Mega projects pull global equipment firms to Nairobi
By Rawlings Otini | October 29th 2019
Roadworks and housing projects have become commonplace in major towns and even remote areas of Kenya, thanks to devolution.
The construction boom has increased demand for equipment which is, in turn, driving global manufacturers and dealers into the country in droves.
Among the machinery that are in high demand are excavators that cost between Sh12 million and Sh18 million for a single unit, motor graders that will set you back upwards of Sh12 million and rollers that go for about Sh7 million.
Data from the Kenya National Bureau of Statistics shows that new registration of wheeled tractors rose by an all-time high 49.5 per cent to 4,040 units last year.
While the construction industry has for the longest time been a preserve of the well-heeled who can afford the equipment, small players are slowly finding their footing, courtesy of the much-publicised financing and leasing arrangements with local dealers of major international brands.
One such beneficiary is Tony Nyabuto, a software developer who says he saw the opportunity in the growing sector and bought several construction equipment, including an excavator, a motor grader and a roller on credit.
He said his machines are always on demand due to multiple projects happening around the country.
“Construction is really a big deal right now,” said Mr Nyabuto.
He was introduced to the equipment leasing business by his friends whom he says were already making a tidy sum several years ago.
Nyabuto said despite the good returns, players are increasingly avoiding Government projects because of delays in payment unless the contractor has financial muscle or is backed by the Chinese or Japanese governments.
The demand is being driven by mega State infrastructure projects such as roads, rail lines, irrigation, mining and ports as well as housing.
The Jubilee Government had set out to build about 60 dams across the country in a Sh300 billion project, although some of them have since been scrapped in the wake of the infamous scandal that has claimed the careers of several senior officials.
Another major project that has fueled the rush for acquisition of construction equipment is the Standard Gauge Railway that has so far gobbled up Sh450 billion.
Major roads such as the Sh300 billion Nairobi-Mombasa expressway are also in the pipeline as well as other roads and railway projects set to link the Lamu Port to Ethiopia.
Global leaders in construction equipment production such as US-based Caterpillar, Japanese engineering firm Komatsu and China’s Sany are now shifting their focus to the Kenyan and larger African market.
“We believe Kenya has the potential if managed correctly for significant infrastructure development,” said Charles Field-Marsham, executive chairman of Pan Africa Equipment Group (PEG) .
He was speaking on Tuesday last week when the Dubai-based construction equipment distributor opened a Sh500 million office in Nairobi.
Their key competitors include Mantrac Kenya that largely deals in the Caterpillar brand of construction equipment.
Kenya last year imported Sh106 billion worth of machinery and equipment spurred by the growing activities in construction, infrastructure and mining.
Scott McCaw, PEG chief executive, said the firm sees opportunities in the extractive industries as well as continued development in the power and energy sectors.
“With Kenya and East Africa focusing on increasing power supply and growing the extractive market, we believe that such domestic needs for industry diversification, economic growth and infrastructure development will certainly drive the medium to the long-term development of these two sectors,” he said.
Apart from increasing power supply and growing the extractive market, the Government is also investing in housing projects in line with the Big Four agenda.
The rapid growth of many African countries has accentuated the need for improved infrastructure on the continent.
This is expected to provide a ready market for companies such as PEG.
China’s Sany Group recently signed a deal with Rhombus Construction Company to distribute its products locally in a contract valued at around Sh5 billion.
Sany is renowned locally for its range of ‘green mamba’ excavators that featured prominently in the recent demolition drive to rid the country of illegal structures.
Sany hopes to sell 650 dump trucks and 200 concrete machines locally in the next three years to boost its brand awareness.
Others keen on the African market are Terex of the United States, Sweden’s Volvo with offices in Johannesburg, Hitachi of Japan as well as Switzerland’s Liebherr.
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