Inside Uhuru's million houses dream

Pipeline Estate,Nairobi in this picture filed on Monday,June ,2014. Poor estate planning has led to higher population rate in Eastlands area and blockage of sewer system and shortage of domestic water. (PHOTOS:COLLINS KWEYU)

NAIROBI, KENYA: The government named affordable housing as one of its key priorities in a four-point agenda. According to statistics from the Ministry of Transport and Infrastructure, the housing shortage in the country stands at 1.85 million houses, with annual shortage of more than 200,000 units.

“Under my Big Four plan, for the same amount of money you pay today as rent, you will be able to own your home, and it will be a decent house, built to modern standards,” President Uhuru Kenyatta said during his swearing-in for a second term on November 28, 2017.

But the question is: Is this achievable in the current housing market?

According to Francis Kamande, the chairman of the National Cooperative Housing Union (Nachu), the government initiated a mortgage plan for civil servants, which involved giving a relief to those who qualified.

This encouraged civil servants to own houses back then. It was successful although it was only limited to those in the civil service. It led to the emergence of popular estates like Umoja.

Kamande says the new plan can be realised if proper measures are put in place.

“It is possible for the project to succeed. What can halt the project is the money that is required. This means that the government needs to partner with private developers to make it a success,” Kamande says.

Transport and infrastructure Macharia Kamau said recently that the government is putting in place several incentives, including ensuring the cost of mortgages and construction materials is reduced and making it a priority to use innovative technologies and materials.

But Kamande says mortgage will only benefit a few individuals in the upper-middle-class, whereas the plan is targeting the lower-middle-class. By December 2016, for instance, there were only about 24,000 mortgage holders in the country.

“The rate of mortgage uptake is very low in Kenya, with the average mortgage size being about Sh8 million,” says Kamande.

He adds: “I am aware the government will use the new innovative building technologies in some of these projects. They need to educate Kenyans on these new technologies to make them feel at ease with them since many are used to the traditional brick and mortar technologies.”

Kimotho Kimani, Heri Homes CEO, is of a different opinion. Although he supports the idea, he says care should be taken so that it does not end up being a pipe-dream.

“We laud the Kenyan government’s plan for affordable housing. However, as currently proposed, the plan has low chances of success,” says Kimani.

Kimani says that the capping of interest rate might give the project a false start. He says that banks have tightened lending rules, which is locking out most Kenyans from affording mortgages. The high cost of land might also hinder the project.

“Developers are normally forced to put up infrastructure and later pass the cost to the buyer. The government ought to lay this infrastructure first before even starting the project,” he says. However, the government has already indicated in its plan that it will lay important infrastructure for the project and also partner with the private sector to make the plan work.

Daniel Ojijo, the executive chairman of Homes Universal, says that the plan by the government to partner with local developers would make the project succeed.

He says that private developers would offer their expertise, logistical input and also lay out frameworks required in the project.

“Local developers can work very well with the government to ensure the success of the project since they have the expertise in this field,” says Ojijo.

He says the government should guarantee private developers loans from foreign financiers like International Monetary Fund.

Ojijo says that apart from the fact that the success of this kind of plan will speed the millennial goal of ensuring all citizens afford houses, it will propel the economy to greater heights.    

According to CS Macharia, the government has already identified and shortlisted 35 firms for the soon-to-be launched prototype project of the construction of 8,000 low-cost houses in Mavoko, Machakos County, which is part of the one-million homes project.

“Nobody has Sh2.6 trillion in his pocket but there is money in this market. The idea is to leverage on the private sector to construct affordable houses,” said Macharia.