infrastructure on which all other industries and public bodies

depend. Many industrial sectors depend on the C&CE performances (roads, railways,

airports, ports, energy networks - gas, electricity, water, sewers, telephone,…).

The C&CE sector is considered to be cyclical, influenced by business and consumer

confidence, interest rates and Government programmes. It is characterized by a high

complexity of inter-company relations with a unique production chain, consisting of main

contractors, supplying industries, subcontractors (specialised or not), and self-employed

workers.

Moreover the sector is the largest single economic activity in Europe, but at the same time it

is also very diverse in its industrial composition. At one end of the sector are design

companies and contractors that create buildings and infrastructure works of international

renown, and at the other end are the numerous of self-employed and small firms active in

very local markets, mainly on small domestic building and maintenance works.

The construction sector is characterised by a few large companies and many of small ones,

with most enterprises serving a relatively small local market. However, large enterprises (with

more than 250 employees) generated only 22% of the EU’s value added in 2005 and small

companies with less than 50 employees generated 60% of the EU’s value added4. The self-

employment contributes to a great part of the importance of small companies in the sector.

Most EU-15 countries displayed a similar pattern, the combination of micro and small

enterprises generated at least half of the construction sector’s value added; The largest

contribution of micro and small enterprises was in the Italian construction sector where they

generated 83 % of value added.

4 Eurostat


Value added by company size (Eurostat)

1 to 9 persons

10 to 19 persons

20 to 49 persons

50 to 249 persons

250 persons and more

France 36% 13% 18% 17% 17%

Germany 24% 18% 18% 22% 17%

Italy 57% 15% 12% 10% 7%

Spain 25% 14% 23% 16% 22%

United Kingdom

27% 9% 11% 17% 36%

Other 15 UE 25% 13% 16% 20% 25%

New 10 UE 30% 9% 13% 26% 23%

In 2005, the CE&C sector employed in the 25 European countries around 12.2 million

persons working in 2.36 companies. 91.2% of companies had less than 10 persons

employed.

As many industries, the C&CE is subject to the development of ICT technologies as well as

legislative and market liberalization that have had a strong impact on integration and

disintegration of firms over the last decade. Over the recent years, the C&CE industry is

consolidating and large companies have been growing through mergers and acquisition in

order to answer to the new changing market conditions in the sector. Size has become an

industry trend for major actors to gain competitive advantage with a strong financial position

when bidding for large contracts (i.e. Vinci with Groupe GTM and ASF; Bouygues with Colas

and more recently ACS with Dragados and Ferrovial Group with BAA).

However, these Intercontinental companies with more than 100,000 employees that are very

active in their origin countries are consolidating their business through:

� organic growth with the increase of PPP market in Europe

� acquisition of new area of expertise

� geographical coverage expenditure to operate locally in a given region


In fact, construction is not just about the physical work of building but includes capabilities

and services like helping with financing and having access to investors, managing the whole

building process and being able to handle property management and development.

Large companies, also uses subcontractors and outsourcing of non strategic activities so as

to reduce costs and gain specialization in operational activities but also 100% owned

subsidiary companies to do some specialised work (Road construction by Colas in Bouygues

Group, or railway works by Vias in Dragados/Acs group).

Sub-contracting has been a major change in the construction process where interface and

contract management are key success factors. In fact, smaller firms work on a lower level, on

which they are responsible for only one trade or a part of it. Bigger firms work on a higher

level and are responsible of several trades by contracting sub-contractors. This contract by

contract basis relationship has lead to put smaller specialized firms under economic pressure

as they must act act as subcontractors on a lowest-price basis.


7.1.2. Related sectors

The construction activity in building and infrastructure is based on the setting up of a

performing work and on the deployment of an efficient management, involving different

categories of related and interrelated activities, although it is obvious that no clear-cut

borderlines can be drawn.

