Following Tuesday's newspaper advertisement ordering employers to start remitting 1.5 per cent of their employees' basic pay to the National Housing Development Fund, apprehension is rife among Kenyans on the design of the Jubilee government's housing project.
Will everyone benefit? How about those who already have houses? How watertight is the project? These are some of the questions that have been posted on the Daily Nation's social media platforms.
Mr Charles Hinga, the Principal Secretary in the State Department for Housing and Urban Development, earlier responded to such questions in the interactive 'Ask Your Question' segment of the Sunday Nation newspaper.
Below are some of the responses he gave to the questions from readers across Kenya, first published on November 18, 2018.
Q: All workers are set to lose a certain percentage of their salaries so that you can implement the affordable housing programme as one of the Big Four priorities. How and when will such employees benefit from those houses?
A: Firstly, I will state that no one who participates in this scheme, whether through the employer-employee scheme or through voluntary contributions, will lose money. If anything, the contributors will actually get a return on their investment. This is because the Housing Fund is designed as a saving scheme where Kenyans make monthly contributions towards the purchase of affordable houses and where those savings then earn a return based on the overall return of the Fund.
Secondly, members have the option of accessing their contributions and the returns accruing 15 years after their first contribution or the attainment of retirement age.
On the question of allocation, potential home owners will be required to register on the affordable housing portal, after which they will begin making contributions. We have in a place a fair and transparent system that will be used to evaluate those who meet the set qualification criteria for acquiring affordable houses. Once those are generated by the system, they will be allocated a house as soon as developers begin construction.
Q: What guarantees have you put in place that everyone in the country will access this plan so that it is not only concentrated in urban centres? What plans are there for it to reach the rural areas too?
A: The affordable housing programme is a nationwide initiative which aims to provide decent, quality and affordable housing to people throughout the 47 counties. The main targets are Kenyans in the low income brackets who have previously been excluded from owning decent homes due to the prohibitive costs.
We will deliver this plan in phases and as such, we will start with flagship projects that will provide about 100,000 units. We will work towards ramping up to our vision of delivering 500,000 homes, all over Kenya, over the next five years.
We are not stopping at the provision of houses. Through the programme, we aim to help existing and upcoming municipalities unlock their potential of attracting investments with a view to promoting greater economic and social development that then improves our people's living standards.
Q: How do you plan to model the Public-Private Partnerships (PPPs) strategy to ensure you deliver affordable housing to the most vulnerable at the bottom of the pyramid?
A: The programme is a government initiative that will provide a series of interventions that will allow Kenyans to live in decent accommodation and to be owners of those houses. It aims to resolve constraints faced by developers who need to supply units to the lower-income segments as well as address the issues of end users who need to access cheaper finance to acquire them.
The programme is an ambitious one t hat requires all hands on deck. We require strong partners who will bring to the table the expertise, technology, finances, infrastructure, incentives and all that is needed to make this plan a success.
Q: There are workers servicing mortgages or whoown houses and therefore have no plans to own additional houses yet the government wants to take a certain percentage of their salaries to pay for affordable housing. How will they benefit from the housing agenda? Why can't the government make enrolment for the programme optional?
A: The programme is an ambitious, capital intensive project and as such, was designed to ensure the Housing Fund receives contributions from different stakeholders so as to reduce the financing burden on the government and guarantee success.
Employers and employees as well as people who are servicing mortgages are in the category of contributors. For such people however, the fund will be a savings scheme where contributions and all interest accruing will be transferred to retirement schemes after 15 years of regular contributions or upon reaching retirement age.
Q: It is a fact that counties can act as catalysts in the successful implementation of President Uhuru Kenyatta's Big Four Agenda. What are you doing to ensure the development plans of all our 47 counties are aligned with this policy of the national government especially on the issue of provision of affordable and low cost houses in Kenya?
A: The aim of the programme is to provide decent and affordable housing units to low and middle income households in 59 municipalities across all 47 counties. However, even with the ambitious government plans to deliver 500,000 units, this figure pales in comparison to the estimated deficit of 1.8 million.
This means we need strong partnerships and support from both public and private sectors, and partners of good will, in order to deliver on this promise.
County governments are an integral part of this programme, since we would rely on them to identify land as well as develop supporting infrastructure. In addition, we have signed MoUs with 18 counties are working towards ensuring the remaining counties are brought on board. The MoUs are based on the affordable housing programme where counties have set aside land for this purpose.
Q: I have some concerns about the housing programme: the government and government agencies such as Kenya Railways and the Postal Corporation have in the past had affordable housing programmes but the houses have beenover-priced and distributed on a know-who basis, thus locking out the majority who deserve them. How do you address this problem in the current Big Four programme? How will you ensure the houses are truly affordable and not run by third party goons and brokers?
A: We do acknowledge that there have been other housing initiatives as part of an attempt to meet demand for various groups. These schemes have, for the most part, not been delivered as envisaged due to challenges including institutional and financial capacities, complexities in land ownership and even politicisation of the schemes due to vested interests.
This programme is different in that it is the first comprehensive one in which the government seeks to provide interventions that will resolve challenges in both demand and supply. It is also unique in that it brings together all stakeholders and creates a conducive environment that minimises risks for developers, thus enabling delivery of decent and affordable homes within the stipulated timelines and at minimum costs.
Further, the prices of the different units are determined and capped before construction, which ensures they are not manipulated and that they do not change upon completion of the units.
With regard to allocation, the programme has a system that minimises human interface and contact and ensures applicants who qualify are allocated houses in a fair and transparent process.
Q: How is the housing fund sustainable, since it seems it was imposed on employees without any public participation? What safeguards are there to ensure any new government that comes after the 2022 election will not do away with the programme?
A: The Housing Fund is based on a unique funding model that aims at removing financial dependency on any one party.
As such, the fund will be capitalised in various ways. Firstly, it will be jumpstarted by an initial cash injection from the government. It will also be financed through voluntary contributions from potential homeowners as well as statutory contributions from employees and employers, which we estimate to be in the tune of Sh5 billion to Sh6 billion per month.
In addition, we will also welcome grants from development partners and investments by equity investors.
With regards to safeguards, both the fund and the programme are insulated from political risks, with these safeguards in various regulations. The fund's regulations were recently subjected to a public participation process ahead of operationalisation. We have also had wide consultations with various stakeholders.
To ensure its sustainability if another government comes in place, the programme has been anchored in law. For instance, the Finance Act of 2018 amended the Employment Act by inserting Section 31A which establishes the fund. In addition, housing is now a right in the Constitution.
Q: Even before the first stone is laid, there are reports of favouritism in the award of a contract to a firm related to the family member of a big person in government. Were this the case, what guarantees are there that the public will actually get value for money? How was the contractor selected?
A: The reports of favouritism are incorrect. The formulation and execution of the fund has, and will continue to adhere to principles of fairness, impartiality and transparency as well as observe the highest standards of integrity to ensure no money is lost and that every deserving applicant gets the house that was applied for.
We are keen on avoiding the legacy issues that have negatively affected the previous housing schemes. We deeply encourage you to report any irregularities to the relevant agency.