Overview
The construction industry in Kenya is driven primarily by two key infrastructure sectors: transportation and real estate. The Ministry of Transport and Infrastructure is responsible for policy initiatives and actions with respect to roads, aviation, maritime, rail, housing, and urban development.
According to Kenya’s 2023 Economic Survey, the Kenyan construction industry grew by 4.1% in 2022, a decline from 6.6% in 2021, a growth that is largely attributed to construction and maintenance of roads. It is expected that this trend will continue in the near term given the government’s reduced public infrastructure spending. The sector is expected to maintain a growth rate of 5% in the near term driven by several infrastructure projects in roads, ports, and airports in the 2023/24 timeframe. Due to budgetary constraints, the GoK prefers using the public-private partnership (PPP) model for developing infrastructure projects.
According to the World Bank, Kenya faces a significant infrastructure financing deficit annually, which constrains growth and development. Sustained expenditures of almost $4 billion per year are required to meet the country’s infrastructure needs. To encourage investors, the National Treasury, through its PPP Unit, strengthened the legal framework governing PPPs and identified various infrastructure projects for implementation. A list of the pipeline of PPP projects is available on Treasury’s PPP Unit website.
Leading Sub-Sectors
U.S. firms have opportunities in the road, railway, and affordable housing sectors, and may also offer engineering design, consultancy, and supervision services in partnership with local firms.
Transport Infrastructure:
Kenya enjoys an extensive, but uneven, transportation network that remains superior to that of its neighbors. Kenya is the transportation and logistics hub for Eastern and Central Africa, and Nairobi is the largest city between Cairo and Johannesburg. The Port of Mombasa is a major gateway for the region, serving over 200 million people in northern Tanzania, Uganda, Rwanda, Burundi, and the Democratic Republic of Congo (DRC) despite persistent deficiencies in infrastructure, inefficiency, and corruption. To remedy these hurdles, the Port of Mombasa has been undergoing major expansion and rehabilitation.
Road Infrastructure:
Kenya has an estimated 246,757 Km of total road network. This comprises national trunk roads, which are maintained, rehabilitated, and developed by the national road agencies, and county roads which are developed and maintained by the respective county governments. Currently, the National Government is responsible for maintaining 44,021 kms of roads, which are classified as national trunk roads while county governments are responsible for 118,034 kms of roads classified as county roads.
With the completion of the 27-kilometer Nairobi Expressway in 2022, Kenya reintroduced toll roads with private sector participation. It is the intention of the government to develop additional toll roads with private sector partnership in a PPP model, such as the planned Nairobi-Mombasa Expressway and the Nairobi-Nakuru-Mau Summit Highway, in addition to existing toll roads such as Thika Road and the Southern Bypass in Nairobi.
In addition, the Ministry of Roads and Transport identified five bus rapid transit (BRT) corridors for development within the Nairobi Metropolitan Area to ease traffic congestion in the city and improve urban mobility. Currently, Line Two along the Thika Superhighway is under construction with the other lines to be developed as funding is made available. The U.S. Millenium Challenge Corporation (MCC) and the GoK signed a $60 million threshold program in September 2023, dubbed ‘The Kenya Urban Mobility and Growth Threshold Program,’ part of which will support the BRT program in acquiring electric or other low emission buses and the design and construction of necessary infrastructure along the BRT lines.
Currently, there are various roadworks under development in the country, including new road construction, dualling, upgrading, and rehabilitation, and bridges and interchanges construction measuring 2,300 kilometers and being carried out at a total cost of $2.2 billion.
Airport Infrastructure:
Kenya maintains airports that serve international and domestic flights in Nairobi, Mombasa, Eldoret, and Kisumu, and airports serving domestic flights in Nairobi, Malindi, Lamu, and Lokichogio (Turkana), in addition to another 463 aerodromes and airstrips. All public airport facilities are managed by the Kenya Airports Authority (KAA).
Maritime Infrastructure:
The Port of Mombasa is the largest port in East Africa and the second largest in Africa, serving both Kenya and neighboring countries, including Burundi, the Democratic Republic of Congo, Rwanda, South Sudan, Tanzania, and Uganda. The Kenya Ports Authority (KPA) is the government agency mandated to maintain, operate, and regulate seaports along Kenya’s coastline. The Port of Mombasa recently completed Phase 1 of the Mombasa Port Development Project (MPDP), which included construction of a second container terminal, three additional berths and installation of two ship-to-shore cranes and four rubber-tire gantry cranes. The project was funded by the Japanese Government at the cost of $217 million.
