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Kisumu construction sector still in the doldrums

Business activities in the construction industry in Kisumu county are still reeling from the effects of political hostilities, which characterised last year’s General Election.

Industry players say the sector is yet to gain momentum months after the political storm, with only a few construction works currently going on in the lakeside town. Kisumu town bore the brunt of the prolonged political uncertainties, which gripped the country last year,  with numerous violent demonstrations.

This is despite the business environment improving due to peaceful co-existence in many parts of the country subsequent to the period of political instability. However, the players are upbeat of good tidings ahead. Contractors are now urging developers to re-start their proposed investments, to make Kisumu lively again.

Pabari Enterprises Ltd director Jiten Pabari says business is still shaky as little activities are taking place in the construction industry. The firm deals in sales of construction and building materials.  “Contrary to our expectations, there are only few new development projects and tenders coming. This is bad news to dealers in the construction and building materials,” he says.

Tom Okoko, an engineer who is also a contractor, says there is little going on in the industry despite Nyanza and other parts of the country enjoying a conducive business environment after political hostilities eased. 

He  attributes the slowdown to delays by county governments to pay contractors for works assigned by the previous regimes.  “They have not been paid their pending bills that accrued from the period preceding the last election,” he says.

The engineer says that currently, contractors are unable to finance projects due to lack of capacity to acquire loans from banks. Some contractors have even lost their vehicles to auctioneers because they failed to service construction loans.

“Most of us are broke and cannot transact our businesses. Until pending bills are cleared, we are likely to continue experiencing problems in the sector,” said Okoko. He appealed to county administrations to settle bills owed to contractors so that they can embark on serious building and construction works.

Notwithstanding the woes over low business performance, Pabari says they are confident the industry will start realising good fortunes in the course of the year when developers start to cash-in on new projects. “A few projects are coming up in the town after the long break,” he says.

Pabari says a number of developers in Kisumu took a break during the political showdown, hence there is a possibility they will come back with big projects, which could be a booster to the construction sector.

Skylark Construction Limited Company director Vinod Patel concurs, saying instead of improving, business has drastically gone down even after the elections. He says things are at a standstill at the moment apart from a few construction activities that have resumed by investors who postponed projects due to last year’s political uncertainties.

“As you can see, our warehouse is quiet, with minimal business going on. This means things are bad for us at the moment; nevertheless we look forward to better prospects,” says Patel.

He regrets that the golden handshake witnessed between President Uhuru Kenyatta and former Prime Minister Raila Odinga, though a good sign of unity in the country and a reprieve to the business sector, has not brought significant impact in the industry as per their expectations.

The slowdown in construction industry has also been necessitated by capping of banks interest rates, a situation which has discouraged investors, particularly small proprietors, from seeking loans for new projects. “The cap on interest rates is a big blow to the industry, especially to small- and middle-class borrowers, where there is a lot of spending power. This has put our economy under intense pressure,” he says.

Patel lauded the government’s Big Four development pillars, especially in housing, but advises that a notable growth will only be realised if the proposals are implemented. “It is a well-thought-out idea. But there must be proper implementation for us to gain,” he added.

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