Architectural, engineering and construction related services: it concerns all services

that are provided during the overall construction process from the preliminary study to the

achievement of the building up/rehabilitation of the building or infrastructure. This related

sub-sector includes:

� architectural design and structural engineering

� building services engineering

� civil and geotechnical engineering

� engineering and technical services

� surveyor, control, security and quality accreditation office…

Real estate and property management: it concerns very diverse services in close

relationship with the construction sector and includes:

� real estate activities on a fee or contract basis

� letting of own property

� real estate activities on a fee or contract basis


Construction equipment/machinery: it concerns all activities regarding the renting of

construction and demolition equipment with an operator:

� heavy construction equipment supplier: bulldozer, grader, crane, earth moving

engine…

� light construction equipment supplier: generators and light towers, concrete and

masonry tool…

Construction materials: for any kind of construction building materials are needed. The

total amount of materials required for construction purposes in Europe exceeds 2 billion

tonnes per year, making it the largest raw material consuming industry. The C&CE works use

a wide range of building materials which include mainly:

� extraction of stone, slate, sand and gravel;

� manufacturing of wood products (flooring, various, panels and boards, and in

particular builders’ carpentry and joinery

� manufacturing of rubber and plastic products (including rubber rings and seals, plastic

sheets, tubes and profiles..)

� manufacturing of other non-metallic mineral products such as glass, ceramic sanitary

fixtures, mineral insulating materials, tiles, flags, bricks, cement, lime, concrete and

plaster, as well as the cutting, shaping and finishing of building stone;

� manufacturing of fabricated metal products (structural metal products, tanks,

reservoirs, central heating radiators and boilers, metal cables, wire, screws …)

� manufacturing of machinery and equipment including cooling and ventilation systems

� manufacturing of electrical machinery and apparatus (electricity distribution and

control apparatus, insulated wire and cable, lighting equipment…


Technology, services and products: It concerns the supply / production and sale of

ancillary services, technologies and products that are required for or enhance the provision

of the utility itself. It basically comprises:

� architectural and design software (3-D models and virtual reality)

� IT applications for project management, accounting…

� advanced technology for building and infrastructure maintenance and system

optimisation

� communications systems,

� global positioning system (GPS) logistics, satellite-based equipment for positioning

machines and technical equipment

� other low added-value and no core services (es. from cleaning to security).


7.2. EU Market Structure

The construction sector is strategically important for Europe providing building and

infrastructure on which all sector of the economy depend. More over the sector is Europe's

largest industrial employer accounting for 7% of total employment and 28% of industrial

employment in the EU-15. It is estimated that 26 million workers in the EU-15 depend in one

way or another on the construction sector. In 2004, construction volume in the 25 EU

countries analyzed by Eurostat5 exceeded €1,100 billion, representing 11% of the EU-25

GDP, with the 5 largest countries (Germany, the United Kingdom, France, Italy and Spain)

alone accounting for nearly three-forth (74%) of the total.

In 2003, new construction represented 56.5% while renovation & maintenance, exceeded

43.5 percent of the total construction output of Europe countries.

Construction is also an important sector of the economy in new Member States. In Poland,

Czech Republic and Hungary alone, the turnover was about 40 billion Euro in 2004 and the

market is grow significantly at an average rate of +5% in one year. All together, the New

Member States accounts for less than 5% of the total input.

5 FIEC: European Construction Industry Federation - Construction activity in Europe, 2006


Country

Volume of C&CE sector in 2005

% of GDP Employees in C&CE sector

in 2005

Austria 28 11.4 253

Belgium 27 9.1 242

Cyprus 0,9 6.9 38

Czech 13 15.1 365

Denmark 24 11.6 173

Estonia 2 20.0

Finland 22 13.8 159

France 139 8.1 1739

Germany 206 9,2 2138

Great Britain 159 9.0 1828

Greece 14 7.8

Hungary 9 10.1 325

Ireland 30 18.8 233

Italy 129 9.4 1833

Luxembourg 1 3.7

Netherlands 50 10.1 425

Portugal 22 15.3 550

Slovakia 3 8.1 140

Slovenia 2 7.1 67

Spain 165 18.3 2506

Sweden 19 6.6 249

Source: FIEC, 2005

In the international marketplace, the European construction sector is also a major contributor

to exports, reported as winning more than 50% of major international construction contracts.

Indeed, the international business volume of European construction companies is greater

than that achieved by Japanese (by 10%) and North American companies (by 30%).

Overall construction volume in 2005 was divided among the 3 sub-sectors as follows:

� Residential construction: 47%

� Non-residential construction: 32%

� Civil engineering: 21%


7.2.1. Residential sector

The residential sector is the most important sector and provided in 2005 the main support for

the construction activity in most EU countries. The new residential building sub-sector is

mainly favoured by the low interest rates since several years. The number of new buildings

reached 2.504.000 in 2004 within the 25 EU countries, including 231.000 units for the 10 new

Member States. In fact, in the new Member States, priority is given to infrastructure and non-

residential buildings development although there is a considerable need for new housing and

rehabilitation of existing residential building.

