TURKISH CONSTRUCTION OVERSEAS

CONSTRUCTION & REAL ESTATE | FOCUS: BEYOND AFRICA IN THE 2020S

Turkish construction companies are eyeing up Latin America and India as possible new markets for the coming decade.

The sun sets behind the Galata Port construction site and a mosque in Istanbul, Turkey, January 23, 2020. REUTERS/Murad Sezer


During Turkey's construction boom of the 2000s, many firms were formed in the country to undertake the task of building the new roads, bridges, and schools key to the country's development.

This expansion was accelerated by the availability of cheap credit lines, a highly-skilled workforce, and access to European expertise.

When the construction boom showed signs of slowing down, many firms decided to take their skills elsewhere, including infrastructure projects abroad.

Venturing into Africa seemed a viable option, as a few Turkish firms had already had some successful early experiences in North Africa in the 1970s

Throughout the 2010s, Turkish contractors expanded their operations across the Middle East and North Africa region (MENA) as well as Sub-Saharan Africa, winning a number of notable tenders.

They did so often in tough competition with Chinese companies, active on the continent for well over a decade.

At one point—between 2012 and 2013—Turkish companies were entrusted with over USD30 billion worth of contracts across the MENA region.

Though business declined due to unrest in Libya, Iraq, and Syria in 2014-2015, work is once again gathering momentum.

With a good understanding of the region and its culture, such contractors have made a name across Africa, especially in the construction of public buildings, airports, and hospitals.

The Tripoli Convention Center in Libya, Blaise Diagne Airport in Senegal, and the Kigali Convention Center in Rwanda, host to the 2016 African Union Summit, are just a few major projects in Africa built by Turkish construction companies.

Turkish contractors have also contributed to projects in over 120 countries over the last half a century, including 81 projects completed in Africa in the year 2017 alone, according to data released by the Turkish Contractors Association (TMB).

It is estimated that these enterprises have generated over USD380 billion since the early 1970s.Ankara is supporting those companies active overseas, not least thanks to its well-established diplomatic ties with countries across the MENA region.

By 2015, Ankara had finalized some 39 trade and economic cooperation agreements with African states—almost doubling the number from 2003.

The Republic of Turkey currently has FTAs with Egypt, Morocco, Tunisia, and Mauritius, while more agreements are currently under negotiation to facilitate the operation of construction firms on the continent.

After competing against Turkish contractors, Chinese companies are now keen to team up with the Turks, especially in North Africa, where Turks have a better grasp of the region's political dynamics and business practices.

The Chinese, meanwhile, can help by providing financing for projects, as they have across Africa already. Cooperation between Turkish construction companies and Chinese-financed infrastructure projects in Africa could boost Beijing's One Belt, One Road initiative, which seeks to build, literally, a global supply chain that ferries raw materials to China and products for export out of China.

Emre Aykar, Senior Vice-President of the Confederation of International Contractors Association, believes Turkish contractors can go further, perhaps as far as South America, when the volume of their contracts in Africa begins to slow down.

Mithat Yenigün, chairman of TMB, believes the ASEAN region, India, and Latin America could be the next markets for Turkish contractors to find success.

Even if Africa sees a slowdown, that will not be a major threat to Turkey's overseas construction sector, as the current USD500-billion international market is still predicted to grow to USD750 billion in the 2030s.

Turkish firms will continue to maintain their solid reputation in this sector and can increase their market share—whether or not they choose to partner with Chinese counterparts.