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Economy

Kenya contractors’ income doubles on real estate boom

The wage bill for large-scale building contractors nearly doubled in the five years to 2016, signalling a labour crunch amid a boom in real estate and mega infrastructure projects.

Compensation for workers in the building industry climbed to Sh16.87 billion in 2016 from Sh8.84billion in 2012 — representing a 90.8 per cent jump, data by the Kenya National Bureau of Statistics (KNBS) shows.

Despite the sharp rise in the wage, the number of contractors engaged in the building industry, however, grew at a much slower pace over the period — an indication of a huge scramble for this category of workers.

In 2016, some 148,022 contractors were involved in the building industry, up from 106,114 in 2012, according to the KNBS data.

The demand was highest for general trade contractors who benefited both in terms of hiring and compensation. By 2016 there were 117,239 general contractors working in the building industry compared to 84,046 in 2012. This was against 30,738 specialised contractors engage in 2016 up from 22,068 in 2012.

Compensation for the general contractors stood at Sh13.01 billion in 2016, the KNBS data captured, having risen from Sh7.23 billion in 2012.

The boom in the building industry also saw the number of service companies more than doubled amid a scramble for business. In 2016, there were 660 large-scale firms in the industry compared to 237 in 2012. The majority of these firms specialised in general contractor services.

The sharp demand for building contractors rekindles the debate on the country’s long focus on theoretical university education, ignoring the key contribution of technical training colleges.

Several agencies including the Africa Development Bank (AfDB) have recently launched financing programmes to help shift emphasis towards technical vocational education and training (TVET) in a bid to develop mid-level skills of technicians and artisans for current and emerging labour markets in both Kenya and the region.

Enrolment in such TVET programmes targets post-primary and secondary school graduates in the 15- and 30-year-age bracket and will include apprenticeship programmes and training focused on developing skills needed in infrastructure such as roads, energy, water and ICT.

The performance of Kenya’s overall construction industry has picked up lately, buoyed by a raft of mega infrastructure and housing projects.

For instance, the construction sector’s contribution to gross domestic product hit an all-time high in the third quarter of 2017, defying a slump in the performance of the overall economy. The output from the sector in the July-September window was recorded at Sh99 billion by the KNBS — the highest ever.

This was despite the fact that the country’s economy grew by 4.4 per cent in the third quarter of 2017, the slowest quarterly growth in five years, as prolonged electoral politics and drought took its toll on key segments of the economy. The July-September performance fell far below the impressive 5.6 per cent growth recorded in a similar period in 2016, data released by the KNBS shows.

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