Kenyatta's Housing Project in Limbo Over Lack of Funds

27 February 2020

President Uhuru Kenyatta's pet project of affordable housing for the country is facing financial turbulence.

This comes after National Treasury Cabinet Secretary Ukur Yattani admitted before a parliamentary committee that the government may not allocate money in the next financial year due to a dip in national revenue collection.

After President Uhuru Kenyatta was sworn in for his second and last term in 2017, he announced his Big Four agenda for the country which include, manufacturing, universal health coverage, food security and affordable housing.

Under the housing, the President outlined his government's plan to construct at least 500,000 housing units across the country by 2022.

To construct 100,000 units, the government requires about Sh45 billion so as to attract investors to pump in more money into the programme.

But while appearing before the Transport, Public Works and Housing Committee of the National Assembly Thursday, Mr Yattani noted that his ministry is facing financial difficulties and that he cannot guarantee the availability of the funds required for the project.

"We may not provide anything in the next financial year," Mr Yattani told the committee chaired by Pokot South MP David Pkosing.

Transport, Public Works and Housing Cabinet Secretary James Macharia, who also appeared before the committee, noted that the government now intends to bring onboard the Saccos.

According to Mr Macharia, 228 units of the 1,370 units being the first phase along Park road in the city's Ngara estate, have been completed and handed over to the government.

The projected completion of the entire project is December this year.

In the current financial year, Sh5 billion has been set aside for the programme and will be fully disbursed after Mr Macharia complained that out the allocation, only Sh1 billion has been given out.

Mr Macharia told the committee that it was regrettable there will be no money to fund the President's legacy project noting that if the requested amount was availed, the country would be having 130,000 units.

He noted that given the reality that the country may not have the money required, it may be prudent to explore the mortgage culture and rope in the low-income bracket.

"Currently there are about 25,000 mortgages in the country, which by any standards is quite low. This culture needs to change. The ministry is encouraging investors to come in and take risk by putting up houses for sale," Mr Macharia said.

He noted that the government will provide the required land, infrastructure, water and power among other things to support the investors in this.

"With all this provided, the cost of putting up houses might go down by up to 40 percent. This is the strategy that we want to use," he said.

Mr Yattani explained to the committee that the Kenya Mortgage Refinance Company (KMRC) will also play a key role in boosting the success of affordable housing programme.

KMRC was incorporated in April 2018, to provide secure long-term funding to primary mortgage lenders (Banks and Saccos) in order to increase availability and affordability of housing loans to Kenyans.

Mr Macharia told the committee that the take-off of the project faced setbacks due to delays in the implementation of mandatory contribution and lack of support from the public as provided for in the Finance Act, 2018.

The law had made it mandatory that workers contribute 1.5 percent of their basic salaries with their respective employers contributing a similar figure to finance the project.

However, the Federation of Kenya Employers (FKE) obtained court orders to suspend the implementation of the mandatory contribution.

Before the matter could be determined in court, President Kenyatta while leading the country to mark Jamuhuri Day celebrations on December 12, last year, he decreed that changes be made to the Finance Act to make the contribution voluntary.

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