IEA: Kenya does not have a housing problem

May 22, 2019 Newsroom

In April, Kenyans were caught by surprise when the government announced that it would impose a 1.5 percent housing levy on all salaried Kenyans, which would be used to finance the construction of 500,000 housing units under the Affordable Housing Scheme, a key pillar on President Uhuru’s Big four agenda.

PS Charles Hinga says that while every Kenyan has a right to decent and adequate housing, there has got to be some collective responsibility as to how we fund those rights that we have given ourselves, seeing that only 3 percent of Kenyans have access to quality mortgages.

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This approach has however been faulted by the Institute of economic affairs (IEA) which said that the levy will only increase the cost of employment and that the distribution of these households will come it’s with own consequences.

“We are not convinced that you can just throw in money and solve the housing issue, I do not think the housing levy will solve the housing problem in Kenya,” said Mr. Kwame Owino CEO of the Institute of economic affairs (IEA).

Instead, IEA recommends that when it comes to housing construction, the government should give Kenyans competitive choices more so private sector alternatives.

But while figures from the World Bank estimates that Kenya has a deficit of about 2 million households, Mr. Kwame says that this should not be confused with demand for the households and that the government should instead focus on different housing methods.

Mr. Kwame was speaking during CBA’s 5^th economic forum on housing where the lender said it was keen on sparking conversations and economic thoughts on important development agendas and financial matters in the country.

“As CBA, we look forward to partnering with the government and the private sector on this journey. We are particularly excited about the opportunity to collaborate with the Kenya Mortgage Refinancing Company in bringing down the cost of mortgages.” Said Jeremy Ngunze, CBA Kenya CEO.

The high court however suspended the implementation of the 1.5 percent levy on April 17^th, Justice Maureen Onyango extended the order to until May 27^th, 2019 to allow for the consolidation of the various cases filed against a plan.