Several factors have an effect on residential building development and can affect the growth

of the market : prices, government subsidies, demographic trends, interest rates and the

market demand.

In 2004, Spain built the highest number of new houses but Ireland had the highest rate of

houses completed per 1000 inhabitants. In the EU-15, the number of new houses reached

5,9 per 1000 against 3,2 per 1000 for the 10 new members.


New residential building in EU-15 (2005)

EU - 15 countries Population (in millions)

New housing (in thousands)

New houses per 1000 inhabitants

Germany 83 248

Sweden 9 28

Great-Britain 60 227

Belgium 10 46

Netherlands 16 76

Italy 58 276

Danemark 5 25

Austria 8 42

Portugal 11 62

France 60 363

Finland 5 32

Greece 11 81

Luxembourg 0,5 4

Spain 43 687

Irland 4 77

Source : Euroconstruct, 2005

State subsidies

In most EU countries, the State’s role in providing access to affordable housing has changed

significantly since the 1960s. Government subsidies for the housing market played an

important role to stimulate the new house residential sector and finance the construction of

social housing. In the last decades the State policy aimed at increasing home ownership.

Attempts to reduce the public debt and inflation levels further increased governments’

interest in the privatisation has led to a decrease in housing subsidies. Instead of

redistributing resources, the emphasis has shifted to regulation and risk management.

Today, in many EU countries, subsidies are diverse such tax breaks on the purchase of

housing and/or low interest loans.

19,3

16,0

8,0

6,4

6,1

5,6

5,3

5,0

4,8

4,8

4,6

3,8

3,1

3,0

7,4


Ownership situation

The level of owner-occupied housing without a mortgage varies significantly across Europe.

In the EU-15, it accounts for 38% of ownership, whereas in the New Members countries, this

amount is 66%. The highest level of home ownership can be found in Slovenia and

Lithuania, where at least 80% of the respondents own their house. This high share in the

new members countries is mainly due to the rapid privatisation of accommodation, which

began in the early 1990s. Following new legal regulations, people could afford to become

home owners at a relatively low cost and this applied even to poorer families.

In the EU-15, the highest levels of ownership are to be found in Greece, Italy and Spain. The

lowest rates of owner occupation are recorded in the Netherlands, Denmark and Sweden,

which in turn have the highest rates of ownership with a mortgage.

Prices and housing demand

House prices have increased strongly during the last years in many European countries such

as in Ireland, United-Kingdom, Spain and France.

� Housing demand is still growing in Europe due to demographic and social changes

such as immigration, more single household with the increase of divorce and the

housing needs for older persons are becoming more demanding

� Historically low level of interest rates which is beneficial to the purchase of housing.

This effect is particularly noticeable in Spain, Ireland, Italy and Portugal where

interest rates where approximately 12% before joining the “Euro zone”.

� Investment motivation


7.2.2. Non residential buildings

Non-residential construction covers a wide range of different sectors including industrial and

commercial buildings, health, education and storage facilities. The non residential building

sub-sector has been slowing down since 2002. Private investment declined and the strong

rise of the public investment did not compensate the gap. In fact, the private sector

constitutes 80% of the demand.

The new construction dominates the non-residential building sub-sector in Europe with more

than 55% of the market. The total value of new construction in this sub-sector was over €200

billion in 2005 in the EU-15

The largest sub-sector segment is represented by the industrial buildings followed by

commercial buildings.

The non-residential building sub-sector is influenced by two main economical trends:

� employment growth which drives the demand in new office and industrial building

construction

� consumption growth which stimulates the construction of new commercial buildings

In the public sector, educational building constitutes the largest market segment whereas the

construction of health facilities is stabilized.

New non-residential building in EU-15* (2005)

Source : Euroconstruct, 2005 * No data from Greece and Luxembourg

0%

5%

10%

15%

20%

25%

30%

35%

UK

Austri

a

Finla

nd

Belgium

Portu

gal

Dan

emar

k

Ger

man

y

Franc

eIta

ly

Net

herla

nds

Irlan

d

Spain

Swed

en

Average


7.2.3. Civil engineering

The civil engineering (CE) sub-sector is mainly dependant from public investments and it is

driven by transport infrastructure (56%), roads accounting for the largest proportion of

infrastructure projects.

