The Competitive ROI of Small Trade Businesses in Kenya: A Data-Driven Analysis of Plumbing, Electrical Installation, and Roofing

By Makao Bora Research Team | February 2026

Kenya's construction and trade services sector presents compelling opportunities for entrepreneurs in specialized trades. While international data indicates that plumbing businesses achieve net profit margins between 10-20%, electrical installation services benefit from Kenya's expanding grid connectivity (447,251 new connections in 2024), and roofing businesses serve a construction market valued at KES 956.7 billion in 2024, the Kenyan context presents unique advantages and challenges that affect actual returns on investment.

This analysis examines the factual realities of starting and operating small trade businesses in Kenya, evaluating startup costs, regulatory requirements, market demand, and realistic profitability expectations.

Market Context: Kenya's Construction Boom

Industry Growth Indicators

Kenya's construction sector demonstrates robust fundamentals:

Market Size: The construction industry was valued at KES 956.7 billion in 2024, with projections to reach KES 1.41 trillion by 2029, representing a compound annual growth rate (CAGR) of 6.4%
Economic Contribution: Construction contributed 7.1% to Kenya's GDP in 2020, up from 5.3% in 2016, showing consistent upward trajectory
2025 Recovery: After a 0.7% contraction in 2024, the sector rebounded with 6.7% growth in Q3 2025, driven by government infrastructure projects and the Affordable Housing Programme
Employment: Construction ranked as the fourth-largest employing economic activity in Kenya

Demand Drivers

Several factors fuel demand for trade services:

Urbanization: Rapid urban development in Nairobi, Mombasa, and Kisumu creates sustained demand
Electrification: National electricity access reached 84% in 2024, up from 32% in 2013, with 447,251 new grid connections in 2024 alone
Housing Shortage: Government targets of constructing 200,000 houses annually create opportunities for plumbers, electricians, and roofers
Infrastructure Investment: The FY 2025-26 budget allocated KES 504.6 billion to energy, infrastructure, and communications

Plumbing Services: Market Analysis

Demand and Skills Gap

The plumbing sector faces a critical skills shortage. The PropelA project, supported by Swiss institutions, reports that Kenya has approximately one million job seekers annually entering the market, yet training disconnected from industry needs creates supply gaps. Construction companies cannot fully exploit growth opportunities due to shortages of skilled plumbers.

Data from 2025 indicates an average base salary for plumbers in Kenya around KES 115,000 annually for employed positions, though self-employed plumbers with established client bases can significantly exceed this figure.

Realistic Profitability Assessment

International benchmarks from the plumbing industry indicate:

Gross Profit Margins: 60-62% is considered healthy for plumbing services globally
Net Profit Margins: 10-20% represents the average range, with well-managed businesses achieving 17-20%
Job Economics: Individual jobs range from $150-350 (KES 19,000-45,000) for small repairs to $850-1,700 (KES 110,000-220,000) for major installations like water heaters

Cost Structure (International Baseline):

Labor: 40-60% of total costs
Materials: 20-30%
Transport and overhead: Remaining portion

Startup Requirements in Kenya

National Construction Authority (NCA) Registration:

NCA Class 7 (contracts up to KES 20 million): Requires director with trade test certification
Registration fees: KES 5,000-10,000 depending on category
Annual license renewal: KES 2,500-10,000

Business Registration:

Company registration via eCitizen: KES 150 per name search
Certificate of Incorporation and associated forms
KRA PIN registration (mandatory)
County business permit

Initial Investment Estimate:

Tools and equipment: KES 50,000-150,000
Vehicle/transportation: KES 200,000-500,000 (motorbike to pickup)
Business registration and licenses: KES 20,000-40,000
Initial marketing: KES 20,000-50,000
Working capital: KES 100,000-200,000
Total: KES 390,000-940,000

Critical Success Factors

Technical Certification: NITA-accredited training essential (KCPE minimum for artisan level)
Client Acquisition: Networking and reputation-building critical in early stages
Payment Terms: Managing cash flow with project-based income
Competition: Both from informal "jua kali" operators and established firms

Electrical Installation Services: Market Dynamics

Sector Growth and Opportunity

Kenya's electricity sector experienced significant transformation:

Grid Expansion: 447,251 new customer connections in 2024
Revenue Growth: Kenya Power's electricity sales revenue increased 21% to KES 231.12 billion in FY 2024
Total Sales: 11,403 GWh in FY 2025, an 8% increase
Profitability: Kenya Power returned to profitability with KES 30.08 billion net profit in 2024 after years of losses

Renewable Energy Opportunities

Kenya's commitment to green energy creates specialized opportunities:

Solar panel installation demand growing 20% annually through 2030 according to EPRA projections
Net metering regulations advancement in 2024-2025
Corporate investment in climate-responsive solutions

