Africa's Construction Boom Brings Opportunity

Africa's Construction Boom Brings Opportunity Risk Management Remains Critical The global construction industry is entering a period of sustained growth, driven by unprecedented investment in digital infrastructure, power generation and climate-resilient assets. However, according to Aon's newly launched Global Construction Insurance and Surety Market Report, construction firms are operating in an increasingly complex risk environment that demands a more strategic approach to risk management and insurance.

According to Philip Cronje, Business Unit Manager at Aon South Africa, the findings of the report are particularly relevant for South Africa and the broader African market, where governments and private sector investors are pursuing ambitious infrastructure development programmes amid economic uncertainty, climate pressures and evolving regulatory requirements.

"The construction sector remains a critical enabler of economic growth across Africa," says Cronje. "From renewable energy projects and transport infrastructure to data centres and telecommunications networks, there is significant opportunity. However, project owners, contractors and financiers are facing a range of interconnected risks that have the potential to impact timelines, budgets and profitability."

The report highlights that global construction activity is expected to increase from approximately $16 trillion in 2025 to $17 trillion in 2026, reaching almost $22 trillion by 2030. Much of this growth is being fuelled by investment in energy infrastructure, digital transformation and the need to modernise ageing assets.

For Africa, these trends are already evident. South Africa's renewable energy sector continues to attract significant investment through public and private initiatives[1], while growing demand for data centres is driving large-scale construction projects across key markets including South Africa, Kenya and Nigeria[2]. At the same time, transport, water and energy infrastructure remain priorities for many governments seeking to stimulate economic growth and improve resilience[3].

Inflation, Supply Chains and Skills Shortages Continue to Challenge Projects

According to Cronje, inflationary pressures remain a major concern for contractors and project owners across the continent. "While inflation has moderated in many markets, the impact of elevated material costs, exchange rate volatility and supply chain disruptions continues to affect project feasibility and profitability," he explains. “Long lead times for specialised equipment, particularly in energy and technology-related projects, can introduce significant delays and cost escalation."

Skills shortages also remain a challenge, particularly for specialised engineering, project management and technology-enabled construction roles. "Many African countries are simultaneously pursuing major infrastructure projects, which places pressure on the available talent pool. This increases competition for skills and can impact project delivery if not managed proactively."

Climate Risk Increasingly Shapes Construction Decisions

Climate-related risks are becoming an increasingly important consideration for developers, contractors and insurers alike. Extreme weather events, including flooding, storms and droughts, have become more frequent across many parts of Africa, placing greater emphasis on resilient infrastructure design and construction as highlighted in Aon’s latest Climate and Catastrophe Insight.

"In South Africa, we have seen first-hand the devastating impact that severe weather events can have on infrastructure and communities," says Cronje. "The construction sector has a vital role to play in building resilience, but this requires careful planning, robust risk assessments and appropriate insurance structures."

The Global Construction Insurance and Surety Market Report notes that insurers are paying closer attention to natural catastrophe exposures, particularly for projects located in high-risk areas. As a result, organisations that can demonstrate strong risk mitigation measures are often better positioned to secure favourable insurance terms.

Cyber Risk Moves onto the Construction Agenda

As construction projects become increasingly digitalised, cyber risk is emerging as a significant exposure. Building Information Modelling (BIM), connected equipment, smart infrastructure and cloud-based project management systems have improved efficiency and project oversight. However, they have also expanded the industry's cyber-attack surface.

"Construction companies are collecting and managing more data than ever before," says Cronje. Cybersecurity is no longer purely an IT concern. A cyber incident can disrupt project delivery, compromise sensitive information and create significant financial losses. It has become a project-level risk that requires dedicated management."

Risk Management Must Start Early

According to Aon's report, organisations that integrate risk management and insurance considerations early in the project lifecycle are better positioned to protect profitability and minimise disruption. Cronje believes this is especially important for large and complex projects increasingly being developed across Africa.

"Insurance should not be viewed as a procurement exercise that takes place shortly before construction begins. Risk management, contract structuring, insurance placement and claims planning should all form part of the project's strategic planning process from the outset."

He notes that early engagement with insurers and brokers is becoming increasingly important, particularly for projects involving renewable energy, major infrastructure developments, mining-related construction or regions exposed to natural catastrophe risks.

Alternative Risk Transfer Solutions Gain Momentum

The report also highlights growing interest in alternative risk transfer mechanisms, including captives and parametric insurance solutions. These solutions can provide organisations with additional flexibility when managing complex risks that may be difficult or expensive to insure through traditional markets.

"For projects exposed to weather-related delays or other emerging risks, alternative risk transfer solutions can play an important role in strengthening overall risk financing strategies," says Cronje. "As projects become larger and more complex, organisations are increasingly exploring innovative approaches to risk transfer."

Positioning for Growth

Despite the challenges facing the industry, the outlook for construction remains positive. The combination of infrastructure investment, energy transition initiatives, digital transformation and climate adaptation projects is expected to drive continued growth across global and African markets.

"The opportunities are significant, particularly in South Africa and across the continent. Success will depend on how effectively organisations identify, manage and transfer risk. Those that take a proactive approach to risk management will be best positioned to capitalise on growth opportunities while protecting project performance and long-term profitability,” Cronje concludes.

Ends… Disclaimer The contents hereof should not be construed as legal advice on any matter. You should not act or refrain from acting on the basis of any content included in this communication without seeking professional legal counsel. This communication does not constitute or create a lawyer-client relationship between us.

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https://aiimafrica.com/media/media-centre/from-crisis-to-opportunity-how-renewables-are-rewiring-south-africa-s-energy-future

https://africadca.org/wp-content/uploads/2026/02/DataCentresInAfrica2026

https://www.iea.org/reports/world-energy-investment-2025/africa