Several entrepreneurs and investors interviewed by How we did it in Africa in 2021 highlighted the potential of the construction materials and services industry of their respective countries.
In Nigeria, businesspeople could target either low-cost construction materials for the mass market or supplies for high-end finishes, according to Thessa Bagu, managing director of consultancy firm Naijalink. “The country needs construction materials and equipment, from cranes to tiles and everything in between, as most of them are currently imported. For example, business people can focus on the large mansions and apartments that are being built here in Lagos, which require nice finishing touches, such as faucets and door handles. [Read more: Opportunities in Nigeria: From building materials to health supplements]
Côte d’Ivoire also has a vibrant construction industry. Although private equity firm Adiwale Partners is passionate about the sector, its team lacks the expertise to invest directly in construction and development. However, Adiwale has found a way to participate in the growth of the sector through a recent investment in air conditioning company Maintenance Climatique Technique, which focuses on the installation and maintenance of industrial, commercial and residential air conditioning solutions. The demand for air conditioning in Côte d’Ivoire is driven by major new industrial and commercial developments as well as the renovation of existing buildings. [Read more: Opportunities in French-speaking West Africa: Insights from private equity investor]
While East African investment firm Ascent Capital Africa also avoids direct real estate transactions, it will support companies that supply part of the real estate value chain. For example, it invested in Kisumu Concrete, which manufactures construction products such as ready-mixed concrete and concrete blocks. It is the largest player in western Kenya and enjoys little competition given the difficulty and cost of shipping building blocks from Nairobi or other locations.
Ascent has also invested in Metro Plastics in Kenya, which produces PVC and PPR pipes as well as guttering and sewerage products. “These are not products that will make the headlines but they are essential if you want to build a building or collect rainwater, which is very important in this part of the world. Those types of businesses that cater to constant local demand and are considered somewhat “silent” from potential import threats generally appeal to us. For example, it is not cost effective to ship pipes from China to Nairobi – they are light but take up a lot of space,” says David Owino, founding partner of Ascent. [Read more: Investor reveals East Africa’s most attractive opportunities]