Kenya Plans to Build 500,000 Affordable Housing Units by 2022

It is being speculated that Africa right now is gripped by an unprecedented housing crisis with high rental rates. Low-cost affordable houses, often considered less lucrative than middle-end and upper-end houses, are fewer in numbers.

A statistical study from world bank shows that 6 out of 10 households stay in slums and without the basic adequate facilities such as sanitation, water supply, and electricity.

Few problems are as severe right now in Africa as the issue of affordable housing. The key stakeholders and the world at large are now joining hands to find solutions to mitigate the housing problems.

In alignment with the vision to provide affordable housing, Kenya intents on raising 55 billion shillings (~$545 million) this fiscal year. To achieve the same, the government has introduced a new tax, which will aid the state to construct as many as 500,000 affordable house units.

Charles Hinga, the Principal Secretary for Housing and Urban Development, estimated the average cost for each unit at 2.3 million shillings. Hinga further added that in an ideal scenario no one would be spending more than 30 percent of their disposable income on housing.

Mere 2 percent of the 50000 total houses built every year are targeted at lower income segment - the majority that earns between 15,000 shillings and 49,999 - which is a major concern for Hinga as well as the state along with the persistent dramatic deficit.

Uhuru Kenyatta, whose second and final terms ends in the year 2022, plans to build all the units by then. On the housing finance fronts, the state plans to provide long-term mortgage along with tenant service schemes. The credit would be provided at an interest rate of 3–5 percent to accomplish the affordable housing finance.

From a historical perspective, the Kenyan Bankers Association believes high-land prices as the biggest reason behind inflated housing costs. The result was an affordability gap with only 18 percent of the population being able to live in urban areas.

Hinga also commented on Nairobi being the most expensive land in the whole of Africa. According to him, the reason is the unavailability of serviced lands along with the passage of land from hand to another for purely speculative purposes.

The tax rate, which is at 1.5%, applies to all employers and workers for the fiscal year that began in July to fund this goal of affordable housing.

In an effort to turn the conversation on affordable housing into a reality, GBB Venture is organizing a 2-day Summit on Affordable housing in Nairobi, Kenya from 26th – 27th June 2019. The aim is to bring together investors, builders, developers, government agencies, associations and other members of the Affordable housing community together to initiate action. If you would like to know more about the summit, fill out the form and we will get in touch with you.