NAIROBI, Kenya, May 12 – The coronavirus is expected to have major disruptions in Kenya’s construction and real estate sector, which when combined, contribute about Sh1.2 trillion, or 12.4 percent of the country’s GDP.
According to a study conducted by Deloitte, major disruptions in the sector include shorter working hours, decline in construction materials due to supply disruptions, and lower demand for housing.
The study dubbed Economic impact of the COVID-19 pandemic on East African economies, expects the public housing project to also be impacted as the government pulls together funds to deal with the scourge and respond to emergency interventions.
“Further ramifications on the construction and real estate sectors include a decline in project financing as lenders would be uneasy to finance construction projects because of the uncertainty surrounding the completion of projects,” said the study.
According to the study, Government infrastructural projects are also expected to stall due to a shortfall in revenue collections by USD 658m as the government expands spending on the health sector to combat the virus.
Similarly, the study expects the virus to dampen uptake of houses due to financial certainty.
Last week, Credit rating agency Agusto & Co. Limited said it expects the Big 4 Agenda to be sacrificed as more resources are channeled towards curtailing the spread of the coronavirus.
The government has had to slash Big four’s budget to Sh127.3 billion in the year starting July 1, from Sh450.9 billion in the current period.
According to Blomberg, spending to fight the virus will force the government to divert resources from the Big four projects.
“Housing being part of Kenya’s Big Four Agenda, the government is expected to extend critical intervention to the sector throughout the pandemic,” the report said.