Kenya needs to have more 2 million low-income homes to be able to realise economic growth, an April 2017 report by World Bank reveals.
The report which is titled ‘The Kenya Economic Update: Housing—Unavailable and Unaffordable’ explains how an increase in low-income earning homes will lead to the relative increase in economic growth.
In 2016, the country’s economic growth stood at 5.9%. This represented an increase of 0.03% from the previous year’s figure. Nonetheless, the report adds that Kenya’s economy lags behind when compared to other peers within the East African Community region.
The report which is also known as the Kenya Economic Update ties this economic surge to various situations in the market.
“Unlike oil exporting countries whose economies have been battered by the slump in commodity prices such as Nigeria and Angola, Kenya, being an oil importer, benefited from the slump in oil prices, particularly in the first half of 2016, and this provided further impetus to the Kenyan economy,” reads part of the report.
But even as 2016 came with a fortune in form of economic resurgence, there are indications that 2017 may be the worse year in economic performance. Being that there is the August 8 General Election, the report notes that a decline will be inevitable.
It indicates that the GDP may fall below the 5.8% mark this year, and this may lead to other detrimental impact to the employment sector.
Housing has been touted as one of the most important sectors that could spur economic growth. To solve this problem, the World Bank report states that Kenyan government could use a more dynamic approach to solve the problem.
“The Government of Kenya could rely on the private sector to provide financing for affordable housing, with government actively supporting the sector by creating the right environment for lenders and developers, improving access to land, providing basic infrastructure, and improving the efficiency of accelerating mortgage registration and title transfers,” the report states.
Proper housing out of reach
According to a study done by the Kenya National Housing Service in 2013, Kenya has over 5 million households with an average of over 4 people per house.
81% of the home owners are in the urban centres while 18% are in the rural areas. The report further notes that 80% of the renters reside in the urban areas with only 20% in the rural areas.
With the approximation that over 65% of urban dwellers are unable to achieve proper housing, it appears that over 26M people are living in improper housing conditions.
The 2013 report from the Ministry of Land, Housing and Urban Development also reveals that only those who stay in urban centres are able to afford proper saving at Kshs 3,000 a month.
The rural dwellers who comprise the majority of Kenyan population can only save Kshs 1,500 in a month. It is a finding that paints the picture of an economy where majority of the people lack disposable income, and cannot afford full basket of shopping.
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Kenya Economic Update cites investment in housing as a solution that Kenya government can rely on to multiply the number of low and middle income homes.
According to the KEU report, home owners get economic leverages such as generating income, living in healthy environment and becoming self-reliant, all of which positively impact on economy.
It further adds that when the country has proper focus on the housing sector, construction will boost the jua kali sector by creating more job opportunities.