Introduction
Development of infrastructure is one the main pillars for socio-economic development. Construction of roads, for example, and other infrastructure provides the bedrock for business, hence economic growth. Kenya’s building industry is driven by the government and the private sector, with the latter having an upper hand, especially in regard to housing. The building and construction industry covers roads, housing and the general infrastructure.

The country’s building industry benefits from the economic growth and the inflow of foreign capital and is regarded as a very promising market. It is growing rapidly, and numerous projects in the field of road construction, house building and the construction of office premises are thriving.

The growth in the building and construction industry is gauged by the consumption of cement and other building materials, as well as approvals of housing plans, roads and other physical facilities like airports. The building and construction contributes to the national economy through sales of building materials, employment and opening up of new avenues for trade.

The construction sector comprises engineering, building and architectural designs. It is estimated that there are 170 large-scale firms registered as general or special building contractors. The construction sector provides direct employment to about 80,000 people and more than double of that number benefit directly from the sector. Cumulatively, the sector contributes 2.4 per cent to the GDP.

The expansion of the sector is determined by the consumption of inputs like cement, steel and metal and other building materials. Activity in the building and construction sector picked up in 2004 and continued with the same trend in 2005. Cement consumption, one of the main indicators of growth in building and industry, went up by 11.4 per cent in 2005 compared to 5.8 per cent to the 5.8 per cent registered in 2004. In total, 1,468,870 tonnes of maize was consumed in 200, up from 1,323,105 tonnes.

Leading in the growth of the sector are the private sector players, mostly engaged in construction of buildings either for office use or residential. The government is mostly involved in the construction of roads, public institutions like hospitals and other infrastructure.

Review of construction activities in 2005
The government continued focusing on revival of projects that stalled in the 1990s. While in 2004, the government had set aside Sh1 billion for completion of the stalled projects, the figure was doubled in 2005 to KSh2 billion. Out of the stalled projects that NARC government inherited from the previous regime, 100 of were revived and completed in 2004 in 2005. Those that were revived in 2005 included the National Youth Service headquarters in Nairobi, the Nyanza Provincial head-quarters in Kisumu, as well as some 252 dispensaries countrywide.

Also revived and completed were several road projects that are at different levels of construction. The Kenya Roads Board, the government agency responsible for road maintenance, disbursed some Sh9 billion for road construction and maintenance countrywide.

Road construction
A total of 59 roads were under construction in 2005 under the Ministry of Roads and Public Works. Out of these 36 were ongoing rehabilitation, resealing and gravelling. On aggregate, some 275 kilometres of road were gravelled, 91 kilometres rehabilitated using bitumen, 8910 km graded and 9,559 km maintained. The Roads 2000 project being implemented in 34 districts was also still going on during the year.

Work on one of four by-passes – the northern – in Nairobi went on although at a slow pace. But the overall plan is that within the next two years, the government will have constructed four bypasses, which are aimed at creating links with major highways that lead to the city. In putting up the by-passes, the government wants to ease congestion in Nairobi by having the long-distance vehicles branching off and taking to their routes for their destination without passing through the city, where they have no business getting into.

Overall commitments for the roads and transport sectors over the next five years include US $ 207 million from the World Bank and Sh4 billion counterpart funds from the government. Additional resources were also expected from the Nordic Development Fund and the European Union to the tune of US $ 15 million and US $ 70 million respectively. In the financial year 2004/05, the World Bank is expected to disburse US $ 11 million, which will be complemented by Sh400 million from the government for reconstruction and improvement of the Northern Corridor. These resources are expected to improve the state of road infrastructure in the country and hence support economic recovery in the medium term.

Housing
Since assuming power in 2002, the NARC administration has been working on a masterplan to expand housing units to provide decent shelter for the people. The focus of the housing policy is to push the role of direct provision of housing to the private sector. Its role then remains that of providing policy and creating a conducive environment that encourages the private sector participation in housing construction. To this end, land laws are undergoing a review to make it easier for private developers to acquire land and develop them. All this is being done in tandem with recommendations made by a commission that had been set by the President way back in 2003 but which completed its work in 2004.

Direct government participation in housing is mainly in the provision of low-cost housing to the slum dwellers and other low income earners in urban areas. The government’s agency responsible for housing – the National Housing Corporation – has been undergoing major restructuring to put it in good stead to spearhead the construction of houses, which in turn are sold to the public at concessionary rates and on favourable terms.

The government’s long-term vision is to provide individuals and families with adequate and affordable shelter, and the necessary infrastructure and basic services to support such shelters. Achieving this includes developing a framework for housing finance and a legal, regulatory, and institutional policy to promote housing development. Also, it seeks promote participation of the private sector, public sector, community-based organisations, non-governmental organisations, development partners, co-operatives, small scale builders, individuals, households and committees in planning the development of housing programmes.

The specific targets of the government as contained in the new housing policy are as follows:

• Institutionalise a comprehensive Housing Act to monitor and regulate the housing sector.
• Adopt and implement the revised low cost housing bylaws that were gazetted in 1995 to allow development of low-cost housing.
• Formulate the national urban development policy to provide for well-coordinated development of urban areas in terms of housing, commercial, industrial and infrastructure development.
• Institute legal and institutional modalities for the establishment of a secondary mortgage market in the country.
• Strengthen the National Housing Corporation to address the current housing needs.
• Support and encourage local authorities to develop infrastructure for housing especially in informal settlements.
• Encourage corporations develop housing estates, not only for their employees but also for other users.
• Establish a housing bank to provide funds to the National Housing Corporation to construct middle and low-cost housing estates.
• Develop the legal and institutional mechanisms for the establishment of a secondary mortgage Market to raise long-term finance through mortgage-backed securities.
• Review the taxation rates on building materials to reduce construction costs, as building materials constitute a large component of housing construction costs.
• Develop a “Slum Upgrading” policy and guidelines in liaison with stakeholders while up-holding the principle of minimum or no displacements.
• Promote partnerships be-tween the public sector, private sector, professionals, external support agencies, local authorities, co-operative societies, NGOs and communities in infrastructural development.

Conclusion
The building and construction industry registered increased growth in 2005 and the prospects looked brighter, given that more funds were being channelled to the sector, especially by the government and private investors. Policy and institutional reforms that, among others, encourage more private sector participation in the provision of houses and maintenance of roads augur well for the sector and needs to be intensified further.
However, the government’s success in revitalising the housing sector will depend largely on strong economic growth and significant participation by the private sector. The economic reforms being undertaken by the government and prudent management of macro economic policies such as interest rates are important if investment in the housing sector is to take place. The current low interest rates in the financial market are a good signal for borrowers to invest in the housing industry.

© Camerapix