Coronavirus response deflates project spending across eastern Africa

Eastern African countries cut $68.3 billion spending on infrastructure projects last year, the largest decline in number of projects and value of projects in sub-Saharan Africa in a year.

This is as a result of the economic fallout from the Covid-19 pandemic sweeping across the region, hitting public finances and pushing governments into massive indebtedness.

The Africa Construction Trends Report (2020) by consultancy firm Deloitte released last week shows that the number of infrastructure projects in the region covering Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, Tanzania and Uganda dropped by 35 per cent to 118 in 2020 from 182 in 2019 while the total value of the projects declined by 47 per cent to $77.7 billion from $146 billion in the same period.

Infrastructure projects in the transport sector accounted for 51.5 per cent ($40 billion) of the region’s total projects, followed by energy and power (23.5 per cent) and the shipping and ports (21.5 per cent) sectors.

According to the report, the sizable drop in the number of projects and project value largely resulted from the region’s inability to meet financing costs due to the effects of Covid-19 pandemic resulting in the suspension of several projects.

For instance, the Ethiopian government’s interest in renegotiating payment schedules for the Addis Ababa-Djibouti Railway and Addis Ababa-Sebeta-Mieso-Dewale Road Project, led to thinned financing for smaller projects.