Cement sale has fallen by 5.4 million bags in the past nine months equivalent to billions of shillings, indicating a cooling off in the construction industry.
According to Leading Economic Indicator (LEI) for October by the Kenya National Bureau of Statistics (KNBS), slow consumption of cement means fewer jobs, lower investments in the construction sector and hence lower spending in purchase for construction projects.
This is a continuation of the slump that characterised the prolonged electioneering period last year that saw many delay investment hoping 2018 would be a better year.
“The biggest consumer of cement and other products is the government but it has even withheld payments for many private contractors now unwilling to take up new jobs,” said Town and County Planners Association of Kenya chairman Mairura Omwenga.
Institute of Quantity Surveyors of Kenya chairman Peter Kariuki called for an urgent review of the interest rate capping, saying banks preferred to lend the government and not investors deemed risky borrowers.
He observed that most investors were unwilling to spend high amounts of money due to the recently introduced 0.05 percent transactional tax on money transfers above Sh500,000.
Mr Omwenga said increased taxes announced last June were also a major impediment to development since they increased the cost of living, reducing the amount of money available for other investments in the construction sector.
Association of Construction Managers of Kenya chairman Nashon Okowa, however, blamed the fall in local cement consumption on uncontrolled imports from China for public projects.
“Demolition of commercial and residential buildings has also dampened investors’ zeal since they are unsure of the next demolition site.”