Building and construction activities are often signs of growing economies. Africa is home to six of the world’s fastest growing economies in the world. It also has the world’s fastest growing population which is expected to reach 2.3 billion in less than 40 years. Where will all these people live? It’s no surprise then that Africa’s richest man, Nigeria’s Aliko Dangote, makes a multi-billion dollar fortune from cement – one of the most important and hot-selling building materials on the continent. Entrepreneurs, investors and governments are spending billions of dollars on real estate projects in a bid to satisfy the huge demand for residential and commercial accommodation across Africa. This article looks at nine hot-selling materials that can make you money in Africa’s building and construction boom. Why is the demand for building and construction materials growing across Africa? Before we explore these 9 hot selling materials, its important that we take a quick look at the factors responsible for the growing demand for building and construction materials across Africa. In addition to the explanation we’ll be giving shortly, we developed the ‘infograph’ below to give you an interesting snapshot of all these factors. It’s quite simple and we hope it’ll make a lot of sense to you. 1.building materials -1 1. A fast growing population Africa’s population has reached the one billion mark and is projected to exceed 2 billion by 2050. Our continent has the world’s highest birth and fertility rates which makes it the fastest growing population on the planet. Shelter remains a basic need for millions of Africans who need a roof over their heads. Now and in the near future, there is (and will be) an explosive demand for housing. This demand provides a lucrative potential to investors and entrepreneurs who are investing in residential buildings and real estate projects. Governments across the continent are also investing in public housing projects to reduce the deficit in many towns and cities. This population-driven investment in real estate projects by both investors and governments is leading to a growing demand for all types building and construction materials. 2. Favourable economic growth The recent (2013) report by the African Development Bank, OECD, UNDP and ECA reveals that Sub-Saharan African economies are among the fastest growing in the world. According to the report, Africa’s economic growth was 4.2 percent in 2012 and is projected to reach 4.5 percent in 2013, and further to 5.2 percent in 2014, Increased construction and building activity is usually one of the signs of positive economic growth. Governments have more money to invest in building and construction projects such as infrastructure (roads, bridges, dams etc) and basic housing. In times of economic boom, more people have the financial power to invest in real estate or start building their personal houses. Because business is good in times of economic growth, companies expand their capacity by building new or larger warehouses and offices. All of these building projects lead to a demand for building materials such as wood (timber), cement, sand, steel and several other hot-selling products which feed building and construction activities. 3. Rapid urbanization At the time of writing this article, more than 40 percent of Africa’s one billion people live in cities. This proportion is much higher than India’s 30 percent and comparable to China’s 45 percent. At an average urban migration rate of 3.5 percent projected for the coming years, more than 400 million more Africans will become city people in the next 10 to 20 years. The demand for basic shelter is concentrated in Africa’s urban areas. At the moment, just about 50 African cities have a population over 1million. At the current rate of migration, the number of cities with over one million people will be over 65 by the year 2030. Because more people are flocking to cities and towns in search of jobs and a better life, they are putting a lot of pressure on the inadequate accommodation available in urban areas. (source: Mckinsey Research). Africa’s economic growth is also concentrated in the cities and is attracting a lot of local and foreign businesses. Both small and big businesses require office space and residential apartments for their local and expatriate workers. As a result, private investors and entrepreneurs are getting involved in building projects and real estate developments that will supply the needed office and residential accommodation to these businesses. 4. An expanding middle class The African Development Bank describes the ‘middle class’ as people who spend between $2 to $20 a day. At the moment, there are more than 300 million people on the continent who fit into this category. A significant majority of Africans in the middle class hold salaried jobs or own a small business. Many of them have access to mortgage loans and are building their own properties and homes. A lot of them also invest in real estate projects and have become landlords. According to a recent Deloitte report, “Africa’s middle class has tripled over the last 30 years, with one in three people now considered to be living above the poverty line - but not among the wealthy. The current trend suggests that the African middle class will grow to 1.1 billion (42%) by the year 2060. As African economies are growing (7 of the 10 fastest growing in the world are African), the wealth is trickling down and Africa now has the fastest growing middle class in the world.” 