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Companies: Boom-time builders

Posted on Monday, 23 November 2009 00:00

Foreign and domestic infrastructure companies are making profits on the

back of telecom, electricity and road projects throughout Africa in

spite of the general downturn in global commerce

Construction, South Africa

At 107 years old, South Africa’s Murray & Roberts (M&R) is one of the oldest and best-established construction and engineering companies on the continent. Most of its work is still in South Africa, but M&R has diversified internationally, with 29% of revenues coming from non-South African markets, particularly the Middle East. In what seemed a respectable performance given the circumstances, M&R’s headline earnings for the year to 30 June 2009 were R2bn ($255.4m), R300m higher than in 2008. M&R has a project order-book of R42bn, but its turnover has been heavily dented by the global slowdown. R10bn-worth of Middle Eastern projects have been cancelled since the crisis unfolded and the company’s work in South Africa is now primarily sustained by government contracts, especially those relating to preparations for the 2010 FIFA World Cup.

At its annual general meeting in late October, M&R warned that the South African economy would take longer than previously anticipated to recover from recession, and said it did not expect significant private investment in mining, industrial or commercial projects.?

Energy, Transport and Water, United States

The world’s 12th-largest company is relaxed about the effect the downturn will have on its business in Africa. Early in 2009 it claimed not to have received cancellation of a single order. Between 2004 and 2009, revenue from Africa rose from $500m to $3.5bn. In 2008, GE completed its Hamma desalination plant in Algeria, and a year later it signed a $1bn service contract with the country’s national gas company Sonelgaz. South Africa acts as regional headquarters where GE, with 500 staff, plays a role in media (CNBC), mining (AngloPlatinum), energy (Sasol) and security sectors. In Nigeria, GE has provided turbines for the gas-fuelled power stations that the government has yet to complete. It also has a health services programme aimed at the whole of Africa – certainly a sector for the future.

Construction, Egypt

Perhaps better known for its football team of the same name in Nasr City, Arab Contractors is Egypt’s construction stalwart. Government spending keeps it busy, and the firm is working on a $165m upgrade of the Cairo-Alexandria-Matrouh road, the Dahshour Bridge that will form part of Cairo’s third ring-road, and a range of housing, sanitation and water-treatment projects. Around 20% of Arab Contractors’ work is in Africa outside of Egypt, according to Medhat Askar, head of the Africa section. It has offices in Nigeria, Ghana and Botswana and is building 54km of water mains in Malabo, a $38m bridge linking Jacqueville to mainland Côte d’Ivoire and infrastructure upgrades in Abuja. Apart from payment delays, it has remained unscathed by the global crisis and had a turnover of E£13.5bn ($2.5bn) in 2008/9, a 23.9% rise from E£10.9bn the previous year.

Telecommunications, China

Huawei, a Chinese telecom supplier founded in 1988, is today the world’s fourth-largest seller of network equipment. Huawei’s founder, Ren Zhengfei, is an ex-army man who was strongly influenced by Maoist military strategy.Huawei entered Africa in 1998 and was astonished to find that even with profit margins ten times greater than in China, it was still much cheaper than European competitors. Huawei reported revenues of $18.3bn in 2008, 40% higher than in 2007, 72% of which came from international markets. The company supplies services in 30 African countries, particularly Nigeria, Kenya, Egypt and Tunisia. It now has a foot in South Africa, supplying transceiver stations to Neotel.

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