Kenya’s cement conundrum

Published 03 June 2019

While recent times have seen the Kenya cement industry expand and new players arrive, the sector now faces a conundrum. While economic and construction forecasts indicate sound cement demand going forward, cement overcapacity has led to price pressures that show no sign of abating and which are affecting the bottom line of market players. A wave of industry consolidation in the short- to medium term cannot be ruled out. By Lisa Kimathi, Standard Investment Bank, Kenya.

Despite forecast solid growth in domestic cement demand, Kenya’s cement industry faces overcapacity

following recent expansion initiatives and industry consolidation cannot be ruled out

Kenya’s economic growth eased from 5.9 per cent in 2016 to 4.9 per cent in 2017, but picked up to 6.3 per cent last year (see Figure 1). The construction sector has maintained solid growth notwithstanding a deceleration from 13.8 per cent in 2015 to 8.5 and 6.6 per cent in 2017 and 2018, respectively. Meanwhile, cement consumption in the east African nation fell by seven per cent YoY in 2017 and stabilised (+0.8 per cent) in 2018 (see Figure 2). While there is a consistent component of deceleration in both economic and construction growth, is it sufficient to cause a significant decline in domestic cement demand?

To continue reading this story and get access to all News, Articles and Video sections of the website, please Register for a subscription to International Cement Review or Login