BMI View: We adjusted our outlook for 2016 and 2017 from 10.2% real growth to 7.2%, in light of the continued uncertainty around the viability of the ambitious Bagamoyo Port project, which provided a major upside to our short-term outlook. Nonetheless, our outlook for Tanzania's construction industry remains upbeat and we forecasting expansion of 8.4% in real terms over our ten-year forecast period to 2025. Investment in transport logistics capacity will support growth, with movement in the nascent gas sector expected only after 2020 , owing to depressed commodity prices. I nadequate power supply and allegations of government corruption will continue to weigh on investor sentiment.
Latest Updates And Structural Trends
We revised our forecasts downwards for the Tanzanian construction industry over 2016 and 2017 from 10.2% real growth to 7.2%. Central to this decision is the ongoing uncertainty over the financial viability of the Bagamoyo Port project, which had provided a major upside to our short-term growth outlook.
Our long-term outlook for the industry remains upbeat, expected to expand 8.4% over our forecast period to 2025, above the Sub-Saharan Africa (SSA) average of 6.3%. Nominal industry value will rise from an estimated USD5.1bn in 2015 to USD15.3bn in 2025, sustaining Tanzania's position as the second-largest construction market in East Africa, behind Ethiopia.
Investment in the transport sector, particularly port and rail, will drive industry growth. The sector has been the recipient of significant foreign investment inflows.
Low commodity prices will hinder the government's plans to use its natural gas reserves to boost its ailing power supply.
The hotel sector has the potential to spur industry expansion as the growing number of investment activities and growing tourism industry drive the need for international hotels and lodges in strategic areas.
|f=BMI forecast. Source: BMI|
|Construction industry value, TZSbn||11,850.54||13,367.41||15,078.44||17,284.42||20,030.91|
|Construction Industry Value, Real Growth, % y-o-y||7.55||6.80||6.30||7.63||8.89|
|Construction Industry Value, % of GDP||11.8||11.8||11.7||11.8||12.1|
Tanzania is in eighth place out of 17 countries in our SSA Infrastructure RRI, with an overall score of 41.1 above the regional average of 39.1.
Tanzania boasts one of the more competitive labour markets in SSA, with moderately low costs and high availability of labour, albeit unskilled.
Poor logistics capacity and an opaque business environment poses the main challenges to operating in the market.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Tanzania Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Tanzania Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Tanzanian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Tanzania to test other views - a key input for successful budgetary and planning in the Tanzanian infrastructure market.
- Target business opportunities and risks in the Tanzanian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Tanzania.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.