Cement and steel costs to come down, Kenya

Cement and steel costs to come down, Kenya
Published: 16 June 2008

Finance minister, Amos Kimunya has proposed a raft of measures aimed at bringing down the cost of construction materials.

The minister proposed the reduction of import duty payable on cement from 40 per cent to 25 per cent, a decision welcomed by key movers in the sector.

"This is a step in the right direction as it will check the ever rising prices of cement," said Mr Wilberforce Oundo, the chief executive of Regent Management Limited, a real estate firm.

According to the Economic Survey 2008, cement consumption in 2007 went up by 16.7 per cent to 2,061,400 tonnes compared to 1,765,800 tonnes in 2006.

Consequently, the minister’s move will see to further rise in the consumption rates of the product this financial year.

In 2007, the sector recorded a 6.9 per cent growth rate compared to 6.3 per cent in 2006.

The growth, players say, was in response to attractive interest rates by banks and the ongoing rehabilitation and construction of new roads.

To continue with the growth path that the sector has registered over the years, this year, the minister also zero-rated import duty on steel rolls. This duty stood at 10 per cent before the Budget.

"Players in high-rise buildings, roads and other high end projects will benefit greatly from this," said Mr Oundo, adding that low-cost housing contractors may miss out on this as they are not big users of this category of steel rolls.

During the previous Budget, Mr Kimunya zero-rated taxable goods and services supplied to projects with a minimum of 20 units of houses situated in planned development schemes for the benefit of low-income earners.

As such, the construction of low-cost housing, especially in the urban areas, has gone up in the past year as contractors moved to take advantage of the provision.

And the Government has announced plans to increase its efforts by constructing an additional 200,000 housing units annually through the Private/Public Partnership programme. It intends to allocate Sh350 million to the project this year.

Another Sh500 million will be provided by the Treasury towards the installation of physical and social infrastructure in 20 urban slum areas in the country.

To further enhance the housing situation in the country, two Bills - a Housing Bill and the Landlord and Tenant Bill - will be introduced in Parliament.