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Construction Industry Tanzania

The Construction Industry in Tanzania 2018

Carole Veitch | Tanzania | 09 April 2018

The Construction Industry in Tanzania 2015

Martin Rothschild | Tanzania | 30 October 2015

The Construction Industry in Tanzania 2015

Martin Rothschild | Tanzania | 25 May 2015

The Construction Industry in Tanzania 2014

Martin Rothschild | Tanzania | 26 November 2014

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Report Coverage

The Tanzanian Construction report focuses on current conditions, developments in the sector, the key drivers and the challenges that the industry faces. Profiles for 32 companies active in the sector are provided. Included are Chinese companies such as China Civil Engineering Construction Corporation, China Communications Construction Company, China Merchants Port Holdings Company, China Railway Group and China Wu Yi Company Ltd which are proving to be particularly competitive, especially in the civil construction market. Also profiled is Estim Construction Company Ltd which has subsidiaries in Mozambique and Zambia but whose headquarters are based in Tanzania. Alvic Builders (Tanzania) Ltd is another company with headquarters in Tanzania which undertakes projects throughout Africa.

Introduction

This report examines the construction industry and infrastructure development in the United Republic of Tanzania. As an industry with linkages to all sectors of the economy, the construction sector performs a pivotal role in Tanzania, as well as across the East African trade bloc. The roll-out of major public infrastructure projects across Tanzania and beyond its borders continues to support the rapid expansion of the construction sector, which currently contributes more than US$7bn to Tanzania’s annual GDP. With annual GDP growth averaging 7% over the past five years, Tanzania is ranked among the 20 fastest-growing economies in the world.

Strengths

• High levels of construction activity have supported Tanzania’s high-growth economic environment.
• Public-Private Partnerships are encouraged.
• The construction sector provides employment opportunities for unskilled and semi-skilled workers, as well as tradesmen and skilled professionals.
• The Tanzanian construction industry is a key driver of socio-economic development, providing shelter, basic services, transport networks and other infrastructure.

Weaknesses

• Enforcement of regulations is inconsistent.
• It is frequently difficult to procure construction materials and equipment locally and contractors are highly reliant on imported goods.
• Quality control is inadequate.
• Technology transfer remains weak.
• There is a shortage of skilled labour, workmanship is generally poor and productivity is low.

Opportunities

• Development of transport corridors and ancillary infrastructure in support of Tanzania’s role as a trade conduit for the integrated East African Community (EAC) trade bloc.
• Market demand for low-cost, energy-efficient housing, creates opportunities for new innovations and product lines.
• Renewable energy projects are increasingly attracting greater investment.
• Rising urbanisation presents building and construction opportunities in the form of new satellite cities.
• The emerging middle class is driving demand for infrastructure across a multitude of sectors.
• The National Development Plan outlined in Vision 2025 prioritises the construction of infrastructure, including the establishment of industrial development zones, to support the country’s economic transition.

Threats

• Corruption and tender fraud.
• External geopolitical threats and global macroeconomic pressures could result in lower levels of investment.
• Funding shortfalls and delays in the implementation of infrastructure projects.
• The climate of policy and regulatory uncertainty, which threatens to undermine investment.

Outlook

Since his election to office in December 2015, President John Magufuli has taken a hard line on corruption and political activism. While stakeholders have praised his commitment to tackle the scourge of corruption, concern has been expressed about his crackdown on political dissent. Recent policy reforms introduced by the Magufuli administration, coupled with reductions in government expenditure, have received a mixed response, with some commentators warning that uncertainty surrounding the government’s new policy direction could undermine foreign investment. Stakeholders say that weaker FDI inflows would impede construction activities and result in further projects delays. Notwithstanding downside risks to economic expansion, Tanzania is expected to sustain an average annual GDP growth rate of around 7% over the medium-term. With the frontier economy serving as a trade conduit for its land-locked neighbours, the development of transport corridors remains a strategic imperative. Stakeholders anticipate that infrastructure projects supporting the integration of the East African Community (EAC) trade bloc will be prioritised, with a particular focus on the development of ports, roads and railway lines.

