The rising cost of building materials in Kenya has pushed construction costs by an average of Sh3,000 per square metre, forcing constructors to hold ongoing projects.
The rising cost has been attributed to a disruption in the global market on the ongoing Russia/Ukraine crisis and the weakening shilling, with some cement, steel and paint firms announcing a price surge of at least two per cent.
“I bought a bag of cement at Sh600 in Bondo end of January. Last week, I was told it has gone up to Sh1, 000 at the same shop. I am suspending construction for now,’’ Jack Owour lamented.
Yesterday, a Twitter user @Nick Kanali alluded to cement shortage in Eldoret and its environs saying that he was looking for 70bags but only managed to get 33.
“We have a cement shortage in this country. If you are lucky to get a bag, it costs Sh100 more,’’ he twitted.
His tweet attracted a number of his followers who shared their predicaments following the rising cost of building materials, with some, just like Owour considering shelving ongoing projects.
Many noted that the price of a bag of cement has gone up by at least Sh300 in the past two months.
Last week, Kenya’s leading cement maker, Bamburi, which commands 32.6 per cent of the country’s market share, announced a price increase of two to 10 per cent attributed to input raw materials.
The Nairobi Securities Exchange-listed firm said in order to sustain its operation, it has increased the prices of Nguvu, Tembo and Fundi brands.
“The cost of input raw materials continues to increase disproportionately compared to what Bamburi Cement can absorb,’’ the company said in a statement.
Last week, the Kenya Association of Manufacturers (KAM) warned of a surge in the commodity process as the ongoing Russia/Ukraine crisis continues to hurt the global supply chain.
Apart from cement, constructors are decrying the rising cost of steel, a vital component in the building industry, used to make roofing sheets, reinforcement bars, steel beams and columns, windows and doors.
A spot check by the Star over the weekend in Nairobi’s Kamukunji Market shows the cost of some steel materials has jumped by over Sh1,700 in the past three months.
Although the global prices have been rising in high demand, the ongoing Russia-Ukraine conflict and President Uhuru Kenyatta’s ban on scrap metal in January have worsened the situation.
For instance, the 3 by 3 by 14 gauge (3x3x14g) steel tube used mainly for window grills was retailing at Sh3, 480 in December is now retailing at between Sh5, 000 and Sh5, 500.
Dan Waweru, the proprietor of San Steel Enterprise has operated in the Kamukunji area for the past 20 years told the Star that they are receiving high requests despite a surge in prices.
"As we speak, 3 by 3 by 14 gauge is out of stock. I have seven orders for 3x3x16g tube, a stronger version of those grills,’’ Waweru said, adding that he has never experienced such a situation in his two decades of steel dealings.
In December, 3 by 3 by 14 gauge was going for Sh2, 200 but has since soared to almost 3,700, an increase of Sh1,500. The 2x2x16g tube, which went for Sh1, 500 in December, now retails at prices between Sh2, 500 to Sh2700.
Another dealer Kevin Muthee who sells roof beams has already sold 60 per cent of a stock he is waiting to arrive from China in the next three weeks.
“The demand is really high. Customers have paid for orders arriving in the country in a month's time. There is extremely low supply in the market,’’ Muthee said.
The disruption is attributed to Russia/ Ukraine crisis. The former accounts for nearly 20 per cent of the global export of steel. In the aftermath of the war, the price of steel has gone up and this is tipped to affect construction prices.
Since March 2020, steel prices are up a staggering 215 per cent. The benchmark price for hot-rolled steel hit another all-time high last week, climbing to $1,825. Prior to the pandemic, it traded in the $500 to $800 range.
The Kenya Association of Manufacturers (KAM) Metal and Allied Sector chairman Bobby Johnson says that Kenya has for years imported raw materials to produce steel products, making the sector subject to changes in global prices.
He cites World Bank’s estimates that show that iron ore prices will be 30 per cent higher this year compared to last year, leading to an increase in the cost of imported raw materials.
The shilling, which is on depreciating trends, worsens the matter for Kenya. Although KAM acknowledges that external factors are driving the prices of locally produced steel, neither manufacturers nor the government has control over these costs,’’ he said.
Tom Mwanje, a seasoned construction manager is asking the government to intervene by cutting tax on construction materials.
“The cost construction materials from cement, steel and paint are out of this world. A four-liter becket of paint is now going for an average of Sh2, 500 from Sh2300 in December. Will this sector survive these costs?’’ Mwanje said.
The high cost of materials has pushed the overall cost of construction up by over Sh3,000 per square mere.
The Construction Cost in Kenya 2022 Index by Integrum Construction Project Managers estimates the average building cost per square metre at between Sh34,650 to Sh77,500 from last year’s average of Sh33,450 – Sh72,400.
According to the index, a standard bungalow in Nairobi region, for instance, will cost you about Sh34,650 per square metre, while a middle-class maisonette goes for Sh38,500 per square metre.
A factory or lab in the same region – whose construction costs per square metre conversely average at Sh65,500.