Sh143b budget plan in Ruto's make or break affordable housing goal

Bondeni affordable housing project in Nakuru . [File, Standard]

If President William Ruto’s plan for affordable housing were to happen as envisioned in the Kenya Kwanza manifesto, then there would be one million new homeowners by the close of this financial year.

His plan was well thought out – increase the supply of new housing to 250,000 annually and put in place strategies to ensure half of the units released into the market are within the affordable housing range.

“We will achieve this by structuring affordable long-term housing finance schemes, including a National Housing Fund and Cooperative Social Housing Schemes, which will guarantee the offtake of houses from developers,” his manifesto reads in part.

The plan also involved growing mortgages from 30,000 to one million. This was to be done by enabling low-cost mortgages of Sh10,000 and below.

He also pronounced himself on incentives to developers to enable them to build more affordable units.

From National Treasury Cabinet Secretary John Mbadi’s budget speech, however, these targets are far from being achievable, and may not be tenable even by the time the 2026/27 financial year comes to a close.

This is despite the introduction of the housing levy at 1.5 per cent of the gross pay, which collects an average of Sh100 billion annually. This money is meant to crowd in private sector involvement and provide a surety to developers that they will be paid.

In the 2026/27 budget, the Affordable Housing Programme (AHP), one of President Ruto’s flagship projects under the Bottom-up Economic Transformation Agenda, received an additional Sh8 billion in the latest budget numbers.

National Treasury CS allocated Sh143.7 billion to support President Ruto’s housing agenda for the 2026/27 financial year. The allocation is for the housing, urban development and public works sub-sectors.

In earlier estimates as contained in the report on the estimates of revenue and expenditure for 2026/27 and medium term, the housing and urban development sector had been allocated Sh135.8 billion. Of this amount, Sh50 billion was to go to the construction of affordable housing units.

However, of the Sh143.7 billion allocated on Thursday by the CS, Sh50.6 billion will go towards the construction of affordable housing units, while Sh20.9 billion will be used to put up social housing units.

Some Sh20.2 billion will go towards institutional housing, and Sh18.2 billion will be invested in critical social and physical infrastructure.

A further Sh2.7 billion has been allocated for the Kenya Informal Settlement Improvement Project Phase II, and Sh535 million is targeted to support the construction of county headquarters.

“These investments will improve living conditions, provision of services and local governance capacity,” he said.

Even with the introduction of the 1.5 per cent housing levy, one narrative that comes up whenever government officials discuss the provision of affordable housing is how underfunded the programme is.

A few months ago, Principal Secretary in the State Department for Housing and Urban Development Charles Hinga, disclosed how the programme needs Sh400 billion annually to provide the needed 200,000 units.

Nevertheless, in the Kenya Kwanza manifesto, President Ruto seemed aware of how difficult providing the necessary housing units is, considering the moving target of two million units.

The Kenya Kwanza manifesto notes that as a result of the cumulative deficit of two million units, more than 60 per cent of urban Kenyans are living in slums and other low-quality housing without adequate sanitation.

This undermines their dignity and exposes them to health hazards.

The manifesto also noted a bias by developers towards upper-income housing. “Of the 50,000 units being produced, only two per cent or 1000 units are classified as affordable housing,” it says.

“Moreover, our rapid urbanisation rate at 4.4 per cent, equivalent to 500,000 new city dwellers a year, means that the housing supply is a moving target.”

CS Mbadi said the government has accelerated implementation of the Affordable Housing Programme to address Kenya's housing deficit, create jobs, stimulate local manufacturing, support micro, small and medium enterprises, strengthen county economies, and improve the quality of life for millions of Kenyans.

He detailed how a total of 277,281 housing units have been completed, or are under implementation nationwide as of May 2026.

He claimed that the programme has also successfully aggregated demand through the Boma Yangu platform, where more than one million Kenyans have registered their interest in home-ownership.

This, he argued, demonstrates both the scale of housing demand and growing public confidence in the government's housing agenda.

The CS noted how the government has packaged 177,686 student beds for development across universities, to improve living conditions for students and support the expansion of higher education.

This is as 22,512 institutional housing units are under construction for disciplined forces, teachers, healthcare workers, and other public servants.

Mbadi said decent housing underpins social stability and economic productivity, arguing that Kenya Kwanza’s AHP not only provides safe and affordable homes to Kenyans but also generates jobs directly in construction and indirectly across building materials and services sectors.

“The programme has created over 640,442 jobs across the housing value chain through construction activities, professional services, manufacturing, logistics, and supporting industries,” he said.

Also, under the modern markets programme, a total of 476 markets have been packaged for development nationwide, with 354 already under implementation.

“This will provide dignified trading spaces and support entrepreneurship,” he said.