The second largest market segment in the CE is represented by energy and water

infrastructures projects (19%), telecommunication sector accounting for 8% of CE projects.

The five largest Western European Countries concentrates two thirds of revenues.

In Europe, new projects accounted for 14% of the C&CE sector in 2003. The rate was 7% for

renovation work.

Other

infrastructure

projects

17%

Transport

56%

Energy and

Water 19%

Telecom.

8%

EU has a mature economy and has achieved the building of its core physical infrastructure in

transport, energy, water. No major transformations, re-construction or economic booms are

expected. The drop in public investments in order to cope with budget deficit since 1999 has

led to a decrease in the Civil Engineering sector in most EU countries.

However, since 2005, some new perspectives are present and should contribute to the

recovery of the sub-sector.


� Transport infrastructure projects are still dynamic in Ireland with the Road Transport

Development Plan, in Austria with the development of connections with new member

countries, in the Netherlands with railway projects, in Sweden with large road and

railway projects and in Belgium with railway infrastructure programme (sub-urban

networks in Brussels)

� Regional authorities have increase their investment plan in Spain and France which

compensates the drop in National public investments.

� Energy and water infrastructure projects are expanding in Germany with water, gaz

and electricity networks.

� Works in infrastructure in the framework of the Olympic Games in 2012 should

support the sub-sector in the midterm.

� In new Member states, the CE sub-sector is stimulated by public Investments and by

the Union’s structural funds. Annual growth is expected to reach 10% for the next few

years in Czech Republic, Hungary and Slovakia.

New construction markets are opening up in Asia and Africa and other developing areas.

These markets present opportunities for European construction companies, although

competition from other developed nations will be fierce.

7.2.4. Public Private Partnerships

A Public Private Partnership refers to any alliance between public bodies, local authorities or

central government, and private companies. PPPS are granted to private entities that are in

charge of the whole operation from the design to maintenance passing through the

construction and financing.


The PPP scheme is expected to expand in Europe in the framework to renew its

infrastructure. It offers many opportunities for the construction sector as main future large

infrastructure projects should be conducted through the PPP scheme. The use of PPP is

largely developed in UK and is expected to increase stonrgly in the next fex years in Spain,

France, Germany, Italy and in Central and eastern European countries where the need to

rehabilitate infrastructure is huge. Some key elements are now in place for future PPP

development schemes:

- The legal framework is in place in some countries such as UK, Spain and has been

clarified in other countries such as France with the “Contrat de Partenariat” and

Germany with the “Beschleunigungsgesetz”

- The EU Commission is in the process to introduce the Competitive Dialogue

Procedure wich deals with PPP procurement process.

- The PPP scheme is being introduced in new market segments by EU Governments,

in addition to traditional infrastructure projects. Non residential buildings are targeted

in health and education sectors.

7.3. New challenges for the EU C&CE

The C&CE sector is one of the European Union’s key industries both in terms of output and

employment. Thus, in recent years the European Union has developed a coherent approach

for the C&CE sector with the aim to develop actions contributing to competitiveness and

improvement of the sector. Main challenges to face up are the following:

� maintain technical leadership in respect of sustainable economy (applying new

materials with which are environmental friendly, reducing energy consumption

� improve education and training of construction professionals and operatives to

disseminate new skills and competencies

� ameliorate urbanisation and landscape


� preserve the internal market shares and improve international positions, especially in

relation to the US, China and India.

� increase safety condition: the sector has one of the worst records with over a 1000

fatalities each year.

Several policies emanating from the EU is impacting the construction and civil engineering

sector directly through specific construction policy and indirectly through horizontal issues

related to the sector:

� The Construction Products Directive goal is to harmonize all construction products

subject to regulatory controls for CE marking purposes and to ensure free movement

of construction products. It applies to all construction products that are produced for,

or incorporated within, building and civil engineering construction works. It applies to

all construction products that are produced for, or incorporated within, building and

civil engineering construction works.

� The Directive on the Energy Performance of Buildings will greatly affect

awareness of energy use in buildings, and is intended to lead to substantial increases

in investments in energy efficiency measures within residential and non-residential

buildings.

� The Waste Strategy was adopted in December 2005 by the European Commission

the Thematic Strategy on the Prevention and Recycling of Waste and has as

objective to emphasise more on recycling wich suppose to include new rules in the

construction materials sub-sector..

� The REACH Directive (New chemical policy) has the objective of to introducing a

unique system to manage all existing and new chemical substances which will impact

the construction sector.


