(Nairobi) – A new report by the Kenya Institute for Public Policy Research and Analysis (KIPPRA) highlights a significant shift in Kenya’s arid and semi-arid regions, with the construction sector emerging as the leading economic activity. Traditionally known for pastoralism due to the nomadic lifestyles of local residents, these regions have seen a transformation driven by rapid urbanization and increased development funding from devolved governments.
The report, part of the Kenya Economic Report (KER), shows that the construction industry is now the largest contributor to Gross Value Added (GVA) in Kenya’s arid counties, accounting for 54.65% of the total GVA. This shift is a reflection of the growing urbanization in these areas, which has brought about a demand for infrastructure such as roads, schools, and homes. In addition to construction, other industries contributing to GVA in these regions include mining and quarrying (6.92%), electricity supply (11.44%), manufacturing (19.35%), and water supply (7.65%).
The contribution of construction in Kenya’s semi-arid and non-arid regions is comparatively lower. In semi-arid areas, construction accounts for between 17.33% and 35.32% of GVA, while in non-arid areas, it makes up 41.59%. However, manufacturing plays a more dominant role in these areas, with the largest shares of GVA: 52.39% in semi-arid areas and 56.77% in non-arid areas.
KIPPRA defines the construction sector broadly, including the building of homes, factories, offices, and schools, as well as the creation of physical infrastructure such as roads, bridges, railways, and sewers. Maintenance and repair work of these structures also fall under the sector. The institute emphasizes that devolution has played a critical role in the growth of infrastructure development in Kenya’s arid and semi-arid regions, as counties allocate significant portions of their budgets to construction projects.
Between 2013 and 2022, the development budget for arid counties increased by 62.77%, compared to 56.78% for non-arid and 56.87% for semi-arid counties. This growth is primarily driven by investments in road construction and the building of county headquarters. Despite the dominance of pastoralism, KIPPRA points out the untapped potential for growth in manufacturing, particularly through investments in the livestock product value chain, which could create job opportunities and help diversify livelihoods as communities adapt to the effects of climate change.
While construction leads the way in providing employment opportunities in arid regions, KIPPRA notes that overall employment in the sector remains relatively low. Employment in construction and manufacturing tends to fluctuate with seasons and economic conditions. The report also shows a decline in the manufacturing sector’s share of GVA from 2013 to 2022, while construction’s share has steadily increased across all county categories.
The rapid growth of the construction sector can be attributed to ongoing investments in infrastructure and the affordable housing agenda, with significant public and private sector funding dedicated to expanding housing and other key infrastructure projects. The sector’s success in the arid and semi-arid counties could be key to driving further economic growth and development in these historically underserved areas.