Cooperatives to deliver 500,000 social housing units - Daily Nation
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Cooperatives to deliver 500,000 social housing units

Thursday July 19 2018

Plainsview Estate in Juja, Kiambu County

Urithi Housing Cooperative Society's Plainsview Estate in Juja, Kiambu County. What should be done to put the country on the road to adequate housing for all? Start with a countrywide baseline survey to collect data on households to establish the number of houses needed. PHOTO | FILE | NATION MEDIA GROUP 

By MILLICENT MWOLOLO
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Kenya is ranked highly globally with regard to a thriving cooperative movement having an asset base of more than Sh900 billion and deposits worth over Sh600 billion. The movement has continued to grow over the years.

“This gives Kenya a competitive advantage while at the same time providing a great opportunity which many Kenyans have taken advantage of and tapped into, especially in acquiring decent and affordable homes,” said Mr Patrick Bucha, housing secretary at the State department of housing, urban development and public works.

In a statement read by Mr Bucha, Housing Principal Secretary Charles Hinga Mwaura noted that the ministry has recognised the contribution of the cooperative movement in Kenya towards the attainment of affordable housing, which has gone a long way to uplift the living standards of Kenyans, particularly through the provision of decent housing. “The government is aware of the huge potential that housing cooperatives hold in delivery of affordable housing in the Big Four agenda," he said.

"The strength of cooperatives in the provision of housing has been derived from their ownership of vast parcels of land, and a huge financial asset base through shareholding of their members...” read part of the statement. “It is for this reason that the Kenya Vision 2030 blue-print envisaged that cooperatives had the capacity of contributing 25 per cent of household stocks in urban areas in Kenya,” said Mr Bucha.

He added that there was a need for other housing cooperatives in Kenya to emulate Urithi. “The government alone cannot meet the demand for affordable housing in the country as it is a big project that requires multi-pronged strategies and partnerships to be achieved. Cooperatives have been considered as a very key partner in the Big Four agenda programme of delivering 500,000 affordable and social housing units,” added Mr Bucha.

In the statement, the PS reiterated that the ministry is working in partnership with county governments, financial institutions, private developers, manufacturers of building materials and cooperatives to facilitate provision of affordable housing.

“The ministry has also developed a housing delivery model and a financing framework, coordinated by a programme implementation unit, which comprises relevant government departments, agencies and stakeholders…” the statement read. “Through this programme, we envisage development by private sector in design, construction and finance, while the government provides serviced land and uptake guarantee,” said Mr Bucha.

The interior of a house at Urithi Housing Cooperative Society's Plainsview Estate in Juja in this photo taken on July 10, 2018. PHOTO | ANTHONY OMUYA

The interior of a house at Urithi Housing Cooperative Society's Plainsview Estate in Juja in this photo taken on July 10, 2018. PHOTO | ANTHONY OMUYA

PROJECT FINANCING

On financing, Mr Bucha said the government had established the Kenya Mortgage Refinancing Company, which will provide medium- and long-term liquidity to mortgage lenders.

“We are also establishing the National Housing Development Fund, which will provide a housing aggregator and take-off, with an online housing demand portal to mitigate developer risk, which would significantly boost the supply of housing units in scale and lower developer financing cost,” he said. In the past few months, stakeholders in real estate have been poking holes into the government’s affordable housing project for its inability to provide clear guidelines on how the project will be refinanced.

In May, the government met with housing cooperative officials and developers, who shared the challenges they face in the delivery of affordable housing. They include lack of infrastructure and services, delay in issuance of sub-leases and titling, lengthy approval processes, poor uptake of completed housing units due to low income levels of members and limited access to housing finance. “We are already putting together a mechanism to address these challenges, and working together with all government departments and agencies,” said Mr Bucha.

The ministry has been inviting construction companies, organisations and individuals to share and showcase innovative and effective construction techniques and materials, as well as conducting integrated urban planning and development surveys, and supporting urban areas through the Kenya Urban Support Programme.

The ministry is also mapping areas for installation of infrastructure and services for housing development, and review and harmonisation of legislation, statutes, and policies relating to land registration, housing and urban development.

“But key to the delivery of affordable housing is the identification of land for housing development and fast tracking of titling and registration; mobilisation of finances and identification of financial models for affordable housing,” added Mr Bucha.

To ensure sustainability of affordable housing in the Big For development agenda, the government will continue to engage with cooperatives to ensure that they realise their full potential, noted the PS.

“In this regard, the ministry is currently doing an inventory of the recent and ongoing affordable housing projects being undertaken by the cooperative movements. This will help to map out respective project requirements that will give way to engaging other State departments in the provision of physical and social infrastructure,” he explained.

The 500,000 units are divided into slum upgrading and social development. The World Bank has already signed an agreement with the ministry to provide credit to banks to finance the mortgages.

The National Housing Corporation will offer a tenant purchase scheme once it’s restructured. The private sector will construct the housing units while the government provides incentives such as reduction of corporate tax.

“The government will give both financial and non-financial support to the private sector. The World Bank will give mortgages at 0.75 per cent while the Kenya Mortgage Refinancing Company will give banks guarantee to offer affordable mortgages to Kenyans to own homes build by the private sector,” Mr Bucha said.

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