Kenya鈥檚 cabinet secretary of the national treasury and economic planning presented the country’s financial year 2024 (FY24, 1 July 2024 to 30 June 2025) budget on 13 June 2024.
The budget focuses on priority strategies and policies to achieve the Bottom-Up Economic Transformation Agenda in a bid to improve the livelihoods of Kenyans.
According to budget estimates, the country鈥檚 gross domestic product (GDP) is expected to grow by 5.5% in 2024 and 2025.
The budget also aims to reduce the fiscal deficit to 3.3% of GDP in FY24-25 from 5.7% of GDP in FY23-24.
As part of the latest budget, the Kenyan government announced that total expenditure in the next financial year is estimated to be Ks4trn ($26bn).
Of this total, the government proposes allocating Ks707.4bn in FY24-25 for development expenditure; which is equivalent to 3.9% of the country鈥檚 GDP.
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By GlobalDataAccording to the 2024-25 Budget Policy Statement, the latest budget also includes allocations to counties.
Of the total Ks4trn expenditure, the national government will receive Ks2.5trn while domestic counties are expected to receive Ks54.7bn.
The budget is expected to boost growth in the construction sector, with the government announcing plans in the FY24-25 budget to develop critical features such as railways, roads, air and seaports, and energy and water infrastructure across the country in a bid to reduce the cost of doing business and improve ease of movement for goods and people, coupled with an aim to promote competitiveness.
To develop the country’s critical infrastructure, the government proposed an allocation of Ks193.4bn for the development of roads, of which Ks86.2bn will be allocated to support the construction of roads and bridges; Ks69.5 billion for road maintenance, and the remaining Ks37.7bn for the rehabilitation of roads.
To expand the rail network, the government proposed an allocation of Ks25.2bn towards the railway sector in the FY24-25 budget.
The government also proposed an allocation of Ks2.4 billion for infrastructure development at the Dongo Kundu Special Economic Zone; Ks1bn for the Nairobi Bus Rapid Transport project; and Ks239.4m for the development of Nairobi Railway City.
The government also proposed an allocation of Ks69.7bn towards the energy sector, of which Ks27.8bn will be allocated to the national grid system; Ks24bn to rural electrification; Ks14bn to develop geothermal energy; Ks2.2bn to develop alternative energy technologies; and Ks920m to develop nuclear energy.
Moreover, in the latest budget statement, the government announced that it had issued an 8.5-year ‘Infrastructure Bond’ in February 2024, which attracted significant interest from foreign investors.
The budget also focuses on the residential sector, with the government announcing plans to deliver 200,000 houses annually and to facilitate low-cost housing mortgages.
To support this initiative, the government proposed an allocation of Ks92.1bn towards housing, urban development, and public works.
Of this, Ks32.5bn will be allocated to the construction of affordable housing units and Ks15bn towards the construction of social housing units.
Moreover, the government proposed an allocation of Ks656.6bn to the education sector and Ks127bn to the healthcare sector.
With the latest budget expected to provide a fillip to the construction sector, leading data and analytics company forecasts Kenya鈥檚 construction industry to expand by 5.5% in real terms in 2024, and record an average annual growth rate of 6% between 2025 and 2028.
Growth over the forecast period will also be supported by investments as part of the Fourth Medium Term Plan which was announced in March 2024.
As part of this plan, the government aims to build more than 6,000km of new roads and 227 footbridges by 2027.
Furthermore, in April 2024, Kenya National Highways Authority (KeNHA) announced the 鈥楰eNHA Highways Plan鈥�.
This plan involves the construction of 2,349km of roadways, of which 1,183km will be newly constructed, 674km of existing roads will be enhanced, and 492km of roads will undergo restoration by 2027.
However, high inflation and interest rates, devaluation of the local currency, and rising construction materials costs weigh on the Kenyan construction industry鈥檚 output in the short term.
According to the Kenya National Bureau of Statistics, the domestic construction input price index grew by 3.6% in the first quarter (Q1) of 2024, compared with Q1 2023.
During the same period, the building cost index grew by 3.3% year-on-year (YoY) while the cost index of civil engineering works grew by 3.9% YoY.
