Building sector struggles amid political noise

Africa Logistics Properties, modern Warehouse construction at Tatu City in Ruiru, Kiambu. [Photo by David Njaaga/Standard]
The construction sector has yet to pick up after the slump that hit the industry in the wake of a prolonged electioneering period last year.

According to the National Construction Authority (NCA), only 1,330 new building projects came into the pipeline in the first half of the current financial year, setting the stage for slower growth at the close of the year.

This was a 50 per cent drop from the 2,300 building projects that were approved in a similar period in the previous financial year, meaning at least 1,000 extra projects need to come into the pipeline to match the performance.

Despite the election jitters, the 2016/17 financial year saw 4,732 new construction projects.

“The number of new projects has gone down about 50 per cent this year, according to the latest data we have,” said the NCA manager for regional offices, Stephen Mwilu, at a press briefing in Nairobi yesterday.

NCA, which began collecting data on new projects in the middle of the 2014/15 financial year, estimates that an average of 4,000 projects stream into the pipeline each year.

Over the period, there were 1,712 new construction projects while in the 2015/16 financial year, there were 6,817 new and existing projects.

The GDP figures for the third quarter last year saw the construction sector expand modestly by 4.9 per cent compared to a growth of 7.8 per cent previously.

One-stop shop

Cement consumption over the period decreased by 13.1 per cent from 1.621 million tonnes to 1.41 million tonnes, which has seen Athi River Mining and Bamburi Cement issue profit warnings, while East African Portland Cement remains in the red.

The slowed growth is further explained by a 66.1 per cent and 37.9 per cent decline in the volume of imports of iron and steel products and cement respectively in the period under review.

Housing and Urban Development Principal Secretary Charles Hinga Mwaura said the ministry would prioritise a one-stop shop to speed up the process of getting approvals for construction.

“It takes nine months to register a mortgage and transfer land. This adds between 15 and 20 per cent extra cost for completing mundane processes,” said Mr Mwaura.

The PS added that all officers in the department would be required to use the shortest time possible in procurement processes.

He said the ministry would also increase tax incentives for the homes savings plan to encourage saving for building homes.

construction projectsnational construction authoritybuilding projectscement consumption