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Cooperatives still the sure way for Kenyans to own homes

Thursday April 11 2019

Kenyans have been owning homes through cooperatives, that have been providing low-cost housing. PHOTO | FILE | NATION MEDIA GROUP

Kenyans have been owning homes through cooperatives, that have been providing low-cost housing. PHOTO | FILE | NATION MEDIA GROUP 

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With just 40 months left to run on his second and final term, President Uhuru Kenyatta faces a Herculean task of delivering 500,000 houses to Kenyans as promised.

If his word before the State of the Nation address is anything to go by, Kenyans will be expecting him to produce exactly 410 houses a day, or 17 houses an hour, for him to beat his target in the nick of time.

“We aim to deliver 500,000 affordable housing units by 2022; universal healthcare for all; food and nutritional security; and sharply grow the manufacturing sector and value addition of our agricultural products,” said President Kenyatta. He made the pledge in a communication package released by State House ahead of the State of the Nation address in parliament, via Twitter.

Considering the fact that the country faces a backlog of two million houses, which continues to grow by 150,000 units every year as the country is unable to meet its 200,000 units demand, the President’s assurances, raise critical questions. To begin with, what happens to hopeful Kenyans in the event he is unable to deliver on his promise? What measures have been put in place to ensure continuity of this project regardless of changes in power?

Before the government’s project, Kenyans have been owning homes through cooperatives, that have been providing for them low-cost housing. DN2 met a few of them and they shared their experiences of owning homes; the cooperative way.

Many Kenyans bank on cooperatives for
Many Kenyans bank on cooperatives for affordable houses. PHOTO | FILE | NATION MEDIA GROUP



In 2012, after working for some time in Mombasa, when Grace Wairimu and her husband were about to move out to Nairobi, like most people, their biggest worry was where they would settle down.

“We wanted a place where we would not be paying rent every month, a place that was adequate for both of,” she says, adding that by a stroke of luck when poring through the pages of the Daily Nation, she came across a project that she felt was within their means.

“When I read about the project in the newspaper I instantly fell in love with it. So we decided to research more about it,” she says. “The project was studio apartments by Urithi Housing Cooperative Society dubbed ‘Own A Room’.”

After lengthy deliberations, the couple was convinced they could afford a unit. So the following morning they set out for Nairobi, ready to pay the Sh550,000 asking price for a unit of the studio apartment block.

“Unfortunately for us, when we got to Nairobi, we were told that all the units had been sold out off-plan. It took a lot of efforts to find someone willing to dispose of their house and when we got one, we paid in cash,” says Ms Wairimu.

The 26-year-old business management diploma graduate, who is married to a businessman, says that they moved into the house in 2016, happy to say goodbye to landlords and their pesky agents.

Fast-forward to 2019, and despite the studio apartment having served the couple well, Ms Wairimu says that with the addition of an extra member into the family two years ago, they have outgrown the space and are shopping for a bigger house.

“Our dream is moving into a gated community set-up. It is more secure and our children will have an opportunity to interact and play with other kids,” she says.

For her, the cooperative model of housing remains the surest way towards home ownership.

She says, “I am looking forward to enrolling for the next project with Urithi so that we can move to the next level.”

She says that a two-bedroom house that costs not more than Sh3 million and given a reasonable payment period would be within their range, and relatively affordable.

Asiya Mohammed, a 55-year-old kiosk vender from
Asiya Mohammed, a 55-year-old kiosk vender from Kibra, poses for a photo with her sister's children outside her house in Kamulu Phase 4, off Kangundo Road. PHOTO | DELFHIN MUGO


Asiya Mohammed is a 55-year-old woman from Kibra. The mother of three who also takes care of her late sister’s four children sells vegetables for upkeep.

Hers is a story of ultimate determination and zeal to succeed despite the odds.

In 2011, Ms Mohammed and her friends formed a chama where members could borrow money to boost their small businesses. A few months down the line, they came up with a bigger idea: to transform their outfit into a housing cooperative society that would see them out of the slum.

In March 2011 when Razak Housing Cooperative Society (known simply as Razak) was born and registered.

The society also joined the National Housing Cooperative Union (Nachu), the umbrella body for housing cooperatives that provides low-cost housing to low income earners through training, technical, and financial support.

Today, several members of Razak including Ms Mohammed are the proud owners of one-bedroom houses in various areas of Nairobi region, including in Ruai, off Kangundo Road, on the outskirts of Nairobi.

Ms Mohammed told DN2 that it has not been an easy journey.

“It is a miracle that I managed to do this. I don’t make much from my small business. Sometimes we live from hand to mouth but in a good month I can put aside Sh5000, which is the money that has brought me this far,” she says.

Despite starting off the journey with her friends in 2011, she could not share in their joy in 2013 when they received keys because she had not reached Nachu’s set target of Sh200,000. She never gave up though, and in 2015 her time came, when she got the key to her own house.

“I still had monthly instalments to make in order to offset the Sh525,000 loan from Nachu and also complete construction which has been happening through a new house incremental model,” she says.

Under this, one builds a section of the house say, just a room with some facilities like a toilet then keeps building at their own speed until the house meets the standards of a three-bedroom house, as designed by architect.

Ms Mohammed’s three-bedroom house is in Kamulu Phase 4, off Kangundo Road. Her sister lives there together with the children who have already been enrolled in schools around the area, while she remained in Kibra to run her business.

