NAIROBI, Kenya, July 23 – Kenya’s construction sector set to recover this year thanks to the government’s continued implementation of investor-friendly reforms as well as large-scale infrastructure projects aimed at boosting integration regional and economic diversification.
That’s according to a report from Deloitte that reveals that industry growth is expected to pick up to 6.3 percent growth this year.
The sector has contributed around 6 percent of Kenya’s GDP and has supported over 221,000 jobs per year in the public and private sectors on average over the past five years.
During the period, the sector also saw an annual growth of 7.8% on average, but it is estimated that it slowed to 1.3% real growth in 2020 as the COVID-19 pandemic ravaged the activity of the sector.
The residential and commercial construction sub-sectors were hit the hardest, according to the report, while the public infrastructure construction sub-sector struggled to maintain its growth momentum, supported by public spending.
The main obstacles observed in 2020 included supply bottlenecks, shrinking workforce and funding constraints.
âResidential and commercial construction were the hardest hit sub-sectors in 2020, the latter being worse. This is put into perspective by the decline in the value of non-residential building plans approved by Nairobi City County by around 90% on average in 2020. On the other hand, the value of residential building plans approved by Nairobi City County declined 75.8% on average, âthe report said.
Road to recovery
“2021 brings new hope for recovery in the sector as the Kenyan government continues to remain committed to implementing investor-friendly reforms and driving large-scale infrastructure projects aimed at boosting regional integration and diversification economic, âthe report says.
He warns, however, that efforts to contain spending, as well as scrutiny of the financial viability of infrastructure projects funded by China (largely by the Kenyan government) and Chinese lenders to curb Chinese infrastructure will weigh heavily. on the medium-term recovery of the construction sector.
In addition, the need for fiscal consolidation given the high debt levels is expected to constrain public investment in infrastructure in the medium term and slow the growth of the construction sector.