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The Construction Industry in Tanzania 2018

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R 1 900.00(ZAR) estimated $99.65 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.76 (USD)*

Historical Reports

The Construction Industry in Tanzania 2015-10-30

R 1 900.00(ZAR) estimated $99.65 (USD)*

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The Construction Industry in Tanzania 2015-05-25

R 1 900.00(ZAR) estimated $99.65 (USD)*

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The Construction Industry in Tanzania 2014-11-26

R 1 900.00(ZAR) estimated $99.65 (USD)*

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Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
2.1. Geographic Position 2
3. DESCRIPTION OF THE INDUSTRY 4
3.1. Industry Value Chain 6
4. SIZE OF THE INDUSTRY 7
5. STATE OF THE INDUSTRY 15
5.1. Local 15
5.1.1. Corporate Actions 26
5.1.2. Regulations and Government Policies 27
5.2. Continental 30
5.3. International 34
6. INFLUENCING FACTORS 36
6.1. Economic Environment 36
6.2. Investment in Infrastructure 36
6.3. Corruption 38
6.4. Input Costs 38
6.5. Cyclicality 39
6.6. Health and Safety Concerns 39
6.7. Technology, Research and Development (R&D) and Innovation 39
6.8. Labour 41
6.9. Environmental Concerns 42
7. COMPETITION 43
7.1. Barriers to Entry 45
7.2. Public Procurement and the Tendering Process 45
8. SWOT ANALYSIS 46
9. OUTLOOK 47
10. INDUSTRY ASSOCIATIONS 47
11. REFERENCES 48
11.1. Publications 48
11.2. Websites 49
APPENDIX 1 51
The Global Competitiveness Index 2017-2018: Tanzania 51
COMPANY PROFILES 52
ADVENT CONSTRUCTION LTD 52
ALVIC BUILDERS TANZANIA LTD 54
ATIGH BUILDING CONSTRUCTION COMPANY LTD 56
ATLAS AFRICAN INDUSTRIES LTD 57
AURECON SOUTH AFRICA (PTY) LTD 61
BAM INTERNATIONAL BV 66
CHINA CIVIL ENGINEERING CONSTRUCTION CORPORATION 68
CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD 70
CHINA MERCHANTS PORT HOLDINGS COMPANY LTD 74
CHINA RAILWAY GROUP LTD 76
CHINA WU YI COMPANY LTD 81
COWI TANZANIA LTD 84
DEL MONTE (TANZANIA) LTD 86
ESTIM CONSTRUCTION COMPANY LTD 87
FABEC INVESTMENT LTD 89
FRANKIPILE INTERNATIONAL PROJECTS LTD 91
GIS ENGINEERING & ENVIRONMENTAL SERVICE LTD 93
GS POWER INSTALLATIONS (PTY) LTD 95
HEMATEC INVESTMENT LTD 96
HOLTAN EAST AFRICA LTD 98
ITALFRAME LTD 100
JFM CONSTRUCTION LTD 102
KERAI CONSTRUCTION LTD 103
MHM GENERAL SUPPLY LTD 104
NORPLAN TANZANIA LTD 105
PMG GROUP (TANZANIA) LTD 106
PREMIER ELECTRIC CONTRACTORS 108
SALEM CONSTRUCTION LTD 109
SKOL BUILDING CONTRACTORS LTD 111
SWACHEN ENTERPRISES LTD 113
TANZANIA BUILDINGS AGENCY 114
WAPO SCAFFOLDING (TANZANIA) LTD 116

Report Coverage

The report on the Tanzanian Construction Sector identifies and discusses the opportunities and challenges in the local economy for the construction industry, as well as factors influencing the success of the industry. The report also profiles 27 companies active in the sector, including Advent Construction, one of Tanzania’s major local construction companies. Also profiled are smaller companies such as COWI Tanzania Ltd, which has 100 employees and specialises in infrastructure development, and construction consultancy GMP Consulting Engineers Ltd, which has ten permanent employees and is based in Tanzania.

Introduction

The Tanzanian construction industry has continued its steady growth throughout 2015. The industry is pushing growth in the country, with a second quarter contribution to GDP of 13.2%, compared to average annual GDP for 2015 of an estimated 7%. The growth in the construction sector has been supported by the overall growing economy, the rapid urbanisation rate, increased population growth, and gains in the transport, infrastructure development and communications sectors. The government’s policy of reducing red tape for construction projects and overall push towards infrastructure, large-scale project development, and easier access to capital has also helped propel the industry. There are still significant challenges faced by the country, the most pressing being the inauguration of the incumbent President Dr John Magafuli, disputes surrounding the recent elections, the annulment of the election in Zanzibar, slow economic growth coming out of China, the aftermath of the Burundian coup crisis, general international perceptions of East Africa, as well as general infrastructural, health, and developmental challenges.

