Demand rises on increased home ownership, Kenya

Demand rises on increased home ownership, Kenya
Published: 19 February 2009

Demand for cement has gone up on the back of an increase in the number of middle class Kenyans constructing their first homes and increased government spending on civil works.

This emerged amid concerns that the slowing economy was poised to hurt demand.

Latest Central Bank of Kenya statistics show that cement consumption in the first 11 months of 2008 increased by 36 per cent from 1.86Mt, in the same period in 2007, to 2.5Mt.

Report offers comfort to shareholders holding cement stocks as producers look set to post increased revenue in this season of lower corporate earnings.

But cement makers warn that the growth rate will slow down this year as they factor in the effects of the slowing economy.

The purchasing power of the middle class is expected to drop as donor countries scale down developmental loans awarded to poor nations due to the ongoing global financial crisis.

“We have seen a very vibrant year, but with the downward revision of the projected GDP growth this year, demand for cement will be dismal compared to the past years,” said Mr Surendre Bhatia, deputy managing director of Athi River Mining company.

A downturn in the number of Government-sponsored infrastructure projects will also mean less demand for cement in the short to medium term, said Mr John Nyambok, managing director of  East African Portland Cement Company (EAPCC) in an earlier interview.