Kenya Ends Housing Levy Cash Parking in Treasury Bills as Project Spending Rises

President William Ruto's administration has ended the practice of parking workers' housing levy deductions in short-term Treasury bills, signalling accelerated execution of affordable housing projects and improved absorption of funds. Housing Principal Secretary Charles Hinga told the Nation that the Affordable Housing Fund currently has no money invested in Treasury bills, marking a turnaround from the programme's early years. "There's currently zero money in T-bills from the Fund," he said.

The housing levy was introduced in July 2023 through the Finance Act and later entrenched under the Affordable Housing Act, 2024. The law requires employers to deduct 1.5 per cent of employees' gross monthly pay and make a matching contribution. For the first two years, collections repeatedly outpaced spending, prompting the government to invest surplus cash in three-month Treasury bills. About Sh46 billion of housing levy cash was sitting in Treasury bills in February 2025, and in June 2025 the State Department for Housing and Urban Development told a parliamentary committee it had earned Sh4.2 billion in interest from the investments.

National Treasury data for the year ended June 2026 shows the State Department for Housing and Urban Development spent Sh129.96 billion against a target of Sh140.99 billion under the development vote, an absorption rate of 92.18 per cent. According to the Economic Survey 2026, absorption of housing levy funds jumped to 96.3 per cent of the Sh79.03 billion budget in the year ended June 2025, compared with 32.6 per cent of the Sh78.18 billion allocation in 2023/24. Actual spending on housing has surged more than five times to Sh129.96 billion from Sh25.49 billion.

Collections have exceeded Sh206 billion since the levy was introduced, reaching Sh206.46 billion over three financial years, Sh6.32 billion short of the Treasury's cumulative target of Sh212.78 billion. In the year ended June 2026, actual collections reached Sh79.10 billion against a revised target of Sh95 billion. Hinga rejected the characterisation of the gap as a revenue shortfall, saying the higher target incorporated Sh25 billion carried forward from the previous financial year.

Hinga attributed the earlier cash parking to procurement timelines rather than a lack of projects. "The reason why we kept the money in the 91-day T-bills is that procurement and tendering processes take time, usually four to six months," he said, adding that public finance procedures also delayed access to funds until accounting officers were formally appointed. "The reason absorption has improved is that we are now able to start the tendering processes earlier based on lessons from the past years," he said.

The end of Treasury-bill parking means the housing levy is increasingly functioning as a direct construction fund rather than temporarily serving as a source of short-term government financing, as the government scales up affordable housing projects across the country.