Industry News

Construction Slows Down as Railway Project Nears End

The industry contributes about 5 per cent of the Kenyan economic output.

Updated on

October 3, 2016

Kenya construction growth — Construction grew 8.2pc in Q2 of 2016. PHOTO | FILE

Kenya’s construction industry grew 8.2 per cent in the second quarter of this year, down from 11.2 per cent in a similar period in 2015, official data showed on Friday.

The Kenya National Bureau of Statistics (KNBS) said in its quarterly report that the sector had slowed down due to the deceleration of the Mombasa-Nairobi standard gauge railway project, which is set for December completion.

“The decelerated growth is partly attributable to reduced activities in the construction of the standard gauge railway as its completion draws nearer,” the KNBS said in the report posted on its website.

The slower growth was reflected in cement consumption which recorded a growth of 5.4 per cent in the period under review compared to 8.0 per cent growth in the second quarter of 2015.

But despite the slowdown, the construction sector contributed Sh81.5 billion to Kenya’s gross domestic product (GDP) in the second quarter of this year, up from Sh75.2 billion in a similar period last year, buoyed by the large infrastructure projects that are underway in various parts of the country.

The building and construction sector contributes about 5 per cent of the Kenyan economic output.

Overall, the local economy is estimated to have expanded 6.2 per cent during the first six months of the year compared to 5.9 per cent during the same period last year.

“This growth was mainly supported by better performances in agriculture; forestry and fishing; transport and storage; real estate; and wholesale and retail,” the KNBS said.

Construction, which comprises buildings, roads and rail grew 13.6 per cent last year compared to 13.1 per cent in 2014 driven by the construction of the new railway.

Large-scale projects such as shopping malls, office blocks, and gated communities also contributed to the improved performance of the sector last year as wealthy investors rushed to meet the rising demand for decent housing across major urban centres.