Page 20 - ITA Journal 3-2018

Market information
ment is becoming more attractive, African steel managers presented their willingness to buy higher quality equipment with better technology and longer amorti- zation periods. This indicates an increase in the quality of outputs, as well as in production ef ciency.
Governments in East Africa are investing heavily in infrastruc- ture and emphasize on improving their power supplies. Their infra- structure spending programs are driving economic growth. Based on expert interviews conducted as part of various studies into the steel sector by africon, gov- ernments also offer strong incen- tive programs for steel projects especially in Kenya and Ethiopia to attract investors. However, government in uence in the nal decision taking is relatively high in Ethiopia compared to a low governmental in uence in Kenya.
What drives steel demand?
Despite growing rapidly, steel consumption per capita remains yet relatively low in East Africa, providing ample space for future growth. In the following, this article is going to highlight a few
more and maybe less expected promising industries in East Africa driving demand for steel today - and tomorrow.
... infrastructure & construction
A major demand driver in the steel industry in East Africa today is the development of infrastructure and construction activities. These are partly re ected in the rise of mega construction projects. The region has registered an increase in these projects by about 65.5% for the period 2016-2017. Out of 71 projects, Kenya and Ethiopia have the largest share with 23 and 20 projects respectively.
One of the core projects is the Central Corridor standard gauge railway project that links Rwanda, Burundi and Tanzania spanning across a 1.672 km distance. This project will offer both passen- ger and freight services between Kigali in Rwanda and Dar es Salam in Tanzania. Apart from poten- tially reducing transportation costs and linking markets, the rail tracks require huge amount of steel.
The LAPSSET Corridor program is another mega infrastructure
project that connects South Sudan, Ethiopia and Kenya. It con- sists of seven key projects start- ing with 32 Berth port at Lamu, Kenya, an integrational Highway that connects South Sudan, Ethi- opia and Kenya. The program also includes a crude and a product oil pipeline, in addition to three International Airports and Resort Cities. This project requires steel for products from guardrails, pipe- line tubes to steel structures for the airports and others.
The most valuable project in the region is the Grand Ethio- pian Renaissance Dam, worth US$4.1bn. Upon completion, the dam will deliver energy to both rural and urban areas. The gov- ernment considers exports to neighbouring countries in case of a surplus in electricity. With its gigantic scale, steel is needed to reinforce cement, as well as for pipes and other segments.
Outside these mega projects, countless smaller construc- tion projects are ongoing in the region. These range from infra- structure, to the construction of hotels, housing and industrial facilities. A large share of these requires steel, making up a major part of the overall steel demand.
... water projects
East Africa lacks national resources compared to other regions on the continent. It is soft commodity orientated, the agriculture sector makes up 36% of the total GDP in the region. However, present de ciencies in infrastructure and climate change effects create the need for water treatment pro- jects to maintain and boost the agricultural sector. On the man- ufacturing side, companies such as breweries, food & beverage manufacturers, textile mills and
ITAtube Journal No3/October 2018
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