Housing Levy raises billions, but Ruto's housing promise needs more money
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Kenya's 1.5% Housing Levy collects about Ksh6 billion monthly, but the Housing Principal Secretary says that amount cannot sustain the government's target of constructing 200,000 affordable homes every year.
Kenya's Affordable Housing Programme has a funding problem that the government can no longer avoid. The 1.5 per cent Housing Levy collects about Ksh6 billion every month, but Housing Principal Secretary Charles Hinga says that money cannot sustain the government's target of constructing 200,000 homes every year.
That means the levy, despite being a mandatory charge on workers and employers, is not large enough to finance the scale of the housing programme on its own. Hinga said: 'The levy on its own, the total collection of the levy, we are collecting about Ksh6 billion a month. Now, Ksh6 billion a month in itself, without anything else, cannot be able to sustain 200,000 units a year.'
At the current collection rate, Ksh6 billion a month translates to about Ksh72 billion a year. Yet the government wants to deliver 200,000 affordable housing units annually. A simple comparison puts the scale of the challenge into perspective: if the entire Ksh72 billion annual collection were divided equally across 200,000 targeted units, it would amount to Ksh360,000 per unit, which is not the construction cost of a house.
The government's current position exposes a weakness in the idea that the Housing Levy could provide the main financial engine for a massive national construction programme. The admission highlights the need for alternative funding models to bridge the gap between levy collections and the true cost of land, infrastructure and construction.