Could this be the answer to housing shortage?

If the Ministry of Housing is to be believed, Kenya needs to build 200,000 new homes every year just to meet demand, yet only 35,000 are constructed annually.

This means that at current rates, there will likely be a major housing crisis in urban areas in the next decade, based on population growth and rural-urban migration trends.

The ministry has said it needs Sh10 billion to build low-cost units each year. National Housing Corporation (NHC), the implementing agency of the ministry’s housing programme, has been on a building spree over the last five years, not just in Nairobi, but other urban centres across the country.

Its work has been in addition to other projects by the private sector, yet the country is nowhere close to realising its target, and by 2030, when Kenya’s blueprint for social and economic growth hits its sell-by date, policy analysts will still be groping for answers on how to stem the tide.

The Treasury has stood in the way of NHC listing an infrastructure bond in the past, because of concerns over its capacity to efficiently manage the huge outlays of cash that would ensue, given the still doubtful nature of its books.

But rather than appealing for cash, the corporation would do well to look at how it puts up its buildings in the first place. Last week in China, a 15-storey hotel was built in just six days.

That story was one of the most read on the Internet, and even resulted in some top industry analysts pointing out that there must be something the rest of the world is not doing right, to speed up construction of much-needed, yet safe, housing and office space.

Pre-fabricated

The trick used by the architects and engineers who designed and built the hotel was so simple, it made a laughing stock of traditional approaches to constructing tall buildings: they opted to make the entire structure of pre-fabricated parts built elsewhere, then transported to the site and assembled.

In Kenya, the biggest housing shortage is in the low-income segment in urban areas where only 6,000 units are built each year. In Nairobi alone, two million need modern, decent and affordable housing. This is equal to 400,000 households.

So far, the private sector has focused on building homes for the middle and upper income segments of the real estate market, for the simple reason that getting financing is easier, because these groups have better access to disposable income than the lower segment.

Banks are flush with cash, but are not willing to invest in low income housing, despite making obscene profits. How can this be changed?

There is a way out.

The NHC is in a prime position to set standards for the housing sector in terms of lowering the costs of building homes, but has never done so. Instead it has tried to compete with giants like Housing Finance, using almost similar models.

It is about time that its board seriously considered the option of the parastatal constructing residential buildings at lower cost, using cheaper technology that is not as labour intensive as is the case today, and thus requires less large equipment on site.

This is especially so since the trend is to build high-rise units rather than single, semi-detached ones as land becomes scarce and more expensive. The challenge is to build at a faster pace, using less money, yet creating structures that are safe enough to meet international standards. With just 16 per cent of Kenyans owning their homes, the need for speed becomes even more apparent.

Tight-fisted banks

The ministry should commission a review of laws on building materials and others that could be barriers to adoption of lower cost housing technology.

The beauty of this is that with every successful venture, the private sector will be more willing to look beyond Kenya’s borders for financing to invest in low income housing, with a ripple effect on local tight-fisted banks who would rather sit on their piles of cash and charge exorbitant interest rates on loans.

China has already proved it is the world’s leader in construction. Most major road projects in the country, and many of the new estates coming up in the city, are being built by the Chinese.

Strengthening this partnership would, therefore, hold great benefits in terms of technology transfer and more jobs created, as the faster turnover rate in new housing would require more hands on board.