Graft fight key in achieving housing dream
What you need to know:
An estimated one third of our state budget is lost to corruption every year.
That is around 600 billion shillings each year, almost the total sum needed to fund 500,000 affordable houses!
Among the plethora of challenges Kenya faces, the lack of affordable housing is one of the most pressing. A 2017 World Bank report showed there is currently a housing deficit of more than two million units, with nearly 61 per cent of urban households living in slums. This challenge is becoming ever more acute, with around 500,000 new city dwellers each year requiring somewhere to live. However, as things stand, less than 50,000 units are built each year.
That is why, of all the excitement surrounding President Uhuru Kenyatta’s announcement of his Big Four Agenda, it was his pledge on housing that was the most eye catching. In promising to construct 500,000 affordable homes by 2022, Uhuru committed to more than double the current pace of building houses, which would amount to the biggest step towards remedying this long-standing challenge in recent memory.
SH750 BILLION
Significant steps have already been taken towards this end, with seven key housing projects due to be launched in Nairobi. Additionally, the government has also signed into law a Bill creating a 15 per cent tax relief for Kenyans buying houses under the Affordable Housing Scheme, while exempting first time buyers from stamp duty.
Of course, as with any major policy, the biggest challenge is funding. Government has assigned an initial Sh6.5 billion towards affordable housing, but developers have estimated that it will cost around Sh750 billion to meet the government’s goal.
The plan is to have the remainder of the funding come from the private sector through public-private partnerships. The hosting of the second Kenyan National Construction Week in Nairobi in November is also expected to attract the attention of global low-cost housing developers.
FOREIGN INVESTORS
The impacts of these policies are already being felt. Financial Times, one of the most important investor publications in the world, reported positively on the new conducive atmosphere for foreign investors in the housing market.
They cited the example of a $57 million project to construct a block to house 10,000 students at Kenyatta University, planned by an American investment house, which had been stalled for the past three years by bureaucracy. “But after Mr Kenyatta said the focus of his second term would be universal healthcare, food security, manufacturing and affordable housing, everything changed … [and] barriers were swept away,” the paper wrote. The project is now expected to be finished by 2020.
The ongoing war on graft will also benefit housing. Over the past six months, Kenya has seen unprecedented action against graft at a previously unseen intensity and pace. Senior figures have been arrested, including big names.
DEVELOPMENT
This has been supplemented by an effort to repatriate stolen funds, with a deal with Switzerland, the UK and Jersey already signed, and another with Mauritius reportedly under consideration.
The importance of these measures can only be truly understood when one considers that an estimated one third of our state budget is lost to corruption every year. That is around 600 billion shillings each year, almost the total sum needed to fund 500,000 affordable houses!
Of course, this is far from straightforward as the money returned won’t all go towards new housing. Still, the graft war’s contribution to development cannot be gainsaid.
Ms Kaparo comments on governance issues.