Strengths

• Government’s more liberalised economic policy has contributed to large intakes of FDI and there has been consistent, annual GDP growth of 7% or more.
• Rebasing of the GDP figure to 2007 has seen a marked increase of 32%.
• Significant untapped natural resources.
• Strong relationships with China and Chinese construction firms.
• The Tanzanian government has prioritised infrastructural development.

Weaknesses

• Corruption within the sector.
• High cost of electricity and other vital inputs.
• Lack of highly skilled manpower in construction.
• Lack of private investment.
• Poorly developed infrastructure and communications and technology network.
• Vast, widely-spread population.

Opportunities

• Construction work as a result of the large investments by the public sector in infrastructure development.
• High rate of urbanisation will present construction opportunities.
• Large gas reserves will lead to influx of construction work.
• Significantly reduced inflation rates will make financing new projects cheaper.
• Through partnerships with Chinese companies, local people can gain valuable on-the-job skills training.

Threats

• Continuing corrupt activities in the private and public sector.
• Destabilisation of surrounding countries, especially the coup attempt in Burundi.
• Doubts over the fairness and transparency of the elections.
• High infection and death rate of HIV/AIDS
• Increasing cost of electricity.
• The threat of terrorism and the Al-Shabaab arm of Al-Qaeda in the region, specifically from Somalia.
• Worsening socio-political situation.

Outlook

Construction Industry Forecast Industry analysts expect the Tanzanian construction industry will continue to grow above the general economic growth rate as the drive by the public and private sector towards new projects remains high. The long-term success of the industry will be dependent on creating sustainable, affordable projects and ensuring that the necessary skills are brought to the country and developed locally. The increased production of local content, specifically cement, will allow construction projects to source materials at cheaper prices going forward. Although the high cost of electricity remains an issue for the sector, more generation capacity coming online will help lessen the impact of this over the next decade. The relationship with China remains a positive one for the country, but over-reliance on the Chinese economy for growth may cause problems if China continues to experience lower-than-anticipated GDP growth rates. Strong relationships with international aid organisations such as the World Bank continue to ensure funding for necessary social and infrastructure projects. The high levels of FDI experienced by Tanzania show that it is seen as the destination for investment in East Africa despite corruption across all sectors. This still poses a major threat to the industry, and government officials as well as contractors will need to address this issue harshly to ensure it does not escalate further. Macroeconomic Outlook Estimates from African Economic Outlook as well as the World Bank predict that the Tanzanian GDP growth will stabilise at around 7% per year in 2016. The decrease in inflation experienced in 2015 has allowed economic participants to engage in more risk-taking which has generated funding for more ambitious projects. The rate has stayed below the 5% mark which has given a break to consumers, and this is expected to remain stable going into 2016. The governmental drive towards more liberalised economic policy has decreased the barriers to entry for foreign investors, thus increasing investment in the country. This is expected to continue given that the current ruling party will remain in power for the next five years. Positive international perception of the country as a destination for investment has remained and this sentiment is not expected to change. The country’s balance of payments remains healthy and the debt-to-GDP ratio is well within safe territory. The Dar es Salaam Stock Exchange (DSE) has been a positive point for the country, allowing an easy way for investors to buy into local projects. New listings are expected and the DSE already has a market capitalisation of US$13bn. The scrapping of a cap on foreign ownership has further accelerated the process of investment, and will benefit the economic situation over the medium-term. Political Outlook The recent problems surrounding the Tanzanian elections will cast doubts about the good standing of the country, and will question whether it will still be seen as a progressive African democracy. The historic annulment of the Zanzibar elections will mean new elections will have to be held, which could bring with it significant international interest and tensions. This election was the closest run in recent years, and Tanzanians will hope that a strong opposition will enforce more accountability in government, and not further in-fighting and tensions. Endemic corruption and inefficient government will pose a threat to the legitimacy of the new government in office going forward; analysts believe that positive steps need to be taken to deal with this. The Burundian coup was handled well by local political mediators and there was little collateral damage for Tanzania. The country will have to deal with future geo-political crises in the same diplomatic manner to avoid negative international perception.

