Infrastructure Market Opening Up, China Still Dominant
BMI View: BMI's Infrastructure Key Projects Database shows that Chinese firms have gained a significant market share within Nigeria's construction industry. While the risks to international firms are high, the scale and potential of the Nigerian market is attracting more European, American and South Korean firms to the sector, especially within energy and utilities infrastructure. We expect that the residential and non-residential sector, traditionally dominated by domestic firms, will be the next target for international players.
Nigeria's inadequate infrastructure is often highlighted as one of the key impediments to the country realising its potential economic growth. Hence, the Federal Government (FG) has prioritised investment into addressing the country's infrastructure shortfalls, especially in the power and transport sectors. In tandem with public expenditure, the government is also encouraging and implementing public-private partnership (PPP) schemes as a way of financing infrastructure projects across the industry, from hospitals to roads, housing, and power plants. Such dynamics are increasingly attractive to international firms, looking to gain a market share in Africa's largest construction market.
While we note that the market remains fragmented in many cases, with smaller local firms taking the majority of projects, the push for more complex and large scale infrastructure projects has necessitated the opening of the market to international expertise. Cultural and historical ties with European states are evident in West Africa's infrastructure industry competitive landscape, with French, Italian and other European majors active in the markets. Also, Chinese firms have been extremely successful in developing strategic relationships with the FG and are undertaking some of the country's flagship projects.
|Transport Dominated By Chinese And Nigerian Firms|
|Transport Projects By Nationality Of Main Contractor, % Of Total Number of Projects - As of 06/08/2014|