Investing in Construction and Real Estate Development is Key to Growing Africa’s Economy and Tackling Its Housing Shortage

While Africa’s real estate and construction sectors slowed during the COVID-19 pandemic, the time has come for investment in both to ramp back up. Doing so will increase employment, improve infrastructure, raise living standards, and attract foreign investment – all of which will boost overall economic growth throughout the continent.

Furthermore, migration from rural to urban areas, mostly by young people in search of economic opportunities–is likely to continue at a rapid rate. The African Development Bank anticipates that the populations of the continent’s cities will triple to roughly 1.5 billion by the middle of this century. It is therefore imperative that Africa’s expanding cities have adequate infrastructure, housing, and job opportunities to accommodate this growth.

Growing the workforce, growing the economy 

This year, Africa’s property market will be worth almost US$16 trillion according to Statista, which anticipates an annual growth rate of nearly 6% over the next four years. The continent’s construction sector is also growing. Analysis by Mordor Intelligence projects the market to reach almost US$75 billion over the next five years. 

While not insignificant, the forecasted growth in these sectors fall far short of what is needed for us to solve Africa’s growing housing shortage. In fact, some research suggests that  the continent’s housing backlog amounts to  over 51 million units (with 17 African countries having a shortage of over a million units). While the price tag of closing this gap is steep – roughly US$2 trillion over a decade –the ramifications of doing so for GDP growth and job creation would be far-reaching, and include:

• Unlocking more than US $5 trillion in output across the broader economy 
• Creating 288 million full-time-equivalent jobs over a decade (an average of 26 million annually)
• Boosting the industrialisation of Africa’s economies, most of which have been overly oriented towards the extraction of resources

Building cities for the future 

The provision of housing at scale offers a golden opportunity to reshape Africa’s cities dramatically for the better. Attracting foreign investment – as Zambia has recently excelled at doing –and forging public private partnerships will both be crucial. 

With a sizeable population of young people, there isn’t a shortage of labor, but there is a shortage of skills. To fix this, and ensure there’s a skilled pool of locally sourced labor sufficient enough to achieve this scale of construction, more apprenticeship programs and technical schools will need to be established. That’s why companies like US ABO Capital are investing in executive training programs like the Amity Training Center in Angola, which will help build the talent pool of the future – in Africa and beyond. 

Furthermore, rather than focusing solely on house-building, private sector developers must collaborate with local governments to deliver the urban infrastructure necessary to ensure residents have access to water, sanitation, transport links and electricity. Urban planning and architecture must take into consideration affordability, energy efficiency and climate resilience as temperatures rise and weather volatility increases. By embracing Africa’s extraordinarily innovative design heritage, the thoughtful use of natural ventilation and locally sourced materials can reduce the costs of construction and temperature regulation.

Then, instead of keeping residential areas separate from retail and offices – as has so often historically been the case in major African metropolises – there must be an integrated approach. Providing employment, educational and retail opportunities close to home reduces traffic congestion (and transportation costs for residents), while helping to create economically and socially vibrant multiple-use neighborhoods. 

As an African Development Bank study points out, numerous countries are already developing bilateral and multilateral mega infrastructure projects.  These can be made more impactful if they are designed in ways that are “city smart” – aligning with the needs and nuances of the urban areas they’re connected to.

With 40,000 people moving to Africa’s urban centers daily, urbanization should not be seen as a problem, but rather as a pathway with the potential to lead our continent to widespread prosperity. We must not let ourselves be intimidated by the scale and complexity of the challenges that lie ahead in ensuring that all of Africa’s increasingly urban population have safe and comfortable homes. The obstacles we may encounter are not insurmountable, especially if we work together, and harness – rather than hinder – the ingenuity and innovation that our continent is known for. Holistic and creative thinking, courage and collaboration are the ingredients required that will set us up for success. Put your hard hat on, roll up your sleeves, and let’s get building.