President Uhuru jumpstarts cheap housing project with Sh21b

President Uhuru Kenyatta during the signing of the Supplementary Budget at State House, Nairobi yesterday. [PSCU]

President Uhuru Kenyatta has given Sh21 billion to jump-start his affordable housing dream.

Among the first projects is the construction of 1,640 homes along Park Road in Nairobi, where the housing shortage is most severe.

Another project in Naivasha could start soon after the devolved government provides a site.

Ururu hopes to leave a legacy built on enabling low- and middle-income households acquire homes, besides universal access to healthcare, jobs and food security.

The President yesterday signed the Supplementary Appropriation Bill No. 2 of 2018 that listed revised spending plans, and whose other highlights were deep cuts for allocations for infrastructure and information technology (ICT).

“The allocations in the new law reflect a significant reduction from what was allocated in the last financial year, which is in line with the ongoing austerity measures aimed at cutting down Government expenditure,” read a statement from State House.

Uhuru’s approval means the housing funds, which are part of the Sh47 billion he gave consent to spend, can be accessed immediately.

Department of Housing

All eyes will now focus on the Department of Housing, which should build the cheap homes, albeit in a highly discriminatory programme that locks out the biggest contributors.

It is assumed that anyone earning a monthly salary exceeding Sh100,000 can afford a house at market prices, while their contributions equaling three per cent of their pay will be refunded after 15 years.

Housing Principal Secretary Charles Hinga gave the revenue projections at a round-table meeting with the private sector in a presentation that also indicated the starting prices for a studio apartment at Sh600,000.

The price of three-bedroom apartments has been capped at Sh3 million.

“These projects are intended to build investor confidence and create momentum for the programme,” said Mr Hinga.

It is expected that the project will require nearly Sh750 billion, some to be raised from borrowing to supplement the employer/employee contributions.

Other than the contributions, the National Housing Development Fund will also borrow money from other lenders, including commercial banks.

Kenyans will then purchase the homes through mortgages provided by the State-owned financier, Kenya Mortgage Refinancing Company.

In 2010, the demand for urban housing was estimated at around 80,000 units a year. It is projected to increase to nearly 300,000 units a year by 2050, according to Hinga.

Heavy budget cuts are expected on recurrent expenditures, including hospitality and travel in various ministries.

Cooking gas

Meanwhile, the subsidised cooking gas programme for poor households has been shelved, in one of the measures that has direct implications for citizens.

Sh1.5 billion for the Mwananchi Gas programme was chopped from the Department of Petroleum, as was Sh323 million for the presidency.

The cuts aside, MPs were successful in returning the Constituency Development Fund (CDF) under the Ministry of Devolution that had also been axed in the original spending reviews presented by the National Treasury.

The President was initially in agreement with Finance CS Henry Rotich about doing away with the CDF, which legislators rely on to initiate projects as the patrons.

But a compromise was reached after the MPs objected to several taxation proposals introduced to help raise funds to finance the country’s largest budget.