The manufacturing sector in Kenya has been boosted by the recovery of construction as demand for inputs like cement, iron and steel increases.The resumption of road projects following the settlement of pending bills has lifted the demand for commodities produced by industrialists. Settling contractors’ bills has also resulted in secondary payments to manufacturers for goods supplied. The Kenya Roads Board (KRB) began paying verified bills early this year using a short-term bank loan ahead of the issuing of a Ksh175 billion ($1.36 billion) bond to clear arrears. Subsequently, construction grew by three per cent in the first quarter to March from 0.4 per cent in the first three months of 2024 as activity resumed in the roads sector. The Kenya National Bureau of Statistics (KNBS) says the growth in construction was observable through increased consumption of manufacturers’ inputs as the sector grew by 2.1 per cent in the same quarter from 1.9 per cent“The growth was reflected in the increased uptake of inputs into the industry, including cement, iron and steel,” KNBS said.“Cement consumption increased from 1,942,900 tonnes in the first quarter of 2024 to 2,344,800 in the first quarter of 2025, marking a 20.3 per cent growth. The quantity of iron and steel imports rose from 230,785 tonnes in the first quarter of 2024 to 313,289 tonnes in the first quarter of 2025.” Construction marked its lowest performance since the Moi era in 2024, falling in the second and third quarters. The sector caved under the weight of pending bills and high interest rates pulling down growth for manufacturing and other parts of the economy. Productivity for manufacturing recovered in the opening quarter of 2025. “Non-food making supported the overall growth in the manufacturing sector with production of cement, assembled vehicles and galvanised sheets recording significant growths,” KNBS said. Kenya Association of Manufacturers (KAM) said it expects productivity for manufacturing to improve as payments for road pending bills filter through.“As payment of road contractors goes on, manufacturers also get paid. They then produce more,” KAM chief executive Tobias Alando said.The government is piloting securitisation to settle long-standing arrears for contractors and suppliers. In June, Treasury told the National Assembly that the Cabinet cleared KRB to allocate Ksh12 of the Ksh25 per litre Road Maintenance Levy Fund (RMLF) to compensate investors who buy into two bonds in a bid to clear bills. KRB is to issue a Ksh175 billion ($1.36 billion) bond using Ksh7 (US cents 5.4) per litre of the RMLF. A Ksh125 billion ($970 million) bond is to be issued using the balance of Ksh5 (US cents 3.9) per litre from the levy to cater for future contractors’ bills. KRB has wired Ksh60.6 billion ($470 million) to road agencies from disbursements of the short-term loan, including Ksh29 billion ($220 million) to the Kenya National Highways Authority (ICE NAIROBI)

Fonte notizia: The EastAfrican