Regulatory Requirements

Electrical Work Licensing:

Energy and Petroleum Regulatory Authority (EPRA) license required for electrical engineering works
NCA registration for contractors
Technical qualifications: Minimum KCSE D (plain) for certificate courses

Startup Investment:

Electrical tools and testing equipment: KES 80,000-200,000
Transport: KES 200,000-500,000
Licensing and registration: KES 30,000-60,000
Insurance: KES 20,000-40,000 annually
Working capital: KES 150,000-250,000
Total: KES 480,000-1,050,000

Market Challenges

High Competition: Established electrical contractors dominate large projects
Safety Regulations: Strict compliance requirements increase operational costs
Material Costs: Exchange rate fluctuations affect imported electrical components
Payment Delays: Government and large commercial projects often delay payments

Employment Alternative

The PropelA dual apprenticeship program data shows 80% of 76 graduates secured employment, with electrical technicians earning positions at established firms. This represents a lower-risk entry path versus immediate self-employment.

Roofing Services: Analysis

Market Structure

Kenya's roofing materials market is dominated by established manufacturers:

Mabati Rolling Mills (MRM): 60+ years in operation, premier steel building solutions provider
Market Drivers: Rising construction, government affordable housing initiatives
Material Costs: Influenced by global steel prices, exchange rates, and energy costs

Cost Factors Affecting ROI

Material procurement challenges significantly impact profitability:

Global Steel Prices: Direct correlation to mabati costs
Currency Fluctuations: Weaker shilling increases import costs for raw materials
Energy Costs: Manufacturing is energy-intensive, costs passed to consumers
Logistics: Transport to remote areas adds significant expenses

International roofing contractor data suggests:

Gross Profit Margins: 20-40% average
Operating Profit Margin (EBITDA): ~15%
Cost of Services: 50-55% of revenue
Operating Expenses: 30-35% of revenue

Kenyan Market Specifics

Material Selection:

Iron sheets: Budget-friendly, KES 700-1,200 per sheet
Stone-coated tiles: Premium option, longer lifespan
Asbestos replacement: Government ban in August 2024 creates replacement market

Startup Requirements:

NCA registration (appropriate class based on project values)
Roofing tools and safety equipment: KES 100,000-250,000
Transport (essential for material delivery): KES 300,000-600,000
Business permits and licenses: KES 25,000-50,000
Working capital: KES 200,000-400,000
Total: KES 625,000-1,300,000

Competitive Landscape

The roofing sector features:

High Competition: Many informal operators
Material Quality Issues: Counterfeit materials affect reputation
Seasonal Demand: Heavy rains and construction seasons create fluctuations
Large Initial Contracts: Requires working capital to purchase materials upfront

Critical Reality Check: Challenges Affecting ROI

1. Skills Gap and Training Quality

The construction sector consistently reports that vocational training is disconnected from industry needs. Only 3% of Kenyan construction artisans are women, indicating systemic barriers. Youth unemployment remains at 67%, more than five times the national average, despite construction demand.

2. Financing Constraints

Kenya Power's commercial bank loans to the construction sector dropped 12.4% to KES 528.0 billion in 2024. Access to affordable financing remains limited, with high interest rates affecting startup capital costs.

3. Material Cost Inflation

The Construction Input Price Index rose in Q2 2024, with:

Cement indices: +3.12% to 114.16
Sand: +1.93% to 102.47
Hardcore: +1.76% to 113.25
Paints: +3.75% to 112.47

These increases squeeze profit margins directly.

4. Payment Delays

A Central Bank of Kenya survey in October 2025 revealed no construction firms planned to hire new workers in 2025, citing weak purchasing power. Private sector construction employment declined from 226,300 in 2023 to 223,400 in 2024.

5. Regulatory Compliance Costs

NCA registration, county permits, EPRA licenses, and ongoing compliance create significant overhead for small operators. Foreign contractors pay KES 250,000 registration and must subcontract 30% to locals, but local contractors face bureaucratic hurdles.

Comparative ROI Analysis: The Verdict

Startup Cost Comparison

Trade	Minimum Startup	Optimal Startup	Licensing Complexity
Plumbing	KES 390,000	KES 940,000	Moderate (NCA + NITA)
Electrical	KES 480,000	KES 1,050,000	High (NCA + EPRA + NITA)
Roofing	KES 625,000	KES 1,300,000	Moderate (NCA)

Time to Profitability

International data and Kenyan market conditions suggest:

Year 1: Establishment phase

Focus on certification, registration, and first clients
Expect losses or minimal profits (2-3% margin if fortunate)
Heavy marketing and networking investment
Building reputation through smaller jobs

Year 2-3: Growth phase

Margins improve to 5-10% as efficiency increases
Repeat clients reduce acquisition costs
Better negotiating power with suppliers
Refined pricing based on actual costs

