The consumption of cement in Kenya dropped to 1.4 million tonnes in the second quarter of 2018 indicating slow activity in the real estate sector. In the first quarter of this year, cement consumption stood at 1.5 million tonnes.
According to the Kenya National Bureau of Statistics (KNBS), the volume of cement imports fell 15.7 per cent while that of cement clinker fell eight per cent in the first quarter of 2018.
“Similarly, the volume of imports of construction materials such as iron and steel bars, and rods declined by 4.9 per cent during the quarter in review,” stated KNBS.
The downward trend in cement consumption began in 2017 despite the Standard Gauge Railway (SGR) construction project that was going on last year.
“The sector’s growth was albeit slower than that of the corresponding quarter of 2017 which was driven by the ongoing public infrastructure projects such as roads and phase two of the SGR as well as the continued development of buildings,” said KNBS.
In 2017, the value of approved building plans dropped 22 per cent to Sh240.8 billion from Sh308.4 billion in 2016. In addition, Kenya consumed 6.2 million tonnes of cement in 2017 compared to 6.7 million tonnes in 2016.
The Effect
According to Knight Frank’s Inside View Kenya 2018 update, the reduced liquidity in the private sector as a result of commercial banks lending to less-risky clients could hurt growth.
The decline in consumption has affected various cement companies such as Athi River Mining which cut 700 jobs last year and posted a loss of Sh6.54 billion, East African Portland Cement which posted a loss of Sh1.47 billion, and Bamburi Cement whose profit declined by a third to Sh1.97 billion.
