West Africa Next Stepping Stone For Brazil's Infrastructure Majors
BMI View: In line with our view that the Brazilian majors would seek t o use their existing operations in lusophone Africa as a base to expand further into the region , both Camargo Correa and Odebrecht have been making headway in new markets across Africa . We highlighted West Africa as the most likely beneficiary, based on high growth expectations and ease of market entry. We anticipate the Brazilian companies to perform well in Sub-Saharan Africa, due to their experience operating in similar markets, and their access to cheap Brazilian Development Bank (BNDES) credit.
Brazilian companies have held dominant market positions in lusophone African countries (namely Angola and Mozambique) for some time, however, in line with a broader global expansion strategy; we are seeing these companies expanding their focus outside of their traditional remit. The two companies leading this strategy are Odebrecht and Camargo Corrêa, however we have also seen similar moves by peers Andrade Gutierrez, OAS and Queiroz Galvão.
Leveraging off operations in Angola, West Africa has been at the forefront of this trend. The sub-region is expected to outperform East and Southern Africa in terms of construction growth rates, as hydrocarbons revenues support public investment and progress is made on attracting the private sector through ambitious public-private partnership programmes.
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