7.4. Description of the main EU players

According to the Mc Graw Hill Global Contractors ranking, 8 of the 10 largest international

contractors (based on contracting revenue generated in the company’s home country and

abroad) were from the EU in 2001. By 2005, only five of the top 10 were European – Vinci,

Bouygues (both France), Skanska Ab (Sweden), Hochtief AG (Germany) and Grupo ACS

(Spain) – as a number of Chinese companies - China Railway Engineering Corp, China

Railway Construction Corp had entered the top 10 list.6.

20 Main EU construction companies

Rank Name Country Turnover 2005

(€ Billions) Employees 2005 (in thousands)

1 VINCI France 21,5 140

2 BOUYGUES (construction activities) France 17,1 102

3 HOCHTIEF Germany 13,6 36

4 SKANSKA Sweden 13,4 54

5 ACS Spain 12,1 99

6 STRABAG Austria 9,3 41

7 GRUPO FERROVIAL Spain 8,9 57

8 EIFFAGE France 8,3 54

9 BAM GROEP Netherlands 7,4 27

10 AMEC United Kingdom 7,2 45

11 BILFINGER BERGER Germany 7,1 55

12 FCC Spain 7,1 64

13 BALFOUR BEATTY PLC United Kingdom 5,6 27

14 TECHNIP France 5,4 22

15 NCC AB Sweden 5,3 22

16 TAYLOR WOODROW PLC United Kingdom 5,2 8

17 GEORGE WIMPEY United Kingdom 4,5 6

18 SACYR Spain 4,2 8

19 ROYAL VOLKER WESSEL STEVIN Netherlands 4,2 17

20 BARRAT DEVELOPMENTS PLC United Kingdom 3,7

Source: Companies Activity report, 2005

The current C&CE sector is described below on country-by-country basis. Company data

concerning turnover and employees are provided from company’s activity reports.

6 Mc Graw Hill Construction companies, Top Global Contractors, 2006


Austria

The infrastructure investment, stimulated by the connection with the extension of the trans-

European networks, is the main growth support to the construction industry. Building permits

have dropped to 44,000 from 66,000 in the mid-1990’s. The total volume of revenue in the

construction sector was 29 billions of Euros in 2005 which accounted for more than 10% of

the Austrian GDP (11,6%). The main construction company is the Strabag Group (B€ 9,3)

followed by Porr (B€ 1,9). The third Austrian construction company, Alpine Holding (B€ 1,6)

is under acquisition by the Spanish company FCC.

� STRABAG was founded in Germany in 1895. The Bauholding Strabag Group resulting

form the merger of construction groups Ilbau, Strabag and Stuag, changed its legal

form to Societas Europaea in 2004. The company operates mainly in Austria,

Germany, and Hungary and in other countries in Central and Eastern Europe.

Services provided by the group include architecture and engineering, tunnelling, and

general construction. The company operates in every stage of construction from

financing to project management. Its sister company A-WAY operates is

concessionary companies and handles finances. More recently, the Strabag goup

made acquisition (Züblin, Dywidag and Heilit + Woerner).in Germany, its largest

market with 38% of the construction revenue.

� PORR was established in 1869. The company’s core activities are building (housing,

industrial plants, offices..) and roads construction. The market presence in Austria, in

particular in the Vienna area, was strengthened with the acquisition of Wibeba in

2005. The company main markets are in German speaking countries (Austria,

Germany and Switzerland).


France

The total volume of the construction sector reached 143 billions of Euros in 2005. 54% of the

construction revenue was generated by the public sector. The sector is still sustained by the

housing sector with the demographic trends, policy support and the demand for new houses

construction. Vinci and Bouygues, the two leading construction world leader dominates the

French infrastructure and housing market. The international activity of French construction

firms, accounted for 40% their total turnover. In this regard, the European continent is the

largest share of the business of French groups outside France (around 60% of their

international turnover, Africa accounted for 10%).

� Vinci: created in 1899 by two French engineers, formely called Société Générale

d'Enterprises, Vinci has become the largest company in construction and related

services worldwide with the acquisition of GTM a Suez subsidiary in 2000. The Group

operates in France, most parts of Europe, North America and parts of Africa and has

a leading role in the world market for major design and build projects and specialised

civil engineering. Main activities are:

� Vinci Concession: comprising the design, construction, financing and

operation of major structures like highways, car parks and airports

� Vinci Energy: engineering, systems integration, installation and

maintenance for energy infrastructure, manufacturing, services and

telecommunications sectors

� Eurovia: construction, renovation and maintenance of road and motorway

infrastructure, carries out urban, industrial and retail development projects.

