to deliver only 10,000 police housing units
but only managed to deliver 1,000 units
in five years before throwing in the towel.
The market has been delivering houses for
the last 100 years, why couldn’t government
simply use its policy instruments to fix
the challenges and create an enabling
environment for housing delivery by the
market?
Was There Any Good In
The Programme?
The government’s programme was quite
elaborate on supply side issues, e.g.
incentives to developers, bank guarantees
to developers, guarantee of buy back for
units not sold within five years, provision
of land to investors, tax waiver for
construction materials and tax holiday for
developers, etc. The mechanisms to reduce
costs for developers were quite elaborately
thought through.
The major short falling on the supply side
was failure to recognize that public private
partnerships (PPPs) had failed in Kenya
and there was need to revisit them as the
core delivery mechanism for the housing
within such limited timeframes.
The demand side was poorly conceived.
How do you contribute for a house and not
benefit? There was lack of clarity on who
Majority of the
current housing fi-
nance models being
applied in Kenya
aren’t responsive
to the prevailing
housing demand
and end user mar-
ket characteristics.
There is discon-
nect between the
financing mecha-
nisms promoted by
government and
the
homebuyers
economic realities.
62 MAL35/20 ISSUE
Majority of the Kenyans who are inad-
equately housed are not formally em-
ployed; their incomes are not regular. The
financing instruments proposed - home
ownership through regular mortgage con-
tributions - is therefore incongruent with
this group’s income structure.
the beneficiaries are. How were employers,
who were also expected to contribute to
the kitty, going to benefit? Payback was
only for individual and not employers.
Housing allocation was to be done
through a lottery system therefore not
prioritizing the segment of the population
in most need. The programme did not
attempt to address the Constitutional
Right to Housing, for example how will
the homeless and the poor who cannot
contribute benefit?
The funding mechanism, as indicated
earlier, was a major weakness. After it
was thrown out by the courts government
basically had no funding mechanism for
it’s housing, relying solely on the private
sector whose interests had plummeted
thanks to poor macro-economic and
housing sector performance.
Has The Programme
Delivered Anything?
The ambitious programme in the counties
has not taken off yet, more than two years
after it was launched. The only project to
take off and be completed was the Park
Road Ngara Project in Nairobi County by
the National Government.
The County of Nairobi had started the
Pangani project, which is stalled, despite
evictions from the site in 2019 to enable
developers take possession and start
construction. No projects have taken off
in other counties.
On the software side, the National
government has been able to establish
the Kenya Mortgage Refinance Company
(KMRC) in collaboration with the private
sector and with seed funding from the
World Bank.
Further, the national government has put
in place a number of financial incentives
for the private sector through the Finance
Act 2019. These efforts are yet to yield any
tangible results.
What Needs To Be Done?
Majority of the current housing finance
models being applied in Kenya aren’t
responsive to the prevailing housing
demand and end user market characteristics.
There is disconnect between the financing
mechanisms promoted by government
and the homebuyers economic realities.
Mortgage numbers have been stuck
between 20,000 and 26,000 for the last 10
years; with most homebuyers disqualified
on the basis of their pay. With only 76,000
people in the country earning above Kshs
100,000, and average mortgages of Kshs
10 million, the current mortgage market is
almost exhausted. We wait to see whether
the Kenya Mortgage Refinance Company
(KMRC) will address the mortgage gap,
i.e. people earning between Kshs 50,000
to Kshs 100,000, who represent some
600,000 people.
The more basic question is: how do majority
of Kenyans actually finance their housing?
Majority of Kenyans fund their housing
through savings and savings linked credit,
employing incremental construction.
A significant number also finance their
housing through SACCO loans. These
remain unsupported through policy as
government prioritises mortgages.
There is need to develop a comprehensive
housing
programme
and
finance
mechanism, targeting the various cadres
represented in the housing demand
side. Such a mechanism can be financed
through a cocktail of instruments, from
the Consolidated Fund, grants, savings
linked loans, mortgages, retirement
benefits, housing bonds, etc.
Other approaches include: A sliding
scale housing subsidy for those who for