Cement sales in Kenya down as building slumps

Cement bags in a row

NAIROBI, KENYA: Cement consumption in the first five months of 2018 dipped to 2.3 million tonnes compared to 2.5 million tonnes in the same period in 2017, signalling the end of a construction boom that has persisted since 2013.

It is the only economic indicator that did not pick up after a turbulent 2017 characterised by a toxic business environment caused by a protracted electioneering period, low credit and drought.

The construction sector, which reached its peak in 2016 as it grew by 13.8 per cent with 6.3 million tonnes of cement consumed, has been on a decline as the Government weans itself of the huge infrastructural projects.

Starting from a growth rate of 6.1 per cent in 2013, construction - which includes building of roads, railways, ports and real estate- began to grow at a slower pace in 2016, expanding by 9.8 per cent.

Last year, the sector grew by 8.6 per cent.

In the first three months of 2018, construction grew by 7.2 per cent, the slowest growth rate in more than five years. This was compared to 8.2 per cent growth realised in the first quarter of 2017.

"The deceleration was reflected in the decline in consumption of cement from 1.5 million tonnes in the first quarter of 2017 to 1.4 million tonnes in the quarter under review," said the Kenya National Bureau of Statistics (KNBS) in its quarterly gross domestic product report for the first quarter of 2018.

KNBS noted that the decline in consumption was also occasioned by notable decreases in the import volume of cement which declined by 15.7 per cent and cement clinkers by eight per cent. 

"Similarly, the volume of imports of construction materials such as iron and steel bars, and rods declined by 4.9 per cent during the quarter in review," it said.  

Heavy spending

The growth experienced between 2013 and 2016 was driven by heavy spending in public infrastructural projects such as roads and the Standard Gauge Railway (SGR).

The Government has said it will suspend "low-priority" projects as part of fiscal consolidation to reduce expenditure.

It, however, allocated Sh74.4 billion for the construction of the second phase of SGR between Nairobi and Naivasha, Sh87.5 billion for ongoing road construction financed domestically and Sh34.2 billion for the foreign-funded.

The Government promised the International Monetary Fund that it would delay the implementation of what they described as ‘lower-priority’ investments.