The Kenyan construction industry is set to grow steadily for the next decade attributed to an increased number of projects being carried out in the country. BMI Research shows that the local industry will grow by 8.7 percent this year and remain steady up to until 2026 with an annual growth of 6.2 percent which will see Kenya outperforming all sub-Saharan countries. BMI pegs this on the government’s’ huge spending on infrastructure development such as the Standard Gauge Railway and the Lamu port South Sudan Ethiopia Transport (LAPPSET) corridor being key drivers of local economic growth. “Kenya’s construction market will record significant expansion over our 10 year forecast period between 2017 and 2016…significant support for the sector will stem from the Kenyan budget, backed by foreign investment into the country’s planned infrastructure development,” says the BMI Study. Turner and Townsend report, ‘International construction market survey 2017’ themed Building momentum’ which ranked Nairobi as one of the cheapest city for construction despite declining competition and the high cost of land noted that, “Overseas investment driving expansion”. “The real estate and construction sectors continue to be key drivers of economic growth in Kenya, as they have been for the last five years, and the Kenyan construction industry contributes 7 percent of GDP,” read part of the report. Data from the Kenya National Bureau of Statistics (KNBS) the construction industry grew by 9.2 per cent in 2016 from an expansion of 13.9 per cent registered in 2015. Increased activity in the construction of roads and development of housing also translated to an increase in employment in the sector from 148.6 thousand jobs in 2015 to 163.0 thousand jobs in 2016. “Overall expenditure on roads is expected to increase by 38.3 per cent from KSh 113.2 billion in 2015/16 to KSh 156.5 billion in 2016/17. Total development expenditure is also expected to grow by 31.7 per cent from KSh 87.8 billion in 2015/16 to KSh 115.6 billion in 2016/17. Development expenditure on trunk and primary roads is expected to grow by 36.2 per cent from KSh 51.6 billion in 2015/16 to KSh 70.3 billion in 2016/17,” according to the KNBS 2017 Economic Survey. However, cement consumption in the country dropped by 62,000 metric tonnes in the first five months of the year. Data from KNBS shows cement consumption stood at 2.5 million metric tonnes in the five months to May compared to 2.56 million in a similar period last year. Dyer and Blair investment Bank Cement Sector East Africa overview report published in February says the construction sector remains resilient despite headwinds. “We forecast a 3 year compound annual growth rate (CAGR) in cement consumption per capita of 8.1 percent to 96.7 Kgs in 2018, on the back of 3 year CAGR of 8.7 percent in cumulative regional cement consumption to 14.9 MN Tonnes in 2018F.”
“The East African region (Kenya, Uganda, Tanzania) cement and construction sectors have noted resilience over the last 3 years despite headwinds stretching from power tariff hikes, currency devaluations and high interest rates which curtailed vibrant construction activity, hence high cement consumption growth.” ARM Cement PLC, the sector’s third largest player after Mombasa Cement and Bamburi Cement and the East Africa Portland Cement Company among the listed companies at the Nairobi Securities Exchange.
The private companies are Mombasa Cement, National Cement and Savannah Cement. Bamburi Cement is associated with the Nguvu brand. It was established in Mombasa in 1951. Production started 3 years later. It was listed at the NSE in 1970. It is the leading cement producer in Kenya in terms of production. In terms of shareholding, Lafarge Group takes the lion’s share at 58.6 percent (2012, Dyer & Blair). Bamburi Cement owns the Bamburi Special Products Ltd which produces precast concrete products and ready-mix concrete. Bamburi controls 40.5 percent of the market share.
