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Why Uhuru failed to deliver 500,000 affordable housing units

Real Estate
 Bondeni Affordable Housing Project in Nakuru on February 13, 2023. [Kipsang Joseph, Standard]

When retired president Uhuru Kenyatta was re-elected in 2017, he had an ambitious plan to have nearly every Kenyan have access to affordable shelter under the Big Four agenda.

However, a new report has detailed some of the mishaps that saw Uhuru’s regime fail to deliver the 500,000 affordable housing units

If not rectified, the report notes, these mishaps will also affect the delivery of the same goal by the current William Ruto-led administration. Affordable housing was introduced during retired President Kenyatta’s second term with President Ruto as his deputy.

According to the recently released Status of the Built Report 2022 by the Architectural Association of Kenya (AAK), during the five-year period, the former administration was able to achieve just 13,352 units.

This figure is pulled out of a 2022 State of Housing Report by the Economic and Social Rights Centre - Haki Jamii. It is noted in the report that it is not the first time the government has initiated such an ambitious plan for housing.

There was such in the first medium term (2009-2012) of the Kenya Vision 2030 of increasing housing production from 35,000 units to 200,000 units annually for all income levels. “Yet, according to the 2017 World Bank Economic Update, the government delivered only 3,000 housing units in that period,” the report reads.

AAK however notes that Covid-19 played a significant role as more funds were directed towards the health sector.

Nevertheless, the report says, there are lessons that the Kenya Kwanza administration can borrow to make their goal of providing 250,000 units – a figure that has since been downgraded to 200,000 – annually.

One reason why the previous administration could not deliver the 500,000 units originated from the procurement process which the report says locked out local firms. “The one-phased procurement structure applied (i.e design-finance-build) locked out locals from tendering due to the lack of financial muscle,” the report reads.

Being a capital-intensive project, the report says bidders had to partner with developers or financiers who in most instances already had international consultants on their teams thus the consultancy element gets overshadowed by the return on investment.

“As a result, the quality of the design was compromised,” the report says. “A multi-phased structure should be broken into professional consultancy services (these can be pre-qualified beforehand and ensure local consultants take the lead of the process), financier, developer, and contractor.”

When these elements are clearly separated, the government will ensure better accountability as consultants are able to supervise construction quality and cost control independently from the contractor.

The other reason why this did not work out in the previous administration is linked to the failure to provide holistic housing. This should be done while complimenting the surrounding neighbourhood.

“A case in point is the design of the Park Road project, which had a mismatch in the provision of utilities provided against the population expected to be served,” the report says.

Additionally, the report says, there should be a comprehensive land-use plan incorporating both social and physical infrastructure to guide the provision of mass housing.

“Urban regeneration programmes should be incorporated into such housing projects to prevent the new development from exerting pressure on the existing services. Likewise, leaving the provision of infrastructure such as sewerage and solid waste disposal to private entities is unsustainable and expensive to maintain,” the AAK report reads.

Capacity building

The association insists that impactful housing policy should be put in place to uphold the right of communities by conducting full disclosure, thorough enumeration, documentation and capacity building to ensure that the targeted communities are indeed the beneficiaries of the project.

Government agencies should also follow due processes in the implementation of public projects by implementing resettlement guidelines, including communicating the rationale for compensation.

“This will require appropriate grievance redress mechanisms to be in place to prevent conflicts and forceful evictions,” says the report.

However, undoing the failures of the previous administration is not the only task ahead of the Kenya Kwanza government’s goal to achieve 200,000 units annually.

First, the report indicates, there is an inadequate supply of affordable serviced land. “The soaring land prices, especially for serviced land, significantly affect housing affordability,” states the report. “Similarly, the lack of adequate infrastructure in most parts of the country forces developers to incur more costs, which are then transferred to the end buyer.”

This explains the reason why President Ruto has sought to work with counties, insisting that the devolved units must provide land where such projects can be put up.

So far, numbers shared by the President indicated that 39 counties out of the 47 have signed a memorandum of understanding with the National Government on this matter.

The report states that the cost of construction has been increasing over the years, reaching a record high in recent times. “The sharp increase in construction materials has greatly contributed to this, and the re-introduction of Environmental Impact Assessment and related levy will only make this worse,” says AAK.

It also notes how capital-intensive real estate development is and as such, it is important to seek alternative sources of capital.

As has been witnessed in the case of the current administration, President Ruto has tapped into the pension sector by not only engineering for more contributions through the National Social Security Fund (NSSF) - a statutory contribution but also rallying fund managers and pension administrators behind his dream of affordable housing.

This has reduced the country’s dependence on debt paid in US dollars.

In 2018, during former president Uhuru’s tenure, the government unveiled Kenya Mortgage Refinance Company (KMRC) which has been instrumental in increasing the availability and affordability of mortgages by offering fixed long-term loans under 10 per cent.

However, the report says, the exclusion of employees in the informal sector cuts off a large percentage of the population. The private sector as well must play a role in achieving this goal.

And the piece of their cake has to be guaranteed with an icing topping.

“The government should incentivise the private sector and create a suitable environment by developing a clear framework of returns and revenue sharing, removing regulatory hindrances, and improving the approval processes, which are marred with significant delays,” the report says.  

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