� Vinci Construction: construction in building, civil engineering, hydraulic

engineering, multi-technical maintenance and services.


� The Bouygues group, was founded by Francis Bouygues in 1952, has been run by

Martin Bouygues, Chairman and Chief Executive Officer, since 1989. Initially focused

on the building sector, Bouygues rapidly extended its scope to include property

development and industrial precasting, operating across France through its regional

subsidiaries. Throughout the 1990s, the Group developed its construction activity on

international markets and launch new activities in media and telecommunications.

Today, the group is established in 80 countries, and employs more than 115,400

people. In 2005, its sales amounted to €24.1 billion, of which 70% were generated

outside abroad. In the construction sector the Bouygues group is active in three major

activities:

� Bouygues Construction (6,1 M€): electrical contracting and maintenance

with ETDE, public-private partnerships, property development and transport

infrastructure concessions.

� Bouygues Immobilier (1,5M€): property development in Europe, housing

projects, office blocks and commercial building

� Colas (9,5 M€): construction and maintenance of transport, urban and

leisure infrastructure

� Eiffage: created in 1992 with the merger of Fougerolle and SAE, Eiffage is the third

leading construction player in France. Eiffage has an international network of 500

subsidiaries and the group’s main activities are construction and civil engineering

works. It operates in five segments: Construction and civil engineering, road

construction, electrical contracting, metallic construction and concessions (car parks,

motorways, infrastructures…). The Group's international operations are in Belgium

Europe and Africa (Senegal and Nigeria). More recently, Eiffage acquired Goyer and

Autoroutes Paris-Rhin-Rhone.


Germany

Germany has the largest European market share with rate of 17%. The CE&C industry is

dominated by two major players (Hochtief and Bilfinger Berger) and some large companies

(Ed Züblin AG (Strabag German subsidiary), E Heitkamp Baugesellschaft, Bauer, Wolff &

Müller…). The public sector accounts for 54% of the C&CE market. The German

construction market has decreased during the last decade and the housing sector is still

dropping sharply.

� Hochtief: incorporated in 1873, by Helfmann brothers, is today the biggest building

contractor in Germany and a major player in Europe. Since the 1990’s, the company

expanded its activity abroad and in construction-related services covering every

aspect of properties, facilities and infrastructure projects. More recently, Hochtief

opened up new business fields such as project development, airport management

(Athens, Düsseldorf, Hamburg, Sydney airports…) and facility management. In

Europe, the company is active in building construction, civil and structural engineering

as well as airport construction in the German, UK, Austrian and Eastern European

markets, among others.

� Bilfinger Berger AG’s principal activity is to provide structural and civil engineering.

The Group activities also include construction of railways, bridges, roads, subways

and tunnels, hydraulic engineering, offshore construction and industrial buildings

(power stations, refineries, factories). The Group also constructs and finances

residential and commercial property, water drainage and sewerage treatment and

town planning. Finally, through Bilfinger Berger BOT, the company is active in

concessions, involved in the design, development, financing, construction, and long-

term management of transport infrastructures. In 2005, the Group acquired Babcock

Borsig Service GmbH. The group owns the Razel Company which is active in CWA

countries.


Ireland

The construction sector is a key industry in the Irish economy. In 2005, the revenue of the

construction industry reached €31.5 billion compared to €17.6 billion in 20007, which

accounts for 20% of the GDP. Moreover, the housing construction output doubled from €9.5

billion in 2000 to €20.9 billion in 2005. The largest Irish company is Sicon Ltd, the parent

company of John Sisk & Son Ltd, with net sales over €1 billion with a staff of 2,500

employees. This company has a subsidiary in Zimbabwe. Other large Irish companies have

net sales under €500 million such as Ascon Contractors Ltd, McInerney Holdings, Mercury

Holdings, Michael McNamara & Co, Pierse Contracting, PJ Hegarty & Sons, Ball more

Properties and Abbey PLC.

Italy

Although the market share is one of the largest of EU-25, the construction industry is

fragmented with many small and medium companies with no companies having net sales

over €5 billion. The domestic sector is relatively closed to foreign companies and employs

1.9 million workers. The sector is dominated by four companies: Impregilo SpA,

Snamprogetti (ENI subsidiary) with net sales over €2 billion, followed by Astaldi and

Condotte D’Acqua with net sales around €1 billion.

