Maputo on the Rise

A protracted, gradual reconstruction of Mozambique has been underway ever since the end of its devastating civil war in 1992. However, recently this process has been given a shot in the arm, as the dizzyingly rapid development of Mozambique’s energy sector transforms cityscapes and transport infrastructure. The demand for coal, particularly from India, and the potential of offshore gas deposits are creating strong demand for the construction sector. In addition to major projects such as the Nacala corridor and central Maputo developments, the construction of housing for a growing middle class has begun in earnest, and is hoped to go some way toward tackling the country’s considerable deficit.

PROJECTED GROWTH

Mozambique’s construction sector is growing at a brisk pace. In 3Q2012, the sector represented 4.9% of GDP, but by the same period in 2013, it had risen to 7.8%, and this jump can be largely attributed to the major infrastructure projects planned in the energy, mining, and transport sectors. The three primary logistics corridors are being developed to support coal exports and improve links with neighbors. The Sena railway line is being expanded to Malawi, while the track from Beira to Zimbabwe is under repair. Though these projects are a central element of the nation’s future plans, the government isnotin a position to fully fund each simultaneously, which means that the private sector has had to invest in national infrastructure as their exports grow. Meanwhile, in the capital, over a dozen major construction projects are underway, which will transform the skyline of Maputo Bay with residential and commercial tower blocks. These ventures are driving demand for construction materials and services. Estimates for annual growth in the sector as far as 2016 hover at around 8%.

Major infrastructure projects outside of transport-related schemes include long-overdue infrastructure such as the Greater Maputo Water Supply Expansion Project. At a cost of $178 million, the project will attempt to provide a clean water supply to the capital. The largest single cause of childhood deaths is poor water and sanitation, but the situation has been improving noticeably since the enactment of various water policy reforms in 1998. This project is set for completion in 2019.

CEMENT TO BE

Cement is a vital commodity among construction materials, and Cimpor, a part of InterCement since 2012, dominates Mozambique’s cement-producing sector. The company trades 4 million tons per year internationally, and has a production capacity of 46 million tons. In Mozambique it leads the market, with a 9.8% increase in sales in 2013. It has a production capacity of 2.4 million tons per year, manufactured in its primary facilities in Matola, Dondo, and Nacala. This capacity was given a major boost with the inauguration of a new grinding facility in Dondo in late 2013, which doubled the capacity of the plant there. An agreement was also signed to lease a grinding facility in Matola, allowing Cimpor to broaden its range of products.

Consumption is largely centered around Maputo, with 680,000 tons used in 2010. Beira followed with 250,000 tons, and Nampula and Nacala had the third highest regional demand with 160,000 tons. Private sector demand remains the primary source, though public investment is playing an increasing role. This level of consumption is increasing year on year, and though cement production, driven by Cimpor’s innovations, is increasing, it is still not enough to meet demand. Competitively priced cement from overseas suppliers continues to influence the segment. In addition, issues involving the hoarding of cement have led to high prices and bags of cement being sold at over 50% mark ups.

However, the government’s new cement factories in Maputo, GS Cimentos, ADIL Cement, and Maputo Cement and Steel promise reliable supply, and a quota system for foreign-sourced cement is hoped to protect domestic producers over the coming years. New companies are entering the market too, such as Consolidated General Minerals PLC, which recently acquired a clinker grinding and cement packing plant in Beira. The plant’s capacity will be 800,000 tons annually, and is intended to supply the local market as well as regional neighbors. Other building materials such as steel and other metals are also being produced in ever-increasing volumes. However, the 2014 Global Economic Prospects (GEP) from January 2014 predicted that price stability for such commodities will fluctuate and drop because of diminished demand from China, in addition to other factors.

HOUSES ON THE HILL

Maputo is struggling to provide sufficient housing for the wealth of returning migrant workers and rural citizens who decided to make the capital their home. In addition, a faltering Portuguese economy has encouraged many of its own citizens to move south to countries with a shared language and interconnected history. Many families moved to cities during the civil war, erecting ad hoc shelters, which led to disorganized urban planning and the current lack of space in the capital. Regulations have been introduced, and though the government has not outlined any precise policy since 1990, housing construction has been formalized. The vast majority of families in the low-income bracket could benefit from improved infrastructure in the poorly serviced bairros in which they live. The Mozambican government has plans to build 100,000 social houses by 2014. In addition, the state will provide 300,000 land plots for communities.

However, the most remarkable development in recent years has been the expansion of the high-income housing bracket. Several thousand Mozambican families fall into this group, and are seeking secure, quality urban developments that are provided with adequate utilities. As a sign of expanding construction ventures, Maputo hosted MOZAMBUILD, a conference for suppliers of the country’s building industry, in late February 2014. From aluminum and steel producers to concrete producers, this event offered a stronger understanding of the dynamics of the market in partnership with Mota-Engil, among others. “The city’s market is beginning to reach saturation, and our conviction is that within five years real estate opportunities will have dried up,” explained Aní­bal Leite, Administrator at Mota-Engil in conversation with TBY, “this explains why we are already positioning ourselves in the other provincial capitals of Nacala, Beira, Palma, and Pemba.”

Beyond the cities, where building materials and permissions are not major hurdles, the construction of housing is mostly carried out informally. The rural population of the country in 2010 represented 61.6% of the country, but the pressure of urbanization will see the major cities begin to grow exponentially.