Read More..
The Construction Industry in Tanzania 2015

Full Report

R 1 900.00(ZAR) estimated $99.65 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.76 (USD)*

Historical Reports

The Construction Industry in Tanzania 2018-04-09

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

The Construction Industry in Tanzania 2015-05-25

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

The Construction Industry in Tanzania 2014-11-26

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Supply Chain 1
2.1.1. Capacity, Quality and Security of Supply 1
2.2. Geographic Position 2
2.3. Key Cities and Regions 3
3. SIZE OF THE INDUSTRY 4
4. STATE OF THE INDUSTRY 14
4.1. Local 14
4.1.1. Corporate Actions 14
4.1.2. Regulations 15
4.1.3. Market Opportunities and Challenges per Sector 18
4.1.3.1. Transport 19
4.1.3.2. Energy/Power 23
4.1.3.3. Water Supply and Treatment 27
4.1.3.4. Healthcare 28
4.1.3.5. Education 30
4.1.3.6. Telecommunications 32
4.1.3.7. Residential Building 34
4.1.3.8. Commercial 36
4.1.3.9. Retail 37
4.1.3.10. Hotels and Tourism 38
4.1.3.11. Mining and Industrial 41
4.2. Continental 46
4.3. International 51
5. INFLUENCING FACTORS 53
5.1. General Trends 53
5.2. Economic Environment 54
5.2.1. General 54
5.2.2. Effects on the Construction Sector 56
5.3. Socio-Political Environment 57
5.4. Infrastructure Deficit 59
5.4.1. Government Infrastructure Programme Spend 59
5.4.2. Foreign Direct Investment (FDI) 59
5.4.3. Private Sector Investment 60
5.5. Urbanisation 61
5.6. Local Content 61
5.7. Corruption 62
5.8. Input Costs 63
5.9. Cyclicality 63
5.10. Health and Safety 64
5.11. Labour Resources 65
5.11.1. Training and Skills Development 66
5.11.2. Licensing 67
5.11.3. Skills Shortages 67
5.11.4. Opportunities for Foreign Professionals 68
5.11.5. Environmental Concerns 68
6. COMPETITION 70
6.1. Barriers to Entry 70
6.2. Public Procurement and the Tendering Process 70
6.3. Technology, Research and Development (R&D) and Innovation 70
7. SWOT ANALYSIS 72
8. OUTLOOK 73
8.1. Construction Industry Forecast 73
8.2. Macroeconomic Outlook 73
8.3. Political Outlook 74
9. INDUSTRY ASSOCIATIONS 74
10. REFERENCES 75
10.1. Publications 75
10.2. Websites 75
COMPANY PROFILES 77
ADVENT CONSTRUCTION LTD 77
ALVIC BUILDERS TANZANIA LTD 79
ATIGH BUILDING CONSTRUCTION COMPANY LTD 81
ATLAS DEVELOPMENT & SUPPORT SERVICES LTD 82
AURECON SOUTH AFRICA (PTY) LTD 86
COWI TANZANIA LTD 91
DEL MONTE (TANZANIA) LTD 93
ESTIM CONSTRUCTION COMPANY LTD 94
FABEC INVESTMENT LTD 96
GIS ENGINEERING & ENVIRONMENTAL SERVICE LTD 98
GMP CONSULTING ENGINEERS LTD 100
GS POWER INSTALLATIONS (PTY) LTD 102
HEMATEC INVESTMENT LTD 103
HOLTAN EAST AFRICA LTD 105
ITALFRAME LTD 106
JFM CONSTRUCTION LTD 108
KERAI CONSTRUCTION LTD 109
LOGISTICS ENGINEERING LTD 110
MHM GENERAL SUPPLY LTD 112
NORPLAN TANZANIA LTD 113
PMG GROUP (TANZANIA) LTD 114
PREMIER ELECTRIC CONTRACTORS SOLE PROPRIETORSHIP 116
SALEM CONSTRUCTION LTD 117
SKOL BUILDING CONTRACTORS LTD 119
SWACHEN ENTERPRISES LTD 121
TANZANIA BUILDINGS AGENCY 122
WAPO SCAFFOLDING (TANZANIA) LTD 123

Report Coverage

The report on the Tanzanian Construction Sector identifies and discusses the opportunities and challenges in the local economy for the construction industry, as well as factors influencing the success of the industry. The report also profiles 26 companies active in the sector, including mega-Chinese construction firms the China Civil Engineering Construction Corporation (CCECC) and the China Communications Construction Company Ltd (CCCC), Advent Construction, one of Tanzania’s major local construction companies, and Wapo Scaffolding, a small local company trying to establish itself in the market.

