Factors Affecting the Construction Sector In Kenya

In the last few years, the construction sector in Kenya has witnessed a boom from retail houses to hotels to office buildings. The construction sector is credited as one of the sectors that have fostered economic growth in the country. A look at the towns in Kenya will indicate massive construction projects that are ongoing to house the middle and low-income segments of Kenya’s population. However, the construction sector is not devoid of its challenges. Challenges such as inflation, increased taxation, corruption, demand and lack of funding have had negative implications on the growth of the construction sector. This article will discuss these five factors affecting the construction sector in Kenya. 

1. Inflation

Inflation is a key factor impacting the construction sector in Kenya because it affects the cost of construction materials. In recent times, inflation has affected all areas including the prices of commodities and materials. The construction sector has not been left behind as the cost of materials tends to swing due to supply and demand. Inflation impacts market forces, thus impacting the original cost of construction. Inflation has occasioned a massive rise in the prices of construction materials in Kenya, thereby affecting the construction sector. 

2. Taxes

The increase in taxation in Kenya over the last few years has greatly affected the construction sector. The government of Kenya has steadily increased taxes for fuels, food, electricity and even the construction materials imported from outside the country. This increase in taxes has had a ripple effect on the construction sector by influencing the estimated costs of construction projects. Increased taxation has also affected the cost of labour. The cost of fuel used in construction equipment has also notably increased over the last few years due to higher taxation of fuel. The construction industry has had to part with more money to pay construction workers due to an increase in taxation. The money construction workers were initially paid can no longer take care of their individual needs and those of their families. The construction sector has been forced to break the bank and incur more costs in a bid to increase the wages of labourers so as to cover the increase in prices of basic commodities occasioned by increased taxation.

3. Corruption

Corruption in governmental agencies has also increasingly affected the construction sector in Kenya. Corruption in government is characterized by compromising the quality of buildings that are set for construction. Government orchestrated corruption has led to the deaths of many people and suffering attributable to grievous injuries that occur from collapsed buildings. News items and the dailies in Kenya are often littered with stories of people who have lost their lives and property from collapsed buildings. These substandard buildings are only allowed to come up in exchange for bribes by corrupt government officials who are supposed to ensure that buildings adhere to the stipulated standard.  

4. Lack of Funding

In recent years it has increasingly become difficult to secure funding in the construction sector. This has greatly affected the construction sector because it has become even more difficult to obtain the required amounts for construction projects. Due to lack of funding, some clients have opted for shortcuts or cheaper avenues that result in substandard work. In fact, Kenya is experiencing an influx of substandard buildings that are attributable to a lack of funding. Unfortunately, the rising cases of substandard work in the construction sector in Kenya only come to the fore after the building has crumbled and caused deaths of many people and damage to property. Like it is often the case with many issues, the government will arrest the contractor and talk tough on developers who bribe for acceptance of their building plans and then life goes on until another tragedy occurs. The government should investigate the root causes of substandard buildings such as lack of funding and work out a formula that ensures developers can obtain these funds more easily to help them build quality structures. 

5. Demand

Like other sectors, the construction sector is affected by the distribution of resources. The resources that are mostly involved in the construction sector such as land, labour and capital are limited. However, human wants pertaining to the construction sector are infinite. This affects the construction sector since there are finite resources against endless human wants.  

Frequently Asked Questions about the Construction Sector in Kenya

What is the cost of construction labour?

In the construction sector, skilled labourers are paid between 1000 and 2000 Kenya shillings per day, while unskilled labourers are paid between 400 and 800 Kenya shillings per day. A foreman at a construction site, on the other hand, is often paid between 2000 and 3000 Kenya shillings per day.

Are the costs of construction increasing or decreasing? 

The costs of construction have been increasing steadily as time goes. This is occasioned by increased taxation, inflation, growing labour rates and the weakening of the Kenyan shilling against the dollar. 

How long does it take to approve building plans in Kenya?

Although county governments say that there are weekly meetings aimed at reviewing and approving building plans, it is essential to note that there are no fixed approval periods. One could take days, weeks or months to obtain approval of a building plan and a construction permit. Many developers fear this process because of the bureaucracy and politics that characterizes it. 

What is the cost of cement in Kenya? 

Currently, a bag of cement costs between 520 and 750 Kenyan shillings. For instance, Simba cement costs between 500-550 Kenyan shillings, while Bamburi cement costs between 600 and 700 Kenyan shillings.       

Which is the best cement in Kenya?

From the tests that we have conducted, there is no cement approved by KEBS that is superior compared to the others in terms of quality. Although Bamburi cement has a larger share of the market, its quality is just the same as Rai cement, Mombasa cement, East Africa Portland Cement and others. 

Conclusion

This article has discussed some of the factors that affect the construction sector in Kenya. However, it’s not all doom and gloom. Despite these factors, the construction sector has seen constant growth in the last few years with buildings coming up all over the place. With proper planning and funding, you can build without significant constraints. 

West Kenya Real Estate Ltd is an all-in-one real estate company offering construction, management, letting, sale, and valuation services to clients all over the country. We’ve over 8 years of experience and have handled a diverse range of property constructions, designs, and management. Talk to us today about your next project. You can reach us on call/SMS/WhatsApp via +254789 217 685 / +254 724 481 087