Year 4+: Mature operations

Potential for 10-20% net margins with efficient operations
Established client base
Potential to hire and scale
Diversification into related services

Risk-Adjusted Returns

High Risk, Moderate Return Trades:

All three trades require significant upfront investment with no guaranteed income
Competition from informal sector undercuts pricing
Material cost volatility unpredictable
Payment delays stress cash flow

Employment vs. Entrepreneurship:

PropelA data: 80% employment rate for trained electricians and plumbers
Employed plumber salary: ~KES 115,000 annually (KES 9,583/month)
Self-employment potential: Variable, with successful operators earning significantly more but many struggling in early years

Geographic Considerations

Urban Centers (Nairobi, Mombasa, Kisumu):

Advantages: Higher demand, larger projects, better access to materials
Disadvantages: Higher competition, increased overhead costs, stricter enforcement

Secondary Towns and Rural:

Advantages: Less competition, community trust important, lower overhead
Disadvantages: Lower pricing power, transportation challenges, sporadic demand

Success Factors: Evidence-Based Recommendations

1. Obtain Proper Training and Certification

NITA-accredited programs are essential. The PropelA project's 80% employment success rate demonstrates that quality training leads to opportunities. Minimum requirements:

Plumbing: KCPE for artisan level, KCSE D (plain) for certificate
Electrical: Similar requirements plus EPRA licensing
Roofing: Trade test certification for NCA registration

2. Start with Employment, Then Self-Employment

Working for an established firm provides:

Real-world experience beyond classroom training
Industry contacts and networking
Cash flow without entrepreneurial risk
Understanding of pricing, client management, and operations

3. Capitalize Adequately

Undercapitalization kills small businesses. Ensure:

Minimum 6 months operating expenses in reserve
Working capital for materials (especially roofing)
Marketing budget for first year
Buffer for regulatory fees and unexpected costs

4. Specialize and Differentiate

The market rewards expertise:

Solar panel installation for electricians
Eco-friendly plumbing systems
Warranty-backed roofing with premium materials
Emergency services command premium pricing

5. Manage Financial Discipline

International plumbing data shows businesses often operate at 2-3% margins despite industry benchmarks of 10-20%. The difference:

Accurate job costing before bidding
Strict payment terms enforcement
Supplier relationship management for better pricing
Regular financial review and adjustment

Conclusion: The Realistic Picture

Do plumbing, electrical installation, and roofing offer competitive ROIs in Kenya?

Qualified Yes, With Significant Caveats:

Market Demand Exists: Kenya's construction sector growth (6.4% CAGR to 2029), electrification expansion (447,251 new connections in 2024), and housing shortage create genuine demand for skilled tradespeople.
Skills Gap Creates Opportunity: Persistent shortages of qualified workers mean well-trained, certified professionals can command premium rates and secure steady work.
Profitability Is Achievable But Not Guaranteed: International benchmarks suggest 10-20% net margins are possible, but many Kenyan operators struggle with 2-3% margins or losses in early years due to:
- Material cost volatility
- Payment delays
- Intense competition from informal sector
- High regulatory and overhead costs
Startup Costs Are Substantial: Minimum investments of KES 390,000-1,300,000 require serious capital commitment, with no income guarantee in year one.
Employment First, Entrepreneurship Later: The 80% employment success rate for properly trained graduates suggests gaining experience with established firms before launching independent operations reduces risk significantly.
Location Matters: Urban centers offer more opportunities but face higher competition and costs. Secondary towns may provide better margins for skilled operators willing to serve underserved markets.
3-5 Year Horizon: Expecting profitability in year one is unrealistic. Plan for 2-3 years of modest returns while building reputation, with potential for strong returns (15-20% margins) in years 4-5 with disciplined management.

Final Recommendation:

Small trade businesses in plumbing, electrical installation, and roofing can generate competitive returns on investment in Kenya, but success requires:

Proper technical training and certification
Adequate capitalization (1.5-2x minimum estimates)
Realistic timeline expectations (3-5 years to strong profitability)
Disciplined financial management
Continuous skill development and specialization
Strong customer service and reputation management

The opportunity is real, the demand is growing, but the path is challenging. Entrepreneurs must enter with eyes wide open, proper preparation, and sufficient resources to weather the establishment phase.

About Makao Bora: Makaobora.com provides research-driven insights into Kenya's construction and property sectors, helping professionals and entrepreneurs make informed decisions based on data rather than assumptions.

Sources: Kenya National Bureau of Statistics, National Construction Authority, Energy and Petroleum Regulatory Authority, PropelA Programme, Kenya Power Financial Reports, Global construction industry data, World Bank Kenya Economic Reports.

Last Updated: February 2026