Introduction

This report focuses on the Tanzanian construction industry, which has improved significantly so far in 2015. The industry has positioned itself as a driver of growth in the country, with a quarterly growth rate of 15% in the third quarter of 2014, which is almost double the GDP growth of Tanzania. The industry has been bolstered by further growth in the communications, transport, and infrastructure development sectors. The Tanzanian government continues to support the construction industry and statements from the President indicate that this trend will continue, with the specific aim by government to reduce red tape and make the end-to-end construction and foreign investment process easier. There are still difficult challenges which need to be carefully handled, including the upcoming election which will see the end of the second term of President Jakaya Kikwete, the Burundian coup crisis, and infrastructural, health, and development challenges.

Strengths

• Government’s more liberalised economic policy has contributed to large intakes of FDI and there has been consistent, annual GDP growth of 7% or more.
• Rebasing of the GDP figure to 2007 has seen a marked increase of 32%.
• Significant untapped natural resources.
• Strong relationships with China and Chinese construction firms.
• The Tanzanian government has prioritised infrastructural development.

Weaknesses

• Corruption within the sector.
• High cost of electricity and other vital inputs.
• Lack of highly skilled manpower in construction.
• Lack of private investment.
• Poorly developed infrastructure and communications and technology network.
• Vast, widely spread population.

Opportunities

• Construction work as a result of the large investments by the public sector in infrastructure development.
• High rate of urbanisation will present construction opportunities.
• Large gas reserves will lead to influx of construction work.
• Significantly reduced inflation rates will make financing new projects cheaper.
• Through partnerships with Chinese companies, local people can gain valuable on-the-job skills training.

Threats

• Continuing corrupt activities in the private and public sector.
• Destabilisation of surrounding countries, especially the coup attempt in Burundi.
• Increasing cost of electricity.
• The threat of terrorism and the Al-Shabaab arm of Al-Qaeda in the region, specifically from Somalia.
• Worsening socio-political situation.

Outlook

Construction Industry Forecast The massive upswing in the Tanzanian construction industry has led economic growth in the country. Analysts believe that the industry boom will continue because of the good job the government has done in creating an enabling regulatory environment for foreign investors and contractors. Although the high cost of electricity poses a threat to the industry, new infrastructure projects coming online will provide cheaper and more stable electricity which will benefit the sector. Strong partnerships with the Chinese government, Chinese companies, and international aid organisations will serve the country well over the short- and medium-term. However, the lack of skills in the industry, as well as corruption in the private and public sector all pose threats to the industry and this threat will grow if nothing is done to address these challenges. Macroeconomic Outlook The World Bank and African Economic Outlook agree that the Tanzanian GDP will remain consistently strong going into the second half of 2015, with GDP growth expected to remain at 7%. The marked decrease in inflation to 4.3% has had a positive effect on the economy and government officials expect to be able to keep the rate below or near the 5% mark. The economic shift towards a liberalised economy will benefit the country going forward and economic trade is expected to continue increasing if these policies remain in place. With large amounts of FDI and a generally positive perception of Tanzania, international private sector investment is expected to pick up over the next five years. The current account deficit and ratio of GDP to debt are in safe territories which further increases investor confidence in the country. The Dar es Salaam Stock Exchange (DSE) had a market capitalisation of US$13bn in 2015 and it expects six new listings during the year. The government also scrapped the cap on foreign ownership of domestic companies, which will appeal to foreign investors. The DSE was also the best performing sub-Saharan market in 2014 with a return of 23.4% on investments. Political Outlook Political analysts will be looking with significant interest at Tanzania’s review of the constitution as well as the forthcoming national elections in October 2015. Although not much is expected to change in the country’s constitution, observers are interested in seeing whether Tanzania can maintain its image as a reasonably well-run African state or whether these elections will prove violent and non-transparent like the elections of some of Tanzania’s neighbours. As the endemic corruption and inefficient government will pose a threat to the legitimacy of any government in office going forward, analysts believe that positive steps need to be taken to deal with this. In KPMG’s analysis of the political threat looking forward to 2016, the company indicates that Tanzania is unlikely to face significant threats to its stability during the run-up to the elections because of the dominance of President Jakaya Kikwete and the ruling Chama Cha Mapinduzi (CCM) party. Since the 2010 election Chadema has maintained a stronger presence than any opposition parties before it. This has caused some worries for the ruling party as Chadema has won some victories over CCM in by-elections and in parliament. The CCM also suffers from some internal divisions which come to the surface when the party responds to crises instead of setting the political agenda. Despite this, KPMG only ranked Political risk at a factor of BB, which indicates that no dramatic political events are expected to occur. The Burundian coup and the subsequent displacement of its people is an issue that needs to be handled carefully by Tanzania to maintain a positive public perception and to distinguish itself from neighbouring Burundi.

