From Nigeria to Kenya, money-making potential in Africa’s building materials industry

Several businesspeople and investors interviewed by How we made it in Africa during 2021 highlighted the potential in their respective countries’ building materials and services industry.

In Nigeria, businesspeople could target either low-cost building materials for the mass market or supplies for high-end finishes, according to Thessa Bagu, managing director of advisory firm Naijalink. “The country needs building materials and equipment, from cranes to tiles and everything in-between as most of these are currently imported. For example, businesspeople can focus on the big mansions and flats that are being built here in Lagos, which require nice finishes, such as taps and door handles.” [Read more: Opportunities in Nigeria: From building materials to health supplements]

Côte d’Ivoire also has a vibrant construction industry. Although private equity firm Adiwale Partners is enthusiastic about the sector, its team doesn’t have the expertise to invest directly in building and development. However, Adiwale found a way to participate in the sector’s growth through a recent investment in air-conditioning company Maintenance Climatisation Technique, focused on the installation and maintenance of industrial, commercial and residential air-conditioning solutions. Demand for air conditioning in Côte d’Ivoire is driven by substantial new industrial and commercial developments as well as the refurbishment of existing buildings. [Read more: Opportunities in French-speaking West Africa: Insights from private equity investor]

While East African investment firm Ascent Capital Africa also steers clear of direct property deals, it will back companies that supply part of the value chain for real estate. For instance, it has invested in Kisumu Concrete, which manufactures building products such as ready-mix concrete and concrete blocks. It is the largest player in western Kenya and enjoys little competition given the difficulty and cost of shipping building blocks from Nairobi or other locations.

Ascent has also invested in Metro Plastics in Kenya, which produces PVC and PPR pipes as well as gutters and wastewater removal products. “These are not products that are going to make the front page news but they are essential if you’re going to construct a building or collect rainwater, which is very important in this part of the world. These types of businesses that serve consistent local demand and are considered somewhat ‘safe’ from potential threats of imports are generally attractive to us. For example, it’s not cost-effective to ship pipes from China to Nairobi – they are light but take up a lot of space,” says David Owino, founding partner of Ascent. [Read more: Investor reveals East Africa’s most attractive opportunities]