Kenya's affordable housing programme faces Ksh118.3bn shortfall as 176 projects stall
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A Parliamentary Budget Office report says 176 affordable housing projects have stalled on delayed contractor payments, leaving a Ksh118.3 billion funding gap in the current financial year.
Kenya's Affordable Housing Programme is facing a Ksh118.3 billion funding shortfall, with 176 projects stalled because of delayed payments to contractors, according to a report by the Parliamentary Budget Office (PBO).
The report says the stalled projects represent about 15 per cent of the projects under construction as of June and form part of a Ksh1.76 trillion affordable housing pipeline that has spent Ksh198 billion since the programme began in 2023. The affected works comprise 16 affordable housing projects, 22 social housing and slum upgrading projects, 91 institutional and student housing projects and 47 social and physical infrastructure projects.
The PBO says the shortfall represents more than half of the programme's financing requirements for the current financial year, even though the government has collected Ksh205.7 billion through the housing levy since its introduction in 2023. The Budget Office warned that prolonged delays could increase construction costs and recommended prioritising projects that are close to completion so that units can be finished and sold sooner, with the proceeds reinvested in other developments.
The funding pressure comes as the government targets the construction of 200,000 affordable housing units a year. Housing Principal Secretary Charles Hinga has said the levy, which raises about Ksh6 billion a month, cannot on its own sustain that annual target. The government is exploring additional long-term financing from development partners including the World Bank and plans to use future housing levy proceeds as collateral for a Ksh100 billion loan, alongside proceeds from completed units and beneficiary payments under Tenant Purchase Agreements.