Read More..
The Construction Industry in Tanzania 2015

Full Report

R 1 900.00(ZAR) estimated $99.65 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.76 (USD)*

Historical Reports

The Construction Industry in Tanzania 2018-04-09

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

The Construction Industry in Tanzania 2015-10-30

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

The Construction Industry in Tanzania 2014-11-26

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Supply Chain 1
2.1.1. Capacity, Quality and Security of Supply 1
2.2. Geographic Position 2
2.3. Key Cities and Regions 3
3. SIZE OF THE INDUSTRY 4
3.1.1. Key Indigenous and Foreign Players 5
4. STATE OF THE INDUSTRY 12
4.1. Local 12
4.1.1. Corporate Actions 13
4.1.2. Regulations 14
4.1.3. Market Opportunities and Challenges per Sector 17
4.1.3.1. Transport 17
4.1.3.2. Energy/Power 21
4.1.3.3. Water Supply and Treatment 25
4.1.3.4. Healthcare 27
4.1.3.5. Education 28
4.1.3.6. Telecommunications 29
4.1.3.7. Residential Building 31
4.1.3.8. Commercial 33
4.1.3.9. Retail 33
4.1.3.10. Hotels and Tourism 34
4.1.3.11. Mining and Industrial 36
4.2. Continental 39
5. INFLUENCING FACTORS 44
5.1. General Trends 44
5.2. Economic Environment 45
5.2.1. General 45
5.2.2. Effects on the Construction Sector 47
5.3. Socio-Political Environment 47
5.4. Infrastructure Deficit 49
5.4.1. Government Infrastructure Programme Spend 49
5.4.2. Foreign Direct Investment (FDI) 50
5.4.3. Private Sector Investment 50
5.5. Urbanisation 51
5.6. Local Content 51
5.7. Corruption 52
5.8. Input Costs 53
5.9. Cyclicality 53
5.10. Health and Safety 53
5.11. Labour Resources 54
5.11.1. Training and Skills Development 54
5.11.2. Licensing 54
5.11.3. Skills Shortages 55
5.11.4. Opportunities for Foreign Professionals 55
5.12. Environmental Concerns 56
6. COMPETITION 58
6.1. Barriers to Entry 58
6.2. Public Procurement and the Tendering Process 58
6.3. Technology, Research and Development (R&D) and Innovation 58
7. SWOT ANALYSIS 59
8. OUTLOOK 60
8.1. Construction Industry Forecast 60
8.2. Macroeconomic Outlook 60
8.3. Political Outlook 61
9. INDUSTRY ASSOCIATIONS 62
10. REFERENCES 62
10.1. Publications 62
10.2. Websites 63
COMPANY PROFILES 64
Advent Construction Ltd 64
Alvic Builders Tanzania Ltd 66
Atigh Building Construction Company Ltd 68
Atlas Development & Support Services Ltd 69
Aurecon South Africa (Pty) Ltd 73
COWI Tanzania Ltd 77
Del Monte (Tanzania) Ltd 79
Estim Construction Company Ltd 80
Fabec Investment Ltd 82
GIS Engineering & Environmental Service Ltd 84
GMP Consulting Engineers Ltd 86
GS Power Installations (Pty) Ltd 88
Hematec Investment Ltd 89
Holtan East Africa Ltd 91
ItalFrame Ltd 92
JFM construction Ltd 94
Kerai Construction Ltd 95
Logistics Engineering Ltd 96
MHM General Supply Ltd 98
Norplan Tanzania Ltd 99
PMG Group (Tanzania) Ltd 101
Premier Electric Contractors Sole Proprietorship 103
Salem Construction Ltd 104
Skol Building Contractors Ltd 106
Swachen Enterprises Ltd 108
Tanzania Buildings Agency 109
Wapo Scaffolding (Tanzania) Ltd 110

