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What could hold back President Uhuru's legacy

By Leonard Khafafa | Published Wed, July 4th 2018 at 00:00, Updated July 3rd 2018 at 22:33 GMT +3
President Uhuru Kenyatta meets students moments after the official opening of the Kenya-US Trade Conference at the United Nation Complex at Gigiri, Nairobi. [Standard]

Those fortunate enough to have met President Uhuru Kenyatta talk of the man’s sunny disposition. His charm cuts through like a burst of light dispelling the gloom of an unlit room. But others who have had a closer, personal interaction tell of how that light can be switched off to the detriment of any harbinger of ill tidings. Which is probably the reason no one seems keen on telling the president that one of the four defining pillars of his second term may be headed for a still-birth.

Affordable housing is one of the Big Four. This, perhaps more than the other three, has the potential effect of being the most visible, if correctly implemented. Conversely, it can contribute to the ignominy and trust deficit that the government currently suffers.

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The anatomy of failure in affordable housing can be described in four concentric rings. The first of these is the sheer cost of projects. According to sources, the Government intends to build 500,000 homes of 50 square metres each and at Sh25, 000 a square metre. Pundits say that for a basic house, Sh50, 000 per square metre is needed. The Government’s estimates are only workable where land is cheap, expansive and where developers intend to build bungalows.

Deep foundations

This has worked well in sprawling cities like Johannesburg, South Africa. But in Kenya where urban land is increasingly scarce, only high-rise apartments are economically feasible.

But these require deep foundations, lots of steel and cement for the slabs of each floor and extensive electrical installations for the elevators needed. After plumbing, it becomes obvious that Sh25, 000 per square metre is woefully inadequate.

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The second ring is that of not-so-well thought out government policies. For instance, there is a proposal to create a housing fund by taxation of 1 per cent to be shared by employer and employee. There is resistance from both.

Citizens already feel overburdened by a heavy taxation regime. Federation of Kenya Employers (FKE) chairman Mark Obuya puts it succinctly when he says, “the proposed changes increase labour costs for employers and the cost of living for employees without any guaranteed benefits to them.”

Then there is the Kenya Mortgage Refinance Company (KMRC) incorporated in April 2018 and the National Housing Development Fund (NHDF) touted as the bulk housing aggregator and off-taker. All these agencies create an unwieldy vehicle with blurred lines surrounding where their functions start and end.

The third ring is that of uptake. The promise of home ownership is inflated. This is how. Affordability presupposes that the houses are intended for those in the lower echelons of society. For these, social housing is imperative. But looking at the government’s proposal, only a fifth of the intended houses are for distribution through social programs. The rest are by commercial arrangements. And therein lies the rub. Assuming the houses are constructed at Sh50,000 per square metre for 50 square metre units, each unit should then cost Sh2.5 million.

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Omnipresent soundtrack

A 15-year mortgage at a rate of 14 per cent means the monthly repayments would be Sh33, 000. That would be a third of the income of one earning Sh100, 000.

The problem is that the cost of living in Kenya is inordinately high. Typically, Kenyans spend more than two-thirds of their income on food alone. The rest is shared between transport costs and school fees for families with kids. It becomes difficult to see how uptake of mortgages is guaranteed without affecting the cost of living.

The last ring is that of corruption. The last couple of months have seen the corruption song become an omnipresent soundtrack. The government lacks an acute sense of its vulnerability in the face of an atrophied moral compass. Every mega project presents the opportunity for looting by public officials. Unless the scourge is dealt with decisively, it is probable that the funding for affordable housing will not be put to the use it is intended.

Conflated with corruption are the proxy wars being fought by supporters of the leading lights of the ruling Jubilee Party. Continued public spats can only fuel the groundswell that may bring the tenure of the present government to a premature end; and with it, the affordable housing project.

President Uhuru has good intentions for Kenya. But as the adage goes, “the road to hell is paved with good intentions.” Green Arawa, an Israeli company that has been frustrated in its dealings in Kenya, gives an apt summary to what the president must contend with when they say, “corruption, bureaucracy, politics and vested interests stand in the way.”

Mr Khafafa is the Vice Chairman, Kenya-Turkey Business Council.

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