New fears for economy as construction sector slumps
Cement consumption in Kenya fell sharply in the first quarter of 2024, official government data shows, raising concerns about the health of the country’s construction sector and the wider economy.
Cement sales fell 12.7 percent to 1,949,900 metric tons in the January-April period, compared to 2,234,200 metric tons in the same quarter of 2023, according to the Kenya National Bureau of Statistics (KNBS).
“During the quarter under review, the construction sector recorded a decelerated growth of 0.1 percent, from the 3.0 percent growth recorded in the first quarter of 2023,” KNBS said.
“Cement consumption fell by 12.7 percent to 1,949.9 thousand metric tons from 2,234.2 thousand metric tons in the corresponding period of 2023. The amount of imported bitumen has decreased from 25,482.6 metric tons recorded in the quarter of seen at 7223 metric tons at 18.18. the period under review.”
The decline in cement use, a drag on construction activity and economic growth, comes as President William Ruto’s government has made affordable housing a key plank of its policy agenda.
“The decline in cement consumption is a clear sign of concerns in the construction industry and the wider economy,” said John Mwangi, a Kiambu-based developer. “It’s a wake-up call for the administration to reexamine its policy priorities.”
The construction sector registered a slower growth of 0.1 percent in the period, from 3.0 percent in the first three months of 2023, KNBS data show.
Imports of other key construction materials, such as bitumen, also declined over the period, while imports of iron and steel rose, potentially indicating a shift in sector activity.
Credit extended to enterprises in the construction sector grew by a modest 0.6 percent to reach Sh140.9 billion in March 2024, compared to a 4.8 percent increase in the same period in 2023.
The slowdown in the construction industry raises questions about the government’s ability to meet its ambitious affordable housing targets, which are seen as crucial to addressing the country’s chronic shortage of good, affordable homes.
“The president has made housing a central part of his agenda, but these figures suggest the sector is facing significant headwinds,” Mr Mwangi said. “Urgent interventions may be needed to get the industry back on track.”
For decades, a booming construction sector punctuated by high-rise buildings across the city’s outskirts and across much of the country had earned Kenya the moniker of a “big construction site”, indicating the country’s strong economic health. country. However, the sharp decline in cement consumption now raises concerns, as the construction industry has long served as a signal for the country’s broader economic performance, analysts said.
President Ruto has made affordable housing a top policy priority, aiming to build hundreds of thousands of new homes across the country.
According to him, this ambitious agenda is not only meant to address Kenya’s chronic shortage of good and affordable accommodation, but also act as a driver of job creation in the construction sector, according to him.
For years, the booming construction industry had been a symbol of Kenya’s robust economic growth, with high-rises rising on the outskirts of the city and across the country.
This construction boom had earned Kenya the moniker of a “major construction site”, underscoring the sector’s importance as a barometer of the country’s economic health.
However, the significant 12.7 percent drop in cement consumption during the second quarter raises serious concerns, as it suggests a worrying slowdown in construction activity.
This poses a significant challenge to President Ruto’s affordable housing plan to inject 250,000 units a year, which relies heavily on a vibrant construction industry to meet its ambitious targets and provide much-needed employment opportunities for Kenyans.