How Kenya can provide affordable housing for all

Public housing has a long history of failure in Africa. Be it in Luanda, Addis Ababa or in cities of South Africa and Cameroon, large-scale state housing programmes have been marred by the high cost of land, poor quality infrastructure and mediocre civic facilities. The common factor in all the cases has been the absence of political will to ensure sustainable development.

Kenya can avoid these and other related pitfalls and achieve an affordable housing programme if backed by policy and regulatory systems.

AFFORDABLE HOUSING

Technically, affordable homes are defined as “facilitating houses for rent or sale that are typically 20-40 per cent below market rates”. In Australia, the National Affordable Housing Summit Group defines affordable housing as, “reasonably adequate in standard and location for lower- or middle-income households and does not cost so much that a household is unlikely to be able to meet other basic needs on a sustainable basis”.

In the UK, it includes “social rented and intermediate housing, provided to eligible households whose needs are not met by the market”.

According to Treasury data, there has been a 38 per cent (Sh45.2 billion) drop in public spending in comparison to the last quarter of 2016. A November 29 memo issued by the Treasury Cabinet Secretary identifies four key priority areas that will be the cornerstone of Kenya’s development initiatives in the next five years. Known as the “Big Four” agenda, the issues of food security, affordable housing, inexpensive universal healthcare and manufacturing are to be favourably allocated state funds in abundance. Fiscal space was created for these segments in budgetary review meetings held post-elections even while revenues remained Sh29 billion below target.

Nevertheless, these well-intended initiatives need not be compromised as they are pivotal in unlocking Kenya’s productive capacity if undertaken diligently. 

The term rational behaviour in economics is defined as part of decision-making wherein an individual or a corporate exercises rational decrees that endow continuous benefit, be it monetary or non-monetary.

POLICIES

Housing has become the defining issue of our time since it is at the heart of the current world economic crisis. The provision of affordable housing characterises economic and political ingenuity. It is of greater political consequence than most other areas of government policies.

The government’s pledge to deliver half a million decent and affordable homes to working Kenyans by means of subsidy programmes that include credit facilities and adoption of cutting-edge innovative technologies and materials, is highly ambitious. These cost-effective measures are expected to foster production growth starting from increase in raw material output and decrease in manufacturing cost related to the real estate sector.

Real estate analysts suggest that a sustained decrease in construction costs can be registered with the facilitation of adequately planned support systems like sewers and quality road networks by the government.

The call for public capital investment in housing by the government rhymes well with the 2017 UN World Habitat theme “Housing Policies: Affordable Homes” that was celebrated on October 2, last year. “As we strive to create cities for all, an urgent action for achieving affordable homes requires a global commitment to effective and inclusive housing policies,” said Dr Joan Clos, Executive Director of the UN Human Settlements Programme in his address commemorating the day.

HOUSING SCHEMES

Ironically, despite the overwhelming demand, the provision of affordable housing continues to be at a historic low. Foreign investors like the US-based Milost Incorporated and India’s Tata Housing Development Company have subsequently seized opportunities in Kenya and have inked low and medium-cost housing construction agreements worth billions of shillings with local market players targeting the growing middle and lower-income segments of society.

The ripple effects of affordable housing are at par with building comparable market rate units. Research has shown that the supply of equitable housing tends to increase new consumer spending in moderate-income households which drives the circulation of capital inflow, generates new sources of local revenue, creates jobs and grows the economy.

A house within reach attracts and retains the skilled and semi-skilled labour force within fiscal parameters. However, to avoid the negative factors of exclusive low-income neighbourhoods such as poor quality infrastructure, mixed income housing would extensively help maintain the quality and aesthetics of low-budget housing. For example, the state-subsidised housing complex in Pormetxeta, Baracaldo, in the north of Spain that won first prize in a scheme design competition, is made of prefabricated concrete; its sharp angles and modern, two-toned colour scheme prevents it from resembling traditional public housing blocks.

While focusing on Kenya’s Vision 2030 growth initiatives, regulated social housing schemes along the nation’s mega infrastructural projects like the Northern and Lapsset corridors would help attain sustainable economic growth. The Herculean task at hand would certainly require joint efforts through private-public partnerships. Saccos, for instance, have tremendous potential to achieve house financing solutions.

Last year was economically challenging and politically exhaustive for Kenya – factors that have extensively affected Kenyans. This year is predicted to be the year of fiscal realignment and political reconciliation.

Qureish Raghib is senior partner at Equinox Communication