� IMPREGILO SPA, has four main business activity: public-sector infrastructure projects,

environmental systems (desalination, water treatment and energy production from

solid waste), concessions (motorways, airports, water distribution and treatment,

production of electricity) and building constructions & services. Outside Europe, the

company mains markets are South & Central America and the Middle East.

7 Construction and Housing in Ireland, Central Statistics Office, 2005


The Netherlands

The construction and civil engineering sector accounted for 9.8% of the GDP in 2005 (€49.7

billion). The private sector generated two thirds of the total volume of the C&CE industry.

Public authorities are targeting to launch PPP schemes in new area such as education and

health. The industry is dominated by 10 large companies (net sales over €1 billion), the

largest ones are the Royal Bam Group and the Royal Volker Wessel Stevin followed by

Heijmans, TBI Holding and Ballast Nedam.

� ROYAL BAM GROEP was a simple carpenter's workshop incorporated in 1869. Royal

BAM Group has expanded rapidly via numerous acquisitions. The largest acquisitions

were the construction and civil engineering companies NBM-Amstelland in 2000 and

the European construction group HBG in 2002. The Dutch company has acquired

significant market positions in the United Kingdom, Ireland, Belgium, Germany and

the United States. The Group is active in the construction of housing and non housing

building, and infrastructure (roads, railways, cable networks, pipelines) as well as

their maintenance.

� ROYAL VOLKER WESSEL STEVIN’s core activities are the design, development,

realization and management of construction projects. The two main business trades

are infrastructure (51%) and building & property development (44%).

Spain

The Spanish Construction industry is one of the most dynamic in Europe with more than 5%

growth annually and constitutes 58% of total investment I n the country. The C&CE sector is

stimulated both by residential construction with low interest rates and by Infrastructure

construction with the Strategic Infrastructure and Transport plan (€241 billions over 2005-

2015). The Spanish construction industry accounts 6 major players with net sales over €2 M.

These six companies represent 60% of public funded projects. In the residential sub-sector,

the market concentration is much lower, as many medium companies are present. The three

main companies are Grupo ACS (€12,1 B), Grupo Ferrovial SA (€9,4 B), FCC (€7 B) and are

followed by Acciona (€4.8 B), Sacyr-Vallehermoso (€4.1 B), and OHL-Obrascon Huarte Lain

(€2,4).


� GRUPO ACS, ACTIVIDADES DE CONSTRUCCION Y SERVICIOS, is the leader of the

Spanish construction market, since the merger in 2003 with its former competitor

Dragados. The Group's principal activities are the development, construction and

management of infrastructures (civil works accounts for 60% of construction

revenue). It is also specialized in the construction of non-residential buildings (24%)

and residential building (17%). The construction activity is dominated by the public

sector with 44%. The Industrial services are involved in distribution networks, energy,

telecommunication, industrial and control systems. The services and concession

division is involved in providing port services and logistics, integral maintenance,

transportation of passengers and merchandise.

� GRUPO FERROVIAL was incorporated in 1952 by Rafael del Pino, whose initial core

activity to work for RENFE (Spain's railway company). Since 2000, the company has

acquired different companies in Spain such as Grupisa, and abroad: Budimex in

Poland, Amey in UK, Weber in US and more recently BAA in UK, the world's largest

airport management company. Main trades of Grupo Ferrovial are C&CE, real estate

and services (urban cleaning, facility management and infrastructure maintenance).

The Group operates in all areas of construction: civil engineering, building and

industrial construction. Transport infrastructure accounting for a large part of the

company’s activity with the management of 2,000 km across Europe and tu United-

States, of 4 airports (UK, Australia and Chile), and car parks in Spain.

� FCC, FOMENTO DE CONSTRUCCIONES Y CONTRATAS, established in 2000 as Fomento

de Obras y Construccionnes SA, merged with Construcciones Y Contractas SA in

1992. FCC is involved in the construction industry (47%), services (14%) and cement

(39%). The construction activity emprises the construction and maintenance of

transport and water infrastructures (57%), housing (16%) and non-residential

buildings (27%).