9 Hot-selling Building and Construction materials with high lucrative potentials in Africa Now that we have explored the reasons for the huge and growing demand for residential and commercial accommodation across Africa, it’s time to take a quick lot at the top 10 hot-selling products in the building materials market. Here we go… #1 - Cement 1.building materials 2Cement is one of the most widely used building materials in the modern world and nearly six billion tonnes of this very important commodity is produced every year. Cement is so crucial to the building and construction industry that it’s hardly surprising that Africa’s richest man, Nigeria’s Aliko Dangote, is heavily invested in cement production across Africa. Cement is the main ingredient used in the production of blocks which are the single most used items in building and construction work. It is combined with aggregates (sand, gravel and stones) to make concrete and used as slurry for filling cracks in all kinds of structures. It is also used for masonry work, plastering and pointing. This versatile capability allows cement to be used in all kinds of structures including buildings, bridges. dams, docks, harbours and roads. Manufacturing cement requires a very heavy capital investment in quarries, labour, plant and equipment. As a result, only national governments and businessmen with deep pockets are able to set up cement manufacturing plants. However, small scale businesses and entrepreneurs can get involved in the cement business by joining the distribution chain. You could become a major dealer who buys directly from the cement manufacturers or major importers. Or you could start up as a retailer who sells the product directly to home builders and contractors. Depending on the volume of cement you decide to deal in, it’s likely you will need a sizeable store or warehouse to keep your stock. You must be careful that your cement is well sealed and protected from water which could totally damage it. It’s also important that you know the cement brand(s) that are favoured and preferred by builders in your area. #2 – Wood 1.building materials 3Wood is one of the oldest and most commonly used building/construction materials in the world. Despite the growing threat of deforestation, wood has remained in high demand as a building material because of its reasonable cost, availability, attractive appearance and long life (if protected from insects and moisture). Wood used in building and construction work is commonly referred to as timber (or ‘lumber’ in the US and Canada). Timber is sawn into planks or poles and used as supporting materials (beams and pillars), in roof and ceiling construction, door and window frames, and exterior cladding. Timber is also commonly used in flooring, paneling and general finishing. It is most commonly used to form the mould in which liquid concrete is poured, compacted, and allowed to harden. (Photo credit: bluehedgerealtors) Before wood is used for building and construction work, it has to be felled in the forest, processed and seasoned (the process of removing moisture from wood). It is then sawn into logs and planks and sold on the market. Although Africa has extensive (but fast depleting) forest reserves, the conservation efforts in many countries are forcing builders to look for alternatives to timber. In Kenya for example, innovative entrepreneurs like Lorna Rutto are using waste plastic to produce a strong and durable substitute to timber; and making a lot of money in the process. Entrepreneurs who intend to harvest trees to be used as timber will likely require a permit or license from their government’s forestry department or agency responsible for forest resources. Permits have become necessary to avoid indiscriminate logging that cause damage to the environment. If you intend to buy wood from loggers and process them to timber, it’s likely you will need to invest in machinery and experienced labour who know the techniques of treating, seasoning and curing wood to avoid damage caused by moisture and insects. #3 – Aggregates 1.building materials 4Aggregates are raw earth materials which have been used since prehistoric times in building and construction. Aggregates fall into two broad categories - coarse aggregates (such as crushed stones, gravel, pebbles, and granite) and fine aggregates (usually sand and clay). In modern construction work, aggregates are combined with cement to produce concrete and mortar. Using aggregates gives volume, stability, resistance to wear or erosion, and other desired physical properties to all kinds of structures – buildings, bridges, roads etc. As you may have guessed, aggregates are the most mined materials in the world. Operating a mine (or quarry) is very capital-intensive and requires large earth-moving equipment, belt conveyors, and machines specifically designed for crushing and separating various sizes of aggregates. (photo credit: nelandscapesupply) Entrepreneurs who intend to play in this space could buy aggregates from quarry operators and sell them directly to builders in truck loads or much smaller sizes. #4 - Roofing materials 1.building materials 5 Photo credit: bestroofingcompanies.wordpress All buildings (especially houses) usually have a roof over them. Roofing materials form the outermost layer on the roof of a building and provides shelter from the natural elements (wind, sunlight and rain) and insulation against heat and cold. Commercially available roofing materials can range from corrugated iron and aluminum, clay tiles, plastic, fiberglass and concrete. In choosing roofing materials in Africa, builders and home owners usually consider cost, style and quality, suitability of the material to the climate, low maintenance and long life span. Materials like asbestos (which used to be very common) are becoming increasingly undesirable due to its adverse health effects. Entrepreneurs who intend to start a business in roofing materials must constantly look out for changes in taste and trends in the market. New products are constantly being developed to overcome the shortcomings of older roofing