Introduction

This report focuses on the Tanzanian infrastructure industry, which has seen consistent growth due to a stable growth rate in the local economy. According to the World Bank, the Tanzanian economy is projected to grow at 7% in 2014 and 2015. This will be driven largely by growth in the communications, transport, agriculture and manufacturing sectors. Construction is a significant contributor to GDP and African Economic Outlook estimates this figure to be 7.3% for 2014. The Tanzanian construction industry is well supported by the country’s government. However, the lack of infrastructure, as well as the tense socio-political situation, poses a threat to growth in the industry.

Strengths

• Government’s more liberalised economic policy has contributed to large intakes of FDI and there has been consistent, annual GDP growth of 7%.
• Strong relationships with China and Chinese construction firms.
• The Tanzanian government has prioritised infrastructural development.

Weaknesses

• Corruption within the sector.
• High cost of electricity and other vital inputs.
• Lack of highly skilled manpower in construction.
• Lack of private investment.
• Poorly developed infrastructure and communications and technology network.

Opportunities

• Construction work as a result of the large investments by the public sector in infrastructure development.
• High rate of urbanisation will present construction opportunities.
• Large gas reserves will lead to influx of construction work.
• Significantly reduced inflation rates will make financing new projects cheaper.
• Through partnerships with Chinese companies, local people can gain valuable on-the-job skills training.

Threats

• Continuing corrupt activities in the private and public sector.
• Increasing cost of electricity.
• Worsening socio-political situation.

Outlook

8.1. Construction Industry Forecast Some analysts have predicted a mild slowdown in the Tanzanian construction sector over the course of the 2015 financial year. The possibility of government overspending clashing with tighter budgetary policies could mean that infrastructure spending is affected over the next year. However, average real growth in the sector is expected to increase on the back of increased investments in ports, railways, power infrastructure and natural gas extraction facilities. Strong partnerships with the Chinese government, Chinese companies, and international aid organisations will serve the country well over the short- and medium-term. The high costs of electricity, the lack of skills in the industry, as well as corruption in the private and public sector all pose threats to the sector and this threat will grow if nothing is done to address these challenges. 8.2. Macroeconomic Outlook The World Bank and African Economic Outlook agree on the view that the Tanzanian GDP will remain consistently strong going into 2015, with the GDP growth expected to remain at 7%. The decrease in inflation is expected to stabilise around the 6.5% region in 2015, bringing relief to consumers and allowing for more risky spending to take place. The economic shift towards a liberalised economy will benefit the country going forward and economic trade is expected to continue increasing if these policies remain in place. With large amounts of FDI and a generally positive perception of Tanzania, international private sector investment is expected to pick up over the next five years. The current account deficit and ratio of GDP to debt are in safe territories which further increases investor confidence in the country. 8.3. Political Outlook Political analysts will be looking at Tanzania’s review of the constitution as well as the forthcoming national elections in 2015 with significant interest. Although not much is expected to change in the country’s constitution, observers are interested in seeing whether Tanzania can maintain its image as a reasonably well-run African state or whether these elections will prove violent and non-transparent like the elections of some of Tanzania’s neighbours. The endemic corruption and inefficient government will pose a threat to the legitimacy of any government in office going forward, thus positive steps need to be taken to deal with this. In KPMG’s analysis of the political threat looking forward to 2016, the company indicates that Tanzania is unlikely to face significant threats to its stability during the run-up to the next elections in October 2015 because of the dominance of President Jakaya Kikwete and the ruling Chama Cha Mapinduzi (CCM) party. Since the 2010 election Chama Cha Demokrasia na Maendeleo (Chadema) has maintained a stronger presence than any opposition parties before it. This has caused some worries for the ruling party as Chadema has won some victories over CCM in by-elections and in parliament. The CCM also suffers from some internal divisions which come to the surface when the party responds to crises instead of setting the political agenda. Despite this, KPMG only ranked Political risk at a factor of BB, which indicates that no dramatic political events are expected to occur.

