Commodities

Cement consumption up 24pc on State projects

Nairobi Expressway

The Nairobi Expressway is under construction. The contractor, China Road and Bridge Corporation, has employed more than 2,000 local workers. PHOTO | NMG

Cement consumption rose by 24 percent in the first quarter of this year compared to the corresponding period in 2020, helped by improving demand from the private sector as the economy continues to recover from the Covid-19 led downturn.

Data from the Central Bank of Kenya (CBK) and the Kenya National Bureau of Statistics (KNBS) shows that the demand stood at 2.02 million metric tonnes in the period, compared to 1.63 million metric tonnes in the first quarter of last year.

The building and construction sector was badly hit by the Covid-19 pandemic, largely due to reduced demand for housing and office space as Kenyans suffered job losses and companies sought savings by having staff work remotely.

CBK governor Patrick Njoroge said last week that demand from government infrastructure projects was a big factor in the higher consumption, but added that credit demand trends from the construction sector are indicative of rising private sector activity as well.

“Private sector consumption has also increased significantly, and there is collaborating evidence where credit to the building and construction sector has remained strong, growing in the last four months,” he said.

The government has been a major driver of cement demand in the past decade on the back of an massive infrastructure rollout programme that has included works such as the Mombasa-Naivasha standard gauge railway project, roads and dams across the country.

The private sector has in the meantime seen leaner fortunes in the last three years following its own rapid growth period when developers raced to put up middle and upper income houses.

While the demand for credit in the private construction sector has improved this year, it is not out of the woods yet, continuing to register high incidence of non-performing loans (NPL) and a large number of auctions.

CBK said last week that it is one of two sectors, alongside mining and quarrying, that registered an increase in NPLs in April.