Since she made her first deposit, it has been nine years and she is happy she is almost at the finishing line in terms of clearing the money she owes Nachu.

Her story and that of her friends is proof that with systems in place and willpower, it is possible to turn around the fate of slum dwellers and make them decent homeowners.

One of the houses at
One of the houses at the Juja Plains View Estate. PHOTO | DELFHIN MUGO


At Juja Farm, in the outskirts of Juja town, we meet Margaret Ngugi watering her grass lawn outside her three-bedroom house. She looks happy to welcome us into her home.

“This is a dream come true for me. It is one of those goals you have at the back of your mind that one day you want to live in your own house,” says the mother of two.

Asked how she feels now that she is a homeowner, Margaret says:

“It feels good. There is a comfort that you feel when you are in your house. Even before you move in, because we bought the houses off-plan, you feel content that after you finish paying for your house, you get to call it your own. There is a good environment to raise your children and for them to enjoy their childhood. These thoughts occupy your mind and when they become a reality, you can only be grateful to God”

The Thika-based businesswoman said she learnt about the cooperative from a friend.

“I joined the cooperative in 2014 and in 2015 this project was introduced. My husband and I jumped at that opportunity because that time the house was going at Sh3.6 million. We decided to buy because we were given a lot of time to pay, at our own pace. Right now if you want to buy a house here, it goes for close to Sh6 million.”

Margaret says it took them three years to complete paying for their house. “The thing that endeared us into the project is the flexible payment process where we could deposit any amount we had,” she says.

Mr Samuel Maina, the chairman of Urithi Housing
Mr Samuel Maina, the chairman of Urithi Housing Cooperative Society. PHOTO | NATION MEDIA GROUP

According to Mr Samuel Maina, Urithi chairman, for one to join the cooperative, they would need to pay a registration fee of Sh2,000, which gets them a membership number. The next step is to purchase a minimum of 2 shares, each share is Sh7, 000. One will get a share certificate in 7 days. The last step is to identify a project they would wish to invest in and start the purchase journey.

Inside this Juja Plains View gated community, where Margaret’s bungalow is located, there are 78 houses. DN2 could spot children playing football, riding bicycle and others running up and down the cabro tiled streets.

“Here, you enjoy the security and the neighbourhood in that you have people to interact with and your children have others to play with,” says Margaret, of the advantages of living in a gated community.

For the family, Margaret says they have achieved a great milestone.



Margaret Ngugi’s and Asiya Mohammed’s position in life is where the family of Grace Wairimu would want to be in the next few years, that of owning a three-bedroom house. Ms Wairimu is however at a vantage point in that she has already taken some initial steps and already owns a one-bedroom house, which would earn her Sh7000 in rent when she decides to move to the next level.

A majority of Kenyans lag behind though, and despite the government’s effort to propel them forward, experts argue that well managed cooperatives still remain a sure path to home ownership for most.

According to Mr Samuel Wachira, a consultant with a performance management firm based in Nairobi, owning a home the cooperative way works very well if you are part of a cooperative or a group that is willing to join one.

"For cooperatives, you may not realise full benefits if you join alone because of the guarantee aspect. For one to realise the full benefits of a cooperative, they would need to join as a group so that they can guarantee each other’s liabilities," he says.

"Most of these projects are actually quite good, but they are usually long term and you might have to face quite a number of compromises," Mr Wachira adds.

How cooperatives pool resources

"I would say that (the cooperative model) is more effective than taxing everyone a portion of their salaries. For the tax to work, my thoughts are, government itself should not be going into the business of building houses. That housing levy should be put into a mortgaging company and give Kenyans mortgages at very friendly rates."

Data from Kenya National Bureau of Statistics (KNBS) indicates that the country’s cooperative societies cumulatively have 10.8 million members as at 2016. This vast membership, Mr Samuel Maina, the chairman of Urithi Housing Cooperative Society says creates a big proportion of the demand side of housing. Added to that, co-operatives’ wide geographical spread means if deliberate attempts to make cooperatives members homeowners were made, the country would solve the housing crisis sooner, Mr Maina says.

Unlike individual developments where personal tastes and preferences are likely to influence the development, Mr Maina says, most cooperatives have membership with a common bond and drawn from the same profession or social economic status, hence their income levels are likely to influence the kind and value of the houses to be constructed.

"Cooperatives mobilise resources into a common pool, thereby taking advantage of economies of scale. They are able to utilise the money from deposits raised by members without borrowing from financial institutions thereby mitigating on the costs of financing," says Mr Maina.

Other factors that place cooperatives at a vantage point when it comes to provision of affordable housing include flexible payment terms, friendlier and affordable loaning policies.

According to Mr Francis Kamande, Nachu chairman, out of the three models Kenyan use to access housing in urban areas — mortgage loans, incremental housing and through housing and investment cooperatives, mortgage loans has failed terribly.

"The number of Kenyans who accessed housing through mortgage from all commercial banks in 2017 were less 2300. Total number of Kenyans currently servicing mortgage loans from commercial banks are less than 27,000 and the total mortgage debt as a percentage of the country’s GDP is 3.15 per cent. This is a drop in the ocean when compared with South Africa at 30 per cent," he decries, adding that this calls for urgent policy and legal framework to mitigate the current challenges in mortgage sector.

Until that happens, he says, the incremental housing model as seen in the case of Ms Mohammed and the cooperatives models as demonstrated by Grace and Margaret remains the surest ways for Kenyans of modest means to snap up houses.