Why construction sector is vibrant in semi-arid counties

Workers at a construction site. [File, Standard]

Construction is the most vibrant sub-sector in arid and semi-arid counties according to a recent ranking by Kenya Institute for Public Policy Research and Analysis (Kippra).

The agency attributes this to rapid urbanisation and increased development allocations by devolved units.

While arid counties have long been known to favour pastoralism, owing to residents’ nomadic lifestyle, the Kenya Economic Report (KER) shows construction as the leading sector that offers employment in these regions.

The report Kippra analysed counties’ Gross Value Added (GVA) — the value that producers have added to the goods and services they have bought using industry sub-sectors — showing construction, represented by 54.65 per cent, taking the most share.

The other sub-sectors under industry are mining and quarrying whose share of GVA stood at 6.92 per cent in the 2018-2022 period. Electricity supply stood at 11.44 per cent, manufacturing at 19.35 per cent and water supply at 7.65 per cent.

When compared to other areas namely semi-arid and non-ASAL (arid and semi-arid land), the contribution of construction to GVA shrinks.

For example, in semi-arid, the share of construction to counties GVA oscillates between 17.33 per cent to 35.32 per cent.  In non-ASAL, the highest recorded is 41.59 per cent.

In semi-arid and non-ASAL areas, manufacturing takes the largest share  in counties’ GVA with a high of 52.39 per cent and 56.77 per cent in the latter and former areas respectively.

According to Kippra, the construction sector encompasses various activities related to the building of houses, factories, offices and schools.

It also entails the building of physical infrastructure such as roads, bridges, ports, railroads, sewers, tunnels and maintenance and repair of the same.

“The construction sector is particularly dominant in the arid counties industry GVA at an average share of 54 per cent. This can be attributed to increased urbanisation and investments in essential infrastructure, which have been historically lower in these counties,” says Kippra in the report.

The think tank says devolution has played a big role in infrastructural developments in the ASAL areas as counties allocated huge resources to roads and the build county headquarters.

“The dominance of this sector in the arid counties can also be attributed to the comparatively higher development budget absorption rate indicating focus in infrastructural development,” it adds.

The report shows that the development budget in arid counties has grown to 62.77 per cent between 2013 and 2022.

This is compared to 56.78 per cent in non-ASAL and a high of 56.87 per cent in semi-arid devolved units.

As a largely pastoral community, manufacturing may have been expected to have a larger share in the counties’ GVA due to the value chain in cattle which the report has highlighted.

“Arid counties can grow their manufacturing sector by investing in the livestock product value chain, which could offer job opportunities as they are more labour intensive. This can be an entry point for livelihood diversification in the face of climate change,” the report says.

When it comes to employment, the construction sub-sector also leads in providing the residents in arid areas with jobs, more than any other sub-sector.

This is even as the report cites that employment in the industry sector is low.

Kippra says employment in the sector is low when compared to the other broad categories.

It is mainly concentrated in the construction and manufacturing sectors.

“Employment in the construction sector is particularly dominant in arid counties. There is little disparity in the employment share of manufacturing and construction sectors in the semi-arid (30-484 per cent) and non-ASAL counties,” the report highlights.

Kippra says the construction sector is highly volatile, noting that employment in the sector is subject to significant fluctuations.

“The construction industry is also subject to seasonal employment patterns, raising concerns over the sustainability of employment in the sector,” the report says.

The report states that a disaggregated analysis of the industry’s broad sector revealed that the share of the manufacturing sector has been declining from 2013 to 2022 as the share of the construction sector increased for all county categories.

“The decline in the share of manufacturing GVA is due to its slower growth rates compared to the construction sectors,” says Kippra.

The think tank opines that there have been significant investments in infrastructural enhancements, particularly roads, healthcare, energy, railway infrastructure, and housing development since devolution, which have led to higher growth rates in the construction sector.

“The National Construction Authority acknowledges this upward trend in growth and attributes it to increased government budgetary allocation towards infrastructure development and the affordable housing agenda,” the report says.

Kippra says the industrial sector growth rate is positive for all the years under review, although declines were experienced in 2016/17 and 2019 for most of the counties.

The decline in 2016 experienced by all county categories is attributable to a drought episode.

“The arid counties did not experience a high decline as their main sector in the industry broad sector is the construction sector while the other counties have bigger shares of the manufacturing sector,” the report explains.