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Economy

Mega projects aid construction sector to record Sh100 billion

The construction sector’s contribution to GDP hit an all-time high in the third quarter of 2017, buoyed by a raft of mega infrastructure and housing projects and defying a slump in the performance of the overall economy.

Output from the sector in the July-September window was Sh99 billion — the highest ever, data by the Kenya National Bureau of Statistics (KNBS) shows.

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.

Most sectors including agriculture, manufacturing, health, accommodation, mining and education posted slower growth for the third quarter of 2017 compared to the same quarter last year.

The financial and insurance sector, for instance, recorded the biggest drop from 7.1 per cent in third quarter of 2016 to 2.4 per cent this year; while accommodation and food service slowed considerably from 13.5 per cent to 7.3 per cent over the period. Agriculture, which accounts for a quarter of the national GDP, also recorded slower July-September growth of 3.1 per cent compared to 3.8 per cent in the same period last year while manufacturing slowed over the period from 4.4 per cent to 2.1 per cent.

The construction sector, however, recorded good performance with a 6.7 per cent leap in the third-quarter of 2017 supported by a booming projects spread across the country.

Among the key construction projects implemented in 2017 was the $3.27 billion (Sh336.8 billion) Chinese-funded standard gauge railway (SGR) which links Nairobi to Mombasa port.

The SGR, which was inaugurated in May 2017, is the country’s biggest infrastructure project since independence.

The railway is part of China’s One Belt, One Road initiative, a multi-billion dollar series of infrastructure projects upgrading land and maritime trade routes between China and Europe, Asia and Africa.

The line is eventually expected to connect Uganda, Rwanda, Burundi, the Democratic Republic of Congo, South Sudan and Ethiopia to Mombasa port and act as a gateway to East Africa for trade with China and other nations.

Work is currently ongoing to extend the railway to Naivasha and eventually Kisumu.

Global consultant Deloitte in a recent Africa Construction Trends report said Kenya had the highest number of mega infrastructure projects in East Africa as at 2016, with 11 ongoing projects valued at $7.01 billion (Sh727.98 billion).

Deloitte listed the SGR, Lamu port berths and Lake Turkana Wind Power project among mega ones.

Enhanced activities are expected in the housing construction sector this year as the government rolls out a dream project towards universal access to affordable houses.

The government plans to build a million homes over the next five years as part of President Uhuru Kenyatta’s agenda to make housing more affordable.

Out of this number, 800,000 housing units will be delivered under the public private partnerships model while 200,000 will be social housing.

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