The informal settlement of Mukuru is set for a major facelift as the national government prepares to put up 13,000 housing units in the area.
Mukuru Social Housing Project will cost the Sh15 billion.
The funds for the project were approved in a Cabinet meeting President Kenyatta chaired on Thursday.
The initiative, which is the first social housing programme in Kenya, will be undertaken as a joint venture between the government and private investors.
President Kenyatta said the project is part of his commitment to fulfill his agenda on affordable housing under his administration's Big Four agenda. Under the initiative, the national government will also put up houses in Pangani and Ngara.
The Mukuru project joins ongoing housing projects being undertaken by the Nairobi Metropolitan Services (NMS). Redevelopment of seven estates has started in Pangani and Jeevanjee with the aim of putting up 10,000 low-cost housing units.
Mukuru was declared a special planning area in 2018 by City Hall, suspending any development in the area for two years.
This was extended for another two years by NMS Director-General Mohamed Badi earlier this year to enable construction of roads and better houses.
The declaration meant there would be no further development in the almost 650-acre neighbourhood from Marigoini all the way to Viwandani.
Already, the Mukuru informal settlement renewal programme is underway. Three-sector plans--water and sanitation, roads and drainage, and electrification--whose implementation began in May, have been finalised.
Sh56 million was set aside for the pilot project, with Sh20 million for planning facilitation and Sh36 million for land surveying, registration, roads and sewers.
In May, National Treasury Cabinet Secretary Ukur Yatani allocated Sh1.5 billion in the current financial year for Mukuru.
Mukuru informal settlement, comprising Kwa Reuben and Kwa Njenga wards, has been an area of focus for development by the NMS.
Maj-Gen Badi said a number of projects are lined up targeting informal settlements in Nairobi. He said his administration has embarked on improvement of the road network in informal settlements as well as drainage, sewerage and water piping works.
A 50-kilometre road expansion programme worth Sh300 million in Kwa Reuben is complete.
"Water and sewer pipes will be installed in Mukuru slums. We also have electricity connections that will go hand in hand with the two in order to uplift living standards in the slums," Maj-Gen Badi said.