Mota-Engil SGPS SA, Portugal’s biggest construction company, is set to announce new contracts in Africa even as plummeting commodity prices weigh on infrastructure projects in the oil-rich continent.
“There is a kind of perfect storm in Africa with low commodity prices, a very strong dollar and lower economic growth in countries like China,” said Gilberto Rodrigues, chief executive officer of Mota-Engil Africa NV, a publicly traded unit of Mota-Engil. “In the times ahead we will cause surprise with new contracts.”
The International Monetary Fund said on July 9 it expects sub-Saharan Africa’s economic growth to slow to 4.4 percent this year from 5 percent in 2014. Mota-Engil’s revenue from Africa fell 19 percent in the first quarter to 187 million euros ($207 million), hurt by lower revenue from Angola. Africa’s second-biggest oil producer is cutting spending this year by 25 percent to counter the drop in oil prices.
As a result of Africa’s economic slowdown, some of Mota-Engil Africa’s competitors will disappear and companies will cut spending by seeking partners for their projects, said Rodrigues. Last year, Mota-Engil completed a 237-kilometer (147-mile) stretch of railway in Malawi for Brazilian mining company Vale SA, its biggest project in Africa to date. The company is currently looking at about $15 billion in possible projects in Africa, said Rodrigues.
“Mota-Engil has positioned itself to become a partner in more of these projects,” said Rodrigues, who received an award from the Georgia Legislative Black Caucus in Atlanta on Monday for his work in Africa.
“There are many roads, bridges, railway lines and other projects to be done in Africa,” he said.