materials, meet the demands of modern building techniques, and conform to increasingly stringent building codes. There are primarily four main types of roofing that attract different kinds of customers with distinct roofing needs. They are: Residential roofing (elite, premium, middle income and low cost) Industrial roofing (sheds, factory, storage, cladding) Commercial roofing (showrooms, filling stations, hotels, lodges, farms) Institutional roofing (schools, church organizations, hospitals and government buildings) #5 – Plumbing materials 1.building materials 6Plumbing usually refers to the system of pipes, drains, fittings, valves, valve assemblies, and devices installed in a building for the distribution of water for drinking, heating and washing, and the removal of human and domestic waste (sewage). The main categories of plumbing systems include: potable cold and hot tap water supply; drainage venting; septic systems; rainwater, surface, and subsurface water drainage; and fuel gas piping. (source: Wikipedia) The common materials used in modern plumbing include copper, brass and plastic. In fact more than 70 percent of materials used in today’s plumbing are made of PVC or PEX plastic. This is because plastic is very flexible, easy to install, has a low cost, does not rust like most metals and can last for a very long time. (photo credit: shivaniagro) A lot of the plumbing materials supplied to local African markets are manufactured locally or imported from overseas. Depending on the taste and requirements of customers, the quality and cost of plumbing materials in the market can vary considerably. #6 – Steel & Metal products 1.building materials 7Steel and metal products are widely used in building and construction. Steel is commonly used to make reinforced concrete that supports structures in buildings, bridges, dams etc. Steel is made up of iron combined with a small percentage of carbon. High-carbon or ‘hard’ steel is used to make tools with cutting edges. Medium- carbon steel is used for critical structural components of buildings such as I-beams, reinforcing bars and frames. Low- carbon or ‘mild’ steel is used for pipes, nails, screws, door and window hinges, wire, screening, fencing and corrugated roofing sheets. Metals such as aluminum and copper have become popular building materials due to their ability to resist rust and corrosion. Copper is used for electric wires, tubing for water supply and for flashing. Aluminum is most commonly used for roofing sheets, gutters and the accompanying nails. Brass is another corrosion-resistant alloy of copper and zinc used extensively for building hardware. Like cement, running a steel production plant is very capital intensive. The opportunity for entrepreneurs lies in retail and distribution of steel products to home builders and construction contractors. #7 – Electrical materials and accessories 1.building materials 8Electrical materials are the parts and elements used in the electrical system of any building and construction project. This includes a huge inventory of materials used to supply electric power or telecommunications to different parts of a building and will typically consist of: electrical conduits and fittings, wires and cables, explosion proof enclosures, meters, circuit breakers, connectors, and electrical products such as wiring devices (switches, plugs) and lighting (bulbs). Solar energy products are becoming a popular way of providing electricity to millions of Africans who are not connected to the grid. Entrepreneurs, like Tanzanias Patrick Ngowi, are building million dollar fortunes from providing solar electricity to residential homes and government buildings. You should read Patricks inspiring success story here. While some of the electrical materials mentioned above are made locally, a variety of brands are imported from North America, Europe and Asia and may be preferred for their higher quality. Before entering this business, entrepreneurs must ensure that they are well aware of customer preferences in their area. #8 – Glass Glass is fast becoming one of the most preferred materials of modern building architecture. Clear windows have been used since the invention of glass to cover small openings in buildings and provide us with the ability to both let light into rooms while at the same time keeping undesirable weather outside. Glass controls light, letting in the good rays and keeping out the bad ones; it also saves on energy costs by providing natural day lighting. As a result, more designers are finding that glass fits quite nicely into today’s green building environment. Other qualities that make glass such a hot-selling building material include its roles in heat, sound, fire and solar protection. It also provides an interesting means of design and electromagnetic dampening. Glass sold on the market is of varying types (reinforced, laminated and tempered) for all kinds of uses. Glass has also found popular use as a decorative material in designing building exteriors. Entrepreneurs can source glass from both local and foreign glazers. #9 – Paints 1.building materials 9Paints are the colourful substances applied to interior and exterior walls of buildings to make them beautiful, enhance texture and protect from cracks, wear and tear. There are paints of all colours and types in the market which typically include : emulsions (water-based paints), matte finish, gloss, varnish, enamel and lacquers. A growing number of local businesses now manufacture paints to compete with dominant foreign brands. We advise that you understand the tastes and preferences of home builders and construction contractors in your area before you go ahead to invest in stock. (photo credit: paintrollers.biz)
Posted on: Tue, 07 Oct 2014 11:50:42 +0000
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