Rising cost of building materials must worry us

Cement bags in a row [Courtesy]

The sharp rise in the cost of building materials should be a major concern to the State. This is considering not only the impact that it will have on Kenyan home builders but also the risk of pushing up the cost of mega infrastructure projects.

These could have the impact of slowing down the construction sector and in turn dent the economy that is yet to fully recover from ravages of Covid-19.

The construction industry held the Kenyan economy when other sectors faltered, especially in 2020, due to the impact of Covid-19. While many sectors have recovered or are on their way to full recovery, the construction sector remains key to the economy.

It is thus critical to find solutions to some of the challenges that have caused a sharp increase in the cost of cement and steel to avoid stalling of the sector.

While a number of these are factors that are beyond Kenya’s control, some of them are well within the control of the government. There is little that the country can do about the Russia-Ukraine war that has resulted in constrained supply of coal that cement producers use in the production of clinker.

However, also among the factors that are causing an increase in the cost of steel include the ban on trade in scrap metals. Local steel millers use scrap metal in production of steel and while this might not be the magic wand to reduce the cost of steel, considering only a fraction of the steel produced locally comes from scrap metal, it could help, to an extent, tame the rise in prices. It would perhaps help if the government speeded up the process of reforming the sector and reopen it. 

On cement production, manufacturers have in the past cited high cost of power as a key concern. The government recently reduced the cost of power by 15 per cent and also has on offer a tariff that gives manufacturers a 50 per cent discount in the cost of power consumed during off-peak of 10pm to 6am and on meeting certain conditions.

Cement producers should consider these offers to reduce their production costs and ultimately ensure fairly priced product gets to the market.