Kenya’s construction sector experienced a downturn in 2024, contracting by 0.7% compared to a growth of 3.0% recorded in 2023, according to newly released economic data.
The decline is attributed to a combination of rising input costs, reduced financing, and a drop in key industry indicators.
The average annual inflation for construction materials and other inputs rose to 2.83% in 2024, up from 2.30% in 2023, placing further strain on developers and builders grappling with tighter budgets.
A significant drop was also recorded in loans and advances to the construction sector from commercial banks, falling by 12.4% from Sh 602.7 billion in 2023 to Sh 528.0 billion in 2024.
Industry analysts link this decline to cautious lending amid economic uncertainty and concerns about project viability.
Cement consumption, a critical indicator of construction activity, fell by 7.2% to 8,537.0 thousand metric tonnes in 2024.
The drop reflects reduced construction activity, particularly in the private sector, which continues to face financing and cost challenges.
Private sector employment in construction also saw a decline, slipping from 226,300 workers in 2023 to 223,400 in 2024.
However, public sector employment in construction rose slightly, from 9,700 to 9,900 workers, indicating continued government investment in infrastructure projects.
The sector’s slowdown comes amid broader concerns about economic headwinds facing Kenya’s real estate and infrastructure development, including inflationary pressures, high interest rates, and subdued investor confidence.
Stakeholders have urged the government to step in with targeted fiscal measures, including tax incentives and affordable credit lines, to support recovery and restore growth in one of the country’s key economic pillars.
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