Construction Sector Shrinks As Cement Use Fall

Kenya’s construction sector shrank by 0.7 per cent in 2024, a sharp contrast to the 3.0 per cent growth recorded in 2023, according to the 2025 Economic Survey.

The report shows inflation on construction materials and other inputs rose to 2.83 per cent in 2024, up from 2.30 per cent the previous year. Loans and advances to the construction sector dropped significantly from Sh602.7 billion in 2023 to Sh528 billion in 2024.

Cement consumption also declined by 7.2 per cent to 8.54 million metric tonnes in 2024. Private sector jobs in construction dropped slightly from 226,300 in 2023 to 223,400 in 2024. However, public employment rose marginally from 9,700 to 9,900 workers during the same period.

Meanwhile, the manufacturing sector grew by 2.8 per cent in 2024, up from 2.2 per cent the previous year, contributing 7.3 per cent to the national GDP. The volume of manufactured output rose by 4.4 per cent compared to 2.8 per cent in 2023.

Formal employment in manufacturing increased by 1.9 per cent to 369,200 workers, accounting for 11.5 per cent of formal jobs. Agro-based industries recorded a strong growth of 9.8 per cent, largely driven by a 72.5 per cent surge in sugar production.

Despite higher output, prices for some key food products fell. Sugar saw the steepest drop in producer prices at 28.8 per cent, followed by maize flour at 21.5 per cent. Cement production also dipped from 9.6 million tonnes in 2023 to 8.85 million tonnes in 2024, in line with the lower consumption.

The Producer Price Index (PPI) dropped slightly to 139.04 in 2024 from 140.20 in 2023. The biggest price drop was recorded in pharmaceuticals and chemicals, which fell by 9.96 per cent, while the manufacture of non-metallic mineral products recorded the highest price increase at 30.44 per cent.

Credit to the manufacturing sector fell to Sh563 billion, mainly due to a decrease in loans from commercial banks, which dropped to Sh560.6 billion. However, funding from industrial financial institutions rose to Sh2.3 billion from Sh1.9 billion. Development finance institutions funded fewer projects—351 in 2024 compared to 362 in 2023.

Investment in Export Processing Zone (EPZ) manufacturing activities rose by 5.6 per cent to Sh34.1 billion. The total cumulative investment in EPZs increased by 15 per cent to reach Sh171.9 billion in 2024.