Construction sector crumbles under political heat as investors retreat

Locals at the scene in Nairobi where a civilian hawking face masks was shot by the police.[Collins Oduor, Standard]

Kenya’s construction sector is on the brink, as rising political temperatures—fueled by nationwide protests over police brutality and the death of Albert Ojwang in custody—trigger an economic slowdown, stall building projects, and disrupt supply chains.

A sector once valued at over Sh1.5 trillion in GDP contribution in 2022 is now facing contraction, with contractors suspending work and developers holding back due to mounting uncertainty.

According to Kenya National Bureau of Statistics (KNBS) Quarter 1 2025 data, construction activity dropped by 6.7 per cent—the sharpest quarterly dip in over a decade. Cement consumption, a key sector indicator, fell by 12.4 per cent compared to the same period last year.

Industry insiders say the downturn is directly linked to the prevailing political unrest, which has clouded project approvals, delayed financial commitments, and disrupted cross-county logistics.

As demonstrations—reignited by youth-led protests over tax hikes and now intensified by outrage over alleged police brutality—grip parts of the country, developers are scaling down projects, citing rising insurance premiums, logistical bottlenecks, and fears of asset damage.

According to Eng John Wahome, last year’s protests—particularly those spearheaded by Gen Z over the Finance Bill—shook the construction sector more than many realised.

“Transport of critical materials like cement and steel was blocked due to road closures; some suppliers refused to dispatch goods over looting fears. Clients suspended funding until things calmed down. We had to send workers home for weeks, and by the time we resumed, costs had spiked and timelines were in ruins. That disruption is still rippling into 2025,” Wahome said.

He added that informal site labour—many of whom rely on daily wages—are increasingly unwilling to report to work due to transport breakdowns and insecurity.

“In times of stability, we can confidently plan and execute long-term infrastructure projects, but any instability—be it economic shocks, public unrest, or global disruptions—forces us into short-term thinking. Investors get jittery. Project timelines shrink. Funding slows or dries up completely,” he said.

The construction sector is closely tied to investor confidence. Diaspora remittances—Kenya’s single largest source of foreign exchange—declined to $312.6 million (Sh40.4 billion) in April 2025, down from $355.6 million (Sh46.0 billion) in February, according to the Central Bank of Kenya (CBK).

Realtors and developers say a substantial portion of these remittances typically fund residential and mixed-use projects. This year, however, many Kenyans abroad are withholding funds, citing fears that political volatility may erode asset values or delay delivery timelines.

“Remittances drop every time Kenya makes global headlines for the wrong reasons. Our diaspora clients are watching on social media and asking, ‘Is this the right time to invest?’ Right now, most are saying no,” said  Montreal Properties Managing Director  David Ndung’u.

He added that investors are also steering clear of politically volatile zones, often urban hotspots or regions with a history of demonstrations and clashes.

“No one wants to sink millions into an area where protests could shut down roads, scare away tenants, or destroy property. These days, investors ask more about the political climate than about amenities. Stability has become a key selling point,” he said.

Political stability—or the lack of it—has long dictated the performance of Kenya’s construction sector. During the relative calm of 2018–2021, real estate boomed, with Nairobi, Machakos, and Nakuru recording double-digit annual growth in land and housing values.

But each protest wave or electoral cycle—such as the 2017 post-election clashes, the 2023 Finance Bill protests, the 2024 Gen Z-led demos, and now the unrest following Ojwang’s death—has triggered immediate slowdowns.

KNBS data shows that construction grew by 11 per cent in 2021 but slowed to 5.8 per cent in 2023 during prolonged political disputes over constitutional amendments.

Meanwhile, construction input costs are rising again. Prices for cement, steel, and paint—which had begun to normalise after Covid-19—are once more climbing due to import delays and increased transportation costs.

In May 2025, the average price of a 50kg bag of cement rose to Sh870, up from Sh750 in February.

According to the 2024 Status of the Built Environment Report by the Architectural Association of Kenya (AAK), the average cost of putting up a building now ranges between Sh48,750 and Sh84,000 per square metre, higher than the previous year.

The broader economy is feeling the ripple effects. Construction supports over 2.5 million jobs across Kenya—both direct and informal—and fuels complementary sectors including logistics, hardware retail, and manufacturing.

Despite government reassurances that the economy remains resilient, observers warn that investor trust is wearing thin.

Principal Secretary for Housing and Urban Development Charles Hinga recently told a media forum that the government is “monitoring the situation closely and remains committed to supporting the sector through incentives and fiscal stability.” However, experts argue that unless political calm is restored, such assurances will remain hollow.

“Construction is about confidence. Once that’s gone, everything else follows,” said Dr Peter Macharia, an economist.
“If we don’t stabilise our politics, we can’t stabilise our economy,” he concluded.