State should plan better on housing agenda

President Uhuru's big four agenda focuses on manufacturing, health care, housing and food security as his legacy projects. [File, Standard]
The government’s Big four Agenda has been, for some time now, subjected to scrutiny by pundits. However, the agenda on affordable housing should be applauded. In my previous article on affordable low cost housing, I held the view that to bridge the housing deficit, we needed government leading role to drive the industry stakeholders. Setting this as one of the key agenda for this government will steer the industry attention towards realisation of this elusive deficit. While this move by the government is plausible, I remain skeptic on whether the target of 500,000 housing units, if realised in the next five years, will bridge the housing deficit gap. 

The Kenyan annual housing deficit according to statistics is at 200,000 units against an annual supply of 50,000 units. The World Bank housing report released in April 2017, dubbed Housing; Unaffordable and Unavailable, estimates that there are accumulated housing deficit of two million units, and nearly 61 per cent of urban households live in slums. This is aggravated by an urbanisation rate of 4.4 per cent equivalent of 500,000 thousand new city dwellers every year. Considering this, and everything remaining constant, there will be about one million housing deficit and about 2.5 million new city dwellers in the next five years. Juxtapose this against the government target of 500,000 units in five years. While for sure this government initiative will halve the annual housing deficit, it may not address the need of new city dwellers. This is one of my greatest concerns.

According to World Bank housing report April 2017, our first medium term plan (MTP 1, 2009 2012), of Vision 2030 strategy, seemed more realistic in addressing this gap. It had an initial target of providing 200,000 housing units annually for all income levels by 2012. Though it fell way short of this projection (only 3,000 units were provided between 2009 and 2012), I was optimistic that the government would focus on realising this initial plan if not better it. Was this target unrealistic? I disagree, it was achievable and the solution is not to now lower the target when all the variables of population and urbanisation growth rate are on the rise. In fact we will be deviating from Vision 2030 strategy.

Wide deficit

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As we ponder on the wide housing deficit gap that we may face in five years’ time, it is also plausible that even the 500,000 units targeted may not be realised if certain key deliverable are not addressed. First MTP 1, 2009-2012, failure must be classroom for all stakeholders to sit in. The country cannot afford another failure of that level in the next coming years. The government move to establish the Kenya Mortgage Refinancing company and also set up the National Housing Development Fund is indeed a step towards progress, however, it is also time the capping of interest is reviewed to supplement this effort. It is obvious that the strict restrictions that banks adopted since interest capping have impeded access to loans especially to buyers of low cost market tier. We should have a conversation on the cost of construction. How come imported cement from China is cheaper than local cement? The question around high land prices and taxation in major towns is a riddle we must find its answer. In a project feasibility to determine a house sale price, there are various contributing cost components, we must address the major cost contributors. Otherwise even a PPP arrangement would yield a more or less similar result. 

If it was on me, I would, on the very least, revise the government housing target to align with the first MTP 1 target of 200,000 units annually hence sticking to the Vision 2030 strategy. That notwithstanding, the government still has a Herculean task to realise even the 500,000 units. The National Housing Corporation must be restructured since as principal agency tasked with increasing formal supply of affordable housing, not much has been achieved. We must remain hopeful but also realistic.

- The writer is a project manager and Chairman of Association of Construction Managers of Kenya

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