Kenya’s construction sector faced a turbulent year in 2024, registering a 0.7% decline in growth, a notable drop from the 3.0% expansion recorded in 2023. This subdued performance is detailed in the Kenya National Bureau of Statistics (KNBS) Economic Survey 2025, which attributes the slowdown to reduced activity in both public infrastructure and private sector projects.
Financing Hurdles and Cautious Investors
The construction industry remained a critical pillar of the Kenyan economy, but persistent challenges continued to undermine its momentum. Some of the issues that contributed to the sector’s lacklustre performance include:
- Limited access to affordable financing,
- Subdued investor confidence
- A general slowdown in development
The cost of construction materials was also not inspiring for developers. The average annual inflation for construction input prices increased from 2.30% in 2023 to 2.83% in 2024, squeezing margins for developers and contractors alike.
Credit to Sector Shrinks, Cement Demand Falls
A sharp decline in lending to the construction sector signalled tightening liquidity. Commercial bank loans and advances to the sector dropped by 12.4%, falling from KSh 602.7 billion in 2023 to KSh 528.0 billion in 2024.
This financial squeeze was mirrored in material consumption trends. Cement consumption—a reliable barometer for construction activity—dropped by 7.2% to 8.54 million metric tonnes in 2024. In 2023, cement consumption dropped by 3.0%, according to last year’s economic survey.
This year on year trend signals trouble for the construction industry. It seems the industry is not on a recovery path.
Mixed Employment Trends
The labour market in construction reflected the industry’s general slowdown. Employment in the private construction sector declined from 226,300 in 2023 to 223,400 in 2024. However, public employment defied the trend, rising modestly from 9,700 to 9,900 workers in the same period.
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In Nairobi, the value of private building plans approved saw a marginal rise from KSh 220.0 billion in 2023 to KSh 221.6 billion in 2024, suggesting continued developer interest despite execution challenges.
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However, this did not translate into actual output. The total value of completed buildings in Nairobi City County declined by 2.3% to KSh 149.9 billion in 2024. The number of completed private buildings dropped from 22,093 to 21,807, while completed residential buildings declined slightly to 17,920 units. Non-residential completions fell by 3.0%, reaching 3,887 units—an indication of waning commercial and institutional development.
State Housing Projects Hit Hard, But Roads See Big Boost
Public residential construction took a major hit in 2024. The value of building works completed by the State Department for Housing and Urban Development (SDHUD) dropped steeply from KSh 11.0 billion in 2023 to KSh 4.0 billion. Likewise, the number of residential units delivered plummeted by 50.7%, totaling only 1,655 units for the year.
This is despite having a large budget allocation of over Shs 86 billion, (initially set at Shs 92 billion)for the housing docket.
1,655
The State Department for Housing and Urban Development (SDHUD) delivered 1,655 residential units in 2024- a 50.7% drop in units delivered the previous year.
However, road infrastructure emerged as a bright spot. Government expenditure on roads is projected to rise by 29.1% in FY 2024/25 to reach KSh 171.9 billion. Bitumen roads increased in length to 24,900 km, up from 23,000 km in 2023.
A standout achievement was in the expansion of superhighways, which more than doubled in length from 157 km to 365 km, largely due to the reclassification of the Dongo Kundu Bypass and Kipevu Link Road—both completed and opened in 2024.
What Lies Ahead for Construction in 2025?
As the sector exits a year of contraction, stakeholders will be watching to see whether improved public investment—particularly in infrastructure—can stimulate a broader recovery. Access to affordable financing, investor sentiment, and housing demand will remain key indicators to watch.
For now, the data paints a picture of a sector in cautious retreat, hoping for a rebound in the coming fiscal year.