Sweden

The construction and civil engineering sector accounted for 7.2% of the GDP in 2005 (€20.8

billion). The Swedish construction market is dominated by the residential building sub-sector

(43%), followed by non-residential building and civil engineering. The sector is led by Skanka

(€13.4 B) largely in ahead from its competitors NCC AB (€5.3 B), PEAB AB (€2.7 B) and JM

AB (€1 B). As the Sweddish market is small, large construction companies have developed

their activity abroad 80% of the turnover for Skanska and 58% for NCC AB.

� SKANSKA incorporated in 1887, started by manufacturing cement products. Although

its historic markets are in Scandinavia, the Group has subsidiaries in UK, Denmark,

Poland, Czeck Republic United-States and Latin America. The construction activity

(building and civil construction) accounts for 90% of the company’s revenue, while

Infrastructure projects (BOT), residential development and commercial development

accounts for 9% in 2005.

� NCC AB develops residential and commercial property projects and builds offices,

industrial facilities, roads, civil-engineering structures and other types of

infrastructure. NCC also offers input materials used in construction, such as

aggregates and asphalt. The company is active in Nordic countries with its

subsidiaries: Denmark (14% of the annual turnover), Finland (12%) and Norway

(10%).

United Kingdom

The United Kingdom has the largest construction sector with a 16.6% share in the EU-25 in

value added terms. Although there are no major groups such as in France, Germany or

Spain, the construction industrial structure is more fragmented with the presence of many

companies having a turnover above €1 Billion. Amec (€7.2 B), Balfour Beatty (€5.6 B), Taylor

Woodrow (€5.2 B), George Wimpey (€4.4 B), and Barrat Development (€3.7 B) are in the top

20 largest EU companies. Most of UK construction companies are domestically owned and

have localised operations.


� AMEC is an international project management and services company that designs,

delivers and supports infrastructure assets for customers across the public and

private sectors. The company comprises two divisions, Energy & Process and Built

Environment which accounts for 36% of the total revenue in 2005.

� BALFOUR BEATTY’s main activity comprises building (44%), engineering (35%), rail

engineering (20%) and privately funded infrastructure projects (PPP/PFI). 66% of the

turnover was realized in the UK in 2005

� TAYLOR WOODROW's operation focuses on Housing, property and non-residential

construction. The housing segment accounts for 80% of the company’s consolidated

revenue. The Group has subsidiairy in the housing segment in North America, Spain

and Gibraltar.

� GEORGE WIMPEY is specialized in housing and land development in UK and North

America.

� BARRAT DEVELOPMENT‘s principal activity focuses on house building and developing

residential and non-residential property.

Portugal

The Portuguese construction industry is composed of many small companies and accounts

for 17% of the GDP. The sector is in recession since 2001, and the Government reduced

investment in infrastructure development to contain budget deficit. Therefore the competition

is fierce in the sector. The largest companies are Mota Engil (€1.2 B), Somague (€0.9 B),

Teixeira Duarte (€0.7 B) and Soares Da Costa (€0.6 B).


Bibliography

� African Ministerial Conference on Housing and Urban Development (AMCHUD),

“Financing housing and urban development: with special reference to Africa”,

2005

� Pierre-Antoine Braud, “La Chine en Afrique : Anatomie d’une nouvelle stratégie

chinoise", 2005

� Centre for Chinese Studies, Stellenbosch University, “China’s Interest and Activity

in Africa’s Construction and Infrastructure Sectors” A research undertaking

evaluating China’s involvement in Africa’s construction and infrastructure sector

prepared for DFID

� Deloitte, “European Powers of Construction”, 2006

� European Commission, Development and Relations with ACP Countries, “Country

Strategy paper”

� Euroconstruct, statistical data, 2006

� Communautés Européennes, Industrie Commerce et Services, Eurostat, 2006,

(www.ec.europa.eu/eurostat/)

� FIEC, “Construction activity in Europe”, 2006

� Kellen Europe, “The construction Issue sheet”, 2005

� Missions Economiques, “Le BTP au Cameroun, Côte d’Ivoire, Gabon, Mali,

Nigéria et Sénégal”, 2005

� OCDE, “African Economic Outlook” 2006

� Commission of the European Communities, Communication from the Commission

to the Council and the European Parliament, “Interconnecting Africa: the EU-

Africa Partnership on Infrastructure”, 2006

� RICS Research, “Land and Property Markets in Ghana”, 2005

� The World Bank Group, “Country Brief” & “Country Strategy Assistance” from

Central and West Africa countries

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