Affordable housing plan: Will President Ruto deliver this ambitious plan?

As he embarks on the arduous journey of streamlining a country he claims long veered off the set trajectory, President William Ruto will be tasked with ensuring that millions of Kenyans in dire need of decent and affordable housing can finally live their dreams.

Dr Ruto was part of a Jubilee administration that sought to deliver 500,000 affordable houses by the end of its reign in 2022. Affordable housing was one of the key pillars of the infamous Big 4 agenda, which was launched by President Uhuru Kenyatta in 2017.

But the dream - which included a promise to audit 6,000 buildings per year to ensure their safety and security - proved a little too ambitious.

This year, government spokesperson Cyrus Oguna said that the government had delivered 250,000 affordable houses, "with another 650,000 in the pipeline, way more than the 500,000 promised by Jubilee administration".

Other sources indicated that the housing units that were complete were in the region of 10,000, with hundreds of thousands more "registered at the National Construction Authority (NCA)" and others receiving approval and being in "various stages of implementation".

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It was not a surprise, therefore, that in Dr Ruto's manifesto, The Kenya Kwanza Plan: The Bottom Up Economic Transformation Agenda 2022-2027, affordable housing was discussed, with a plan to jump over the hurdles that have slowed down implementation in the past five years, including a mouth-watering budget for the same.

With Nairobi, the capital city of Kenya, hosting well over 4.4 million people, and the rest of the country growing at a high rate, the need for housing is certainly a priority for this government, and for governments after this.

Interpolations show that the population of the country has crossed the 55 million mark in 2022, with Worldometer indicating that the country is home to 56.5 million, a rise of eight million in the three years since the last census in 2019. In 2009, the population was 38.6 million and in 1999, 28.7 million.

"The requirement for new urban housing is estimated at 250,000 units a year, against a production of 50,000 units, translating to a deficit of 200,000 units," the Kenya Kwanza manifesto reads. "The cumulative deficit is estimated at two million units. As a result, more than 60 per cent of urban Kenyans live in slums and other low-quality housing without adequate sanitation, undermining their dignity and exposing them to health hazards. This is also a reflection of the bias towards upper-income housing."

Jua kali industry

Elimination of these problems, faced mostly in high-density settlements and which are prevalent in Nairobi and other cities in the country, will take a concerted effort, one of which, notes the manifesto, is strengthening the jua kali industry's capacity to produce high-quality construction materials. This will not only provide easy access to materials that will support construction but also support gainful employment.

Richard Muteti, the chief executive of Kenya National Federation of Jua Kali Associations (KNFJKA), says that the sector has been tried, tested and proven.

"We have been lobbying hard for jua kali involvement in these government projects. The jua kali was given an opportunity where three of our associations- from Kamukunji, Ngong Road and Kariobangi - as a consortium were contracted for the affordable units erected in Ngara, and they delivered," he says. These jua kali associations made windows and doors for an affordable housing project, which Muteti says they used as a pilot project to test the capacity of the industry, and it was satisfactory.

At the height of the Covid-19 pandemic, some other Jua Kali artisans were contracted to fabricate school desks, which were meant to provide for social distances in classrooms, a process that was largely bungled. Muteti says that the government's plan to heavily involve Jua Kali will "empower people at the bottom of the pyramid", with the country having "many skilled artisans" and such an initiative being "a win-win situation".

The new government will also be tasked with fulfilling one of its promises in the housing agenda, that of ensuring that mortgage uptake multiplies more than 30-fold, as listed in their manifesto.

The manifesto indicates the government's commitment to "grow the number of mortgages from 30,000 to 1,000,000 by enabling low-cost mortgages of Sh10,000 and below".

Clive Ndege, the head of sales at real estate company Superior Homes, says that the government will need to allocate "a considerable amount of resources" towards the construction of more affordable units, a move which will push down mortgage interest rates.

"You do not have many people making incomes that can help them afford a mortgage as it is. You also realise that a lot of projects are very near the city and are expensive to execute, and this means that they are also out of the reach of many earners," he says.

"If more of these come up in satellite towns, where the government can get land cheaply, then the rates might be within reach of more people."

Ndege says that the rates, often oscillating around 12 per cent, are discouraging to many, and only about 20 per cent of home buyers at Superior Homes use the mortgage plan, with a good percentage of those working in banks where they are assured of better rates.

"With these rates, one could find themselves paying twice the value of the property they are purchasing," he says.

President Ruto's government plans to "increase the supply of new housing to 250,000 per annum and percentage of affordable housing supply from two per cent to 50 per cent".

"We will achieve this by structuring affordable long-term housing finance schemes, including a National Housing Fund and Cooperative Social Housing Schemes, that will guarantee off take of houses from developers," the manifesto indicates.

It recognises that the government should should "give developers incentives to build more affordable housing".

Economist Ken Gichinga says that the government does not need to be involved in the industry in the brick-and-mortar version that was previously envisaged.

Enabling environment

"The government just needs to create an enabling environment and let investors participate. We need to ask ourselves: What is the policy landscape that can attract investors?"

Gichinga says that the biggest impediment to the development of affordable housing is the difficulty in the acquisition of land due to the high cost of the same. This, he says, is driven up mainly by speculation. Intervention by the government to bring down the cost of land could salvage the affordable housing plan.

Mr Gichinga also says that commercial banks struggle to finance mortgages due to barriers such as slow processes of land transactions. "Government's investment in digitisation of land records to fasten processes will make it easier for lenders and borrowers," he says.

The government also committed, in the manifesto, to establish "a settlement fund similar to the one that was used to acquire land from settler farmers after independence".

"To stop land fragmentation, the land purchased by the scheme will be subject to land use planning where beneficiaries will own transferable residential plots in the planned settlement, and right to lease non-transferable agricultural land," it said.

In the five-year term, Sh250 billion will be set aside for this, of which the budget commitment is Sh50 billion, with Sh200 billion to be financed by pension funds.

"Assets Under Management (AUM) currently stand at Sh1.5 trillion and other collective investment schemes, including diaspora bonds," the Kenya Kwanza manifesto indicates.