02 Oct The construction industry in Kenya

The construction industry in Kenya is driven primarily by two key infrastructure sectors: transportation and building/housing. The Ministry of Transport and Infrastructure is responsible for policy initiatives and actions with respect to roads, aviation, maritime, rail, housing, and urban development. Infrastructure growth is a key component of Kenya’s Vision 2030, and GDP From Constructionin Kenya increased to 83989 Million KES in the third quarter of 2020 from 72888 Million KES in the second quarter of 2020. According to the Kenyan National Bureau of Statistics’ (KNBS) Economic Survey, approximately 148,000 people are formally working in the domestic building and construction industry.
Key government agencies within the Ministry include the Kenya National Highways Authority, Kenya Roads Board, Kenya Rural Roads Authority, Kenya Urban Roads Authority, Kenya Ports Authority, Kenya Railways Corporation, Kenya Airports Authority, Kenya Civil Aviation Authority, National Transport Safety Agency, and the National Construction Authority.

According to Business Monitor International (BMI), the Kenyan construction industry is expected to grow by 4.5% in 2021, a decline from 6.3% in 2020 and an indication of a slowdown in the short term. The sector is however expected to shake off the effects of the COVID 19 pandemic to record growth in the medium term. This growth will be driven by large infrastructure projects in roads, ports, and airports in 2022 and beyond. The elections in 2022 will, however, be something to watch.

Due to budget constraints, the GOK hopes to realize more infrastructure projects as PPPs. Given Kenya’s current high debt burden, the government is increasingly looking to the private sector to implement infrastructure projects either under the Engineering Procurement and Construction (EPC) + Finance model or as PPP projects. Various types of PPPs are available and include management contracts, concessions, Build, Operate, and Transfer (BOT), Build, Own, Operate, and Transfer (BOOT) or Rehabilitate-Operate-Transfer (ROT).