The expansion of Port of Lamu in northern Kenya, under the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor, is East Africa’s largest and most ambitious infrastructure project, consisting of a 32-berth port in Lamu and other supporting infrastructure. The first 3 berths, financed by the government at $480m, were completed in 2021 with berth 1 having handled 50 ships so far. The government is financing construction of roads and airports that link Lamu Port to Northern Kenya to help realize its full potential and provide better access to Ethiopia and South Sudan. Kenya intends to develop the remaining 29 berths using a PPP model financed by the private sector.
The Government of Kenya is keen to have a private concessionaire run port operations in Mombasa and Lamu to increase efficiency and profitability. KPA published a tender in October 2023seeking global firms to partner with local companies in the development and operation of container terminals at Lamu port, sections of Mombasa port, and the Lamu Special Economic Zone (SEZ). However, the procurement was put on hold in December 2023 after a local interest group filed a petition in court challenging the government’s privatization plans. The case is still in court.
Rail Infrastructure:
Kenya’s total rail network has 2,778 kilometers of narrow meter gauge rail (MGR) and 545 kilometers of the Chinese-funded standard gauge rail (SGR) from Mombasa to Naivasha and is managed by the Kenya Railways Corporation (KRC), a state corporation mandated to provide rail and inland waterways transport.
Kenya partnered with the United Kingdom to develop the Nairobi Railway City, a new rail hub within the Central Business District. UK firm Atkin Global won the bid to design a modern, eight-platform central rail station and a public space, which will anchor commercial and residential developments on a 425-acre spread that will host the Nairobi railway transit hub. Rail infrastructure will take up the lion’s share of the project. The initial phase of the project is being funded by the UK government, while consulting firm KPMG is leading the search for investors into projects that offer commercial viability such as residential homes, commercial buildings, and parking lots. The Railway City will be developed in three phases over a span of 20 years.
Real Estate:
The real estate sector, particularly in the hospitality industry, continues to register growth on the backdrop of the post COVID-19 recovery seen in the tourism sector. According to Nigeria-based W Hospitality Group’s annual report, Kenya expects to open 25 new international hotel brands this financial year with developments already underway that will see an addition of over 3,700 rooms into the industry. Prominent hotel brands operating in the market or planning to enter in the near term include New York-based hotel group Accor, CityBlue, Hilton, Hyatt, JW Marriott, Pullman, Best Western, Aleph, Dusit, and Swiss International. Developments are focused on increasing bed capacity as well as providing conference facilities to adequately cater to rising domestic and international business demands.
The Ruto Administration prioritized affordable and social housing as part of its Bottom-Up Economic Transformation Agenda (BETA), with ambition to develop 250,000 low-income houses annually.
Opportunities
Given Kenya’s debt burden, the government increasingly looks to the private sector to implement infrastructure projects either under the Design Build-Finance-Operate Maintain (DBFOM) or PPP model. A comprehensive list of approved PPP projects is available on the GoK’s PPP Unit website. In addition, companies are welcome to propose projects under the Privately Initiated Investment Proposal (PIIP) model.
The best prospects for U.S. exporters include the supply of new and used construction equipment, such as light and heavy earth-moving equipment, loaders, crawlers, tippers, excavators, compactors, graders, quarry mining equipment, low-cost road maintenance solutions, low-cost housing construction technology, consultancy, and development and planning services.
Kenya uses right-hand drive vehicles, so construction equipment with controls in the center are better sellers in the market.
Additional opportunities include:
- A variety of road, bridge, and dam construction and rehabilitation projects.
- Construction of a greenfield terminal and second runway at JKIA and modernization of some airports such as Wilson Airport in Nairobi. These will likely be developed under a PPP model.
- Various PPP infrastructure projects earmarked by the National Treasury.
- The affordable housing program under the State Department for Housing. Kenya is looking for strategic partners to develop mass low cost and affordable housing. Details can be found on the Boma Yangu website.
- Nairobi Metropolitan Transport Authority (NaMATA) – Bus Rapid Transport (BRT) facilities within five counties (Nairobi, Muranga, Machakos, Kiambu, and Kajiado).
- Opportunities also exist for consultancy and planning services.
Local Trade Shows:
For more information on the infrastructure sector contact:
Mary Masyuko
Senior Commercial Specialist
U.S. Commercial Service, U.S. Embassy Nairobi
U.S. Department of Commerce | International Trade Administration
Tel: +254 (20) 363-6063; Mary.Masyuko@trade.gov