By Seddiq Hassani
The outbreak of the COVID-19 pandemic early last year necessitated worldwide implementation of preventative measures to contain its spread, which contributed to a slowdown in economic activities. Like many other sectors, the construction sector felt the impact especially in the first half of 2020. Worldwide, many businesses leant a lot from the pandemic, in terms of how to cushion their businesses from the unexpected and reinforce their sustainability for the future. As Bamburi, we were not an exception.
Towards the end of August, we published our financial results for the first half of the year. Our team did a good job in delivering excellent performance achieved through fast implementation of strategic response measures to the pandemic that were complemented by the rebound in construction sector activities as the Covid-19 pressure eased off.
Growth in the construction sector
The Leading Economic Indicators data released recently by the Kenya National Bureau of Statistics show that cement consumption for the first 5 months of this year (January-May) increased by 26.6 percent to reach 3.35 metric tonnes, up from 2.43 metric tonnes for the same period last year. This gives us confidence as cement manufacturers. The latest Economic Survey report released by Treasury shows there was 11.8% growth in the construction sector by end of 2020 and it is clear cement consumption this year will exceed the 2020 volume of 7.3 metric tonnes. There is a visible increase activity in the real estate sector after the initial Covid -19 shock coupled with the ongoing infrastructure projects such as the construction of the Nairobi Expressway, Thwake dam, Dongu Kundu Bypass, Lamu Port, LAPPSET corridor, Mau Mau Road among others which are raising hopes for cement makers.
The increase in cement demand is in line with the global outlook. According to IMARC, the global cement market volume was at 4.91 Billion tons in 2020 and it is expected to exhibit a Compound Annual Growth Rate (CAGR) of around 5% in 2021-2026. This will be driven by a significant rise in construction activities particularly mega infrastructure projects and elevating levels of urbanization. The market research firm shows the residential sector will have a clear dominance in cement end use ahead of commercial and infrastructure.
Beneficial strategic decisions
However, construction sector players will not automatically benefit from the rebounding economic activity sector based solely on sustained infrastructure and real estate spending. It will be through continued implementation of the beneficial strategic measures taken since the pandemic - if at all, that were aimed at operational efficiencies, flexibility to changing customer needs, product innovation and safeguarding key stakeholders including staff and communities during the toughest time in their operations history.
Undoubtedly, construction sector players must continue to invest and focus on digital initiatives across their production and supply network so that they can be able to respond to the current operating environment pressures and any future disruptions. This way they will build resilience through increased efficiency and productivity, better customer satisfaction rates through more innovation and convenience, and also improved employee experience.
Combined with the need for digital advancements, the increasing need to adopt sustainable business practices will drive the sector towards the future. Consumers globally have more purchasing power, are more discerning and therefore giving a closer scrutiny to the measures manufacturers are putting in place to operate sustainably as they deliver quality and value to them. Evidently, there is growing demand for greener construction solutions such as the use of Green Cements that minimize the levels of CO2 emissions, environmental conservation initiatives, substitution of industrial thermal energy with low carbon alternatives towards Net Zero goals, and working with communities to support their growth and development.
Duracem, one of Bamburi's greenest cements
As an example at Bamburi Cement, as part of our sustainable construction agenda, we embarked on “Houses of Tomorrow’ (HoT) project which involves careful selection, design and use of materials which leverage low carbon footprint in the overall construction process. We are also solving the waste problem through partnerships with waste producers to dispose off their waste in our cement kilns which we use as alternative fuel to power our plants. We are well known for rehabilitating and restoring quarried lands with examples including the Bamburi Haller Park and Bamburi Forest Trails.
As the construction industry works towards full recovery by solving specific challenges that were amplified by the Covid-19 pandemic, the increased expectations for sustainable business practices is poised to significantly shift the strategic focus areas by operators.
Seddiq Hassani is the Group Managing Director, Bamburi Cement PLC