Cement firms recorded the first growth in quarter one sales in three years, signalling glimmers of recovery in construction activities which contracted last year on elevated interest rates and reduced expenditure on public infrastructure projects.
Consumption of cement, a key input in the building and construction industry, grew 20.69 percent in the first three months of the year to 2.34 million metric tonnes, according to data collated by Kenya National Bureau of Statistics.
The double-digit growth in demand was the first in the review period since 2022.
Uptake of the key construction material fell 13.04 percent in the first quarter of last year to 1.94 million tonnes which followed an 11.37 percent drop in 2023 to 2.23 million tonnes.
The rare fall in cement consumption for two consecutive years came as construction activities contracted at levels last seen more than two decades ago during the reign of late President Daniel Moi.
The KNBS data showed activities in the construction sector contracted 0.7 percent in the 12 months ended 2024 compared with a growth of 3.0 percent in previous year.
“The contraction in construction activities was evidenced by a significant decline in consumption of cement,” KNBS wrote in the 2025 Economic Survey report.
The contraction reflected a tough operating environment characterised by budgetary cuts for public infrastructure projects and elevated interest rates which constrained expansion in credit flow to the sector in two years.
Bamburi Cement, the largest manufacturer by market share, blamed flat growth in sales revenue last year on “contraction in the market demand and challenging domestic environment, heavy rains, floods and unrest during the year”.
The firm, which is on verge of delisting its shares from the Nairobi bourse, posted a measly 0.51 percent slide in turnover last year to Sh21.91 billion.
Latest data, however, shows signs of a rebound in construction activities on the back of easing cost of credit and resumption of stalled public projects after the government announced it had started paying off contractors following verification of debt claims.
Average commercial lending rates which last November peaked at 17.22 percent, the highest levels since August 2016, have since dropped to 15.65 percent, lowering the cost of borrowing for households putting up houses and home-builders.
Latest data on the credit market shows signs of improved flow of credit to the building and construction sector.
Commercial banks increased lending to the sector by Sh1.6 billion in the first two months of the year to Sh136.1 billion compared with Sh134.5 billion at the close of the year last December. This was in contrast to a similar period in the prior year when loans to the sector declined by Sh2.4 billion to Sh140.9 billion.
Reduced public expenditure has deepened cash flow woes for contractors in the sector, resulting in some of them failing to honour their loan repayments.
KCB Group, the largest lender by assets value, revealed earlier in the year that the building and construction sector had the worst non-performing loan ratio in its books at 60.5 percent in 2024.
“This decline [in construction sector] is not primarily attributed to large-scale commercial projects…. [but also] the everyday investments by Kenyan households-individuals purchasing two or three bags of cement to improve their dwellings,” Antony Mwangi, a public policy consultant wrote in an article published by the Business Daily in March, explaining the slide in construction sector.
“The recent fiscal policies have stifled this grassroots demand. By imposing a tax of over 35 percent on the importation of cement clinker and steel billets, lawmakers have inadvertently choked a crucial segment of the economy.”
