Construction sector experienced increased infrastructure spending and private building approvals, inflation, reduced credit, and shrinking employment weighed heavily on growth.
According to the latest economic indicators, the average annual inflation rate for construction input prices climbed to 2.83 percent in 2024, up from 2.30 percent the previous year.
This rise coincided with a significant contraction in bank lending to the construction industry, with loans and advances falling from Sh602.7 billion in 2023 to Sh528.0 billion in 2024.
Cement consumption, a key indicator of construction activity, also dropped by 7.2 percent to 8,537.0 thousand metric tonnes, suggesting a slowdown in building projects.
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Additionally, employment in the private construction sector dipped slightly, from 226.3 thousand workers in 2023 to 223.4 thousand in 2024.
However, not all indicators pointed to a downturn. Employment in the public sector construction segment saw a marginal increase from 9.7 thousand to 9.9 thousand workers.
Furthermore, private building plans approved by the Nairobi City County rose sharply, from Sh220.0 billion in 2023 to Sh221.6 billion in 2024, highlighting renewed investor interest in private development.
In contrast, public residential construction suffered significant declines. The value of housing works by the State Department for Housing and Urban Development (SDHUD) dropped from Sh11.0 billion to Sh4.0 billion, while the number of units completed dropped by more than half, from 3,360 units in 2023 to 1,655 in 2024.
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Despite the setbacks in housing, the government ramped up infrastructure development. Public expenditure on roads rose by 29.1 percent to Sh171.9 billion in the 2024/25 fiscal year.
The total length of roads under bitumen extended slightly to 24.9 thousand kilometres, and the length of superhighways more than doubled to 365 kilometres, largely due to the completion of major projects such as the Dongo Kundu bypass and the Kipevu Link Road.
