Africa’s economic growth is expected to reach 3.8% in 2024, a modest improvement from 3.4% in 2023, according to the African Development Bank (AfDB), yet governments and private sector investors have rolled out huge investment plans focused on the high paint consuming sector of housing.
The bank’s 3.8% growth this year was a revision from earlier projections of 4% due to what the lending institution says are the “persistent long-term effects of COVID-19, geopolitical tensions and conflicts, climate shocks, a global economic slowdown, and limited fiscal space for African governments to adequately respond to shocks and sustain post-pandemic economic recovery gains.”
Despite the small economic growth gains expected in 2024, several countries across Africa are either making progress in the construction of affordable housing projects or have recently unveiled new plans to build similar shelter to cater for the increasing population, growing urbanization and thirst by the middle class for better housing.
For Africa’s paint manufacturers and suppliers, 2024 is likely to be shaped by this drive to address the estimated 56 million housing units deficit estimated to cost USD $1.4 trillion excluding the cost of the bulk infrastructure.
With the continent’s population estimated at more than 1.5 billion people today, which is an increase from the 1.4 billion in 2020, there is a spike in demand for affordable housing and both the public and private sector players are keen on leveraging new technology in constructing affordable house for middle and lower class population as paint manufacturers stare at expanded opportunities for more quality coating products.
Development of most of these affordable housing projects is concentrated in Africa’s urban areas, where the population is expected to grow from 36% of the continent’s to about 50% by 2030.
Africa’s middle class, the driving force, has, according to AfDB, more than tripled in the last 30 years to 313 million or more than 34% of the continent’s population, hence the spike in demand for new housing.
“Africa is urbanizing rapidly,” says Mike Salawou, AfDB’s director, Infrastructure and Urban Development.
“Compared to today, it is predicted that almost one billion additional people will live in African cities by 2050, then approximately 60% of the future total population on the continent,” he said.
For instance, Africa’s biggest paint markets such as Kenya, South Africa, Egypt, Nigeria, Morocco and Algeria are currently implementing or have approved plans for the construction of thousands of affordable housing units as well as the upgrading of slums in urban areas.
Kenya is building 500,000 housing units by 2030 under the country’s affordable housing project.
“As the economy continues to expand, more Kenyans are leaving rural regions for more urban areas in search of higher paying careers, a trend (that) has created a demand for additional housing in cities such as Nairobi, Mombasa, and Kisumu among others,” says the US International Trade Administration.
According to Mhamud Charania, the chairman of Crown Paints Kenya, one of the paint market players in the country, “the expansion of new housing creates greater opportunities for us to expand our presence in the market.”
He, however, notes the massive projects has created “stiff competition among players” forcing the company to “relook at our strategy to enable us to remain competitive.” The competition, he explained, is from new entrants in the country’s paints market “who not only competed along the same product lines but introduced complementary products.”
Crown Paints, Charania observed, has since the start of the affordable housing program impacted the construction material supply trends, especially in the decorative component of the market.
Other African countries implementing affordable housing projects either for mixed use, or as mass housing projects or for targeted groups such as public workers or pensioners, including Algeria, Egypt, South Africa, and Morocco.
For instance, the Algerian government has set a target of constructing at least 579,500 housing units between 2021 and 2024 under the North African country’s one-million-home construction plan that has created potential for increased consumption of coatings and paints and attracting competition in the market.
Coincidentally, Jotun, one of the leading industry players, is among the recent entrants in the Algerian market and likely to benefit from this massive housing project.
Jotun had previously partnered with Med Investment Holding to form the Technover P joint venture to produce Jotun decorative paints and protective coatings from the newly built factory in the district of Tizi-Ouzou, east of Algiers.
“The factory has been designed by the German technology company Netzsch with a capacity for producing locally US$120 million of the standard quality of paint and coating that are presently imported,” Jotun said.
“This investment shows Jotun’s long-term commitment to the Algerian market. We can now bring our clients in Algeria the highest quality, internationally approved decorative paints and protective coatings,” Jotun said when the JV was announced in 2022 as Algeria pushed forward with the housing program.
A similar housing project is underway in Egypt under the social housing program, now called “Housing for All”, which aims to provide affordable housing to one million low-income households, according to the World Bank, one of the project supporters.
“It is Egypt’s first national initiative for green buildings and believed to be the first green social housing initiative in the region,” the bank adds.
Some of the top paint makers in this market include Sipes Egypt, MIDO Coatings, PACHIN, GLC Paints and Scib Paints. Products from international companies are supplied through partnerships with local market players.
In early 2023, Egypt’s paint market got more enriched when El Mohandes Jotun, a leading paint maker in the country, commissioned the second phase of its paint making factory located in the 10th of Ramadan City at a cost of more than US$100 million with capacity to produce at least 7 million liters of paint annually.
Elsewhere, South Africa has recently witnessed the launch of a USD $1.4 billion Southern Farms Biodiversity Development Project in the city of Johannesburg, under which 45,000 new housing units will be constructed as well as associated mixed use housing amenities.
In Nigeria, the government has recently allocated US$108 million in the 2023 supplementary budget to fast-track construction of the first phase of the Renewed Hope Housing Projects and Slum Upgrading Programme that targets construction of at least 34,500 housing units across the country, as well as upgrading more than 25 slum areas.
As 2024 gains pace, African governments and private sector real estate developers will most likely step up the implementation of more paint-consuming real estate developments, with architectural paint expected to be the most demanded product among others.
Source link : https://www.coatingsworld.com/issues/2024-01-01/view_Africa-Report/housing-sector-expected-to-drive-africa-paints-market-in-2024/
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Publish date : 2024-01-22 08:00:00
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