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Table of Contents

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PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Supply Chain 1
2.1.1. Capacity, Quality and Security of Supply 1
2.2. Geographic Position 2
2.3. Key Cities and Regions 2
3. SIZE OF THE INDUSTRY 3
3.1.1. Key Indigenous and Foreign Players 4
4. STATE OF THE INDUSTRY 9
4.1. Local 9
4.1.1. Corporate Actions 9
4.1.2. Regulations 10
4.1.3. Market Opportunities and Challenges per Sector 11
4.1.3.1. Transport 11
4.1.3.2. Energy/Power 12
4.1.3.3. Water Supply and Treatment 13
4.1.3.4. Healthcare 13
4.1.3.5. Education 14
4.1.3.6. Telecommunications 14
4.1.3.7. Residential Building 15
4.1.3.8. Commercial 15
4.1.3.9. Retail 16
4.1.3.10. Hotels and Tourism 16
4.1.3.11. Mining and Industrial 17
4.2. Continental 17
4.3. International 18
5. INFLUENCING FACTORS 20
5.1. General Trends 20
5.2. Economic Environment 20
5.2.1. General 20
5.2.2. Effects on the Construction Sector 21
5.3. Socio-Political Environment 21
5.4. Infrastructure Deficit 22
5.4.1. Government Infrastructure Programme Spend 22
5.4.2. Foreign Direct Investment (FDI) 23
5.4.3. Private Sector Investment 23
5.5. Urbanisation 23
5.6. Local Content 23
5.7. Corruption 24
5.8. Input Costs 25
5.9. Cyclicality 25
5.10. Health and Safety 25
5.11. Labour Resources 25
5.11.1. Training and Skills Development 25
5.11.2. Licensing 25
5.11.3. Skills Shortages 26
5.11.4. Opportunities for Foreign Professionals 26
5.12. Environmental Concerns 26
6. COMPETITION 28
6.1. Barriers to Entry 28
6.2. Public Procurement and the Tendering Process 28
6.3. Technology, Research and Development (R&D) and Innovation 28
7. SWOT ANALYSIS 28
8. OUTLOOK 29
8.1. Construction Industry Forecast 29
8.2. Macroeconomic Outlook 29
8.3. Political Outlook 29
9. INDUSTRY ASSOCIATIONS 30
10. REFERENCES 30
10.1. Publications 30
10.2. Websites 30
COMPANY PROFILES 32
ADVENT CONSTRUCTION LTD 32
ALVIC BUILDERS TANZANIA LTD 34
ATIGH BUILDING CONSTRUCTION COMPANY LTD 35
AURECON SOUTH AFRICA (PTY) LTD 36
COWI TANZANIA LTD 39
DEL MONTE (TANZANIA) LTD 40
ESTIM CONSTRUCTION COMPANY LTD 41
FABEC INVESTMENT LTD 43
GIS ENGINEERING & ENVIRONMENTAL SERVICE LTD 44
GMP CONSULTING ENGINEERS LTD 45
GS POWER INSTALLATIONS (PTY) LTD 46
HEMATEC INVESTMENT LTD 47
HOLTAN EAST AFRICA LTD 48
ITALFRAME LTD 49
JFM CONSTRUCTION LTD 50
KERAI CONSTRUCTION LTD 51
LOGISTICS ENGINEERING LTD 52
MHM GENERAL SUPPLY LTD 53
NORPLAN TANZANIA LTD 54
PMG GROUP (TANZANIA) LTD 55
PREMIER ELECTRIC CONTRACTORS SOLE PROPRIETORSHIP 56
SALEM CONSTRUCTION LTD 57
SKOL BUILDING CONTRACTORS LTD 58
SWACHEN ENTERPRISES LTD 60
TANZANIA BUILDINGS AGENCY 61
WAPO SCAFFOLDING (TANZANIA) LTD 62