Facts & Figures: Quick overview of Kenya’s construction industry

Kenya economic growth
The construction industry contributed 4.8 per cent of Kenya’s GDP. PHOTO/FILE
The output of the Kenyan construction industry rose 13.1 per cent in 2014 compared to 5.8 per cent in 2013, according to the latest figures from the Kenya National Bureau of Statistics.

The Economic Survey 2015, which was released on Wednesday, attributed the double-digit expansion to steady growth in property development, a vibrant real estate sector and the ongoing mega infrastructure projects.

Some of the projects that contributed significantly to this growth were earthworks construction for the Mombasa-Nairobi SGR project, expansion of major airports as well as the current construction of roads and energy infrastructure across the country.

The building and construction industry contributed 4.8 per cent of Kenya’s Gross Domestic Product (GDP), which rose to Sh5.36 trillion from Sh4.73 trillion in 2013 – representing a nominal growth of 13.3 per cent.

“Construction was the best performing sector because of the increase in funds allocated to roads and railway construction as well as rehabilitation of existing roads,” Devolution Secretary Ann Waiguru said during the release of the survey.

The expansion of the port of Mombasa also added to the sector’s growth through the construction work for the second container terminal, infrastructure alterations of berths and construction of a new access road.

The construction growth was also mirrored in cement consumption which registered a 21.8 per cent to 5,197 thousand tonnes in 2014, buoyed by enhanced construction activities.

Loans and advances from commercial banks to the building and construction sector went up by 13.6 per cent from Sh70.8 billion in 2013 to Sh80.4 billion in 2014, due to increased financing of real estate projects.

The survey indicated that the value of reported private building plans approved in Nairobi went up from Sh190.6 billion in 2013 to Sh205.4 billion in 2014, representing an increase of 7.8 per cent.

On the other hand, the value of reported new buildings completed in the Kenyan capital increased by 13.0 per cent to stand at Sh59.1 billion in 2014.

In line with the growth of the construction output, workers in the sector were paid an average monthly wage of Sh45,743 last year up from Sh39,480 in 2013, representing a 15.9 per cent increase.

The construction industry is expected to sustain its strong growth this year, as the State rolls out several big dollar projects such as the 10,000km roads project, phase two of the standard gauge railway, construction of Lamu Port among others.

Opportunities for investment in the sector are vast especially in the manufacture and supply of building materials, construction of low income housing as well as in the area of upgrading informal settlements.

The transport sector also offers huge investment opportunities especially in the renovation and rehabilitation of transport infrastructure.

Some of the major opportunities in construction include:
1.) Road construction and rehabilitation
2.) Construction of the rail link to South Sudan
3.) Rehabilitation of major airports
4.) Development of Lamu Port and associated infrastructure
5.) Construction of geothermal and wind power generation plants
6.) Urban housing development to meet the rising housing demand.

To learn more about the sector, please read the Construction Business Review.