Lessons from Singapore housing model

By Kevin Oguoko

Eastern countries’ citizens save about 30 per cent of their household incomes. This figure is 4.3 per cent in Kenya.

According to World Bank records, Singapore GDP per capita in 1963 was $472 (Sh40,592) while Kenya’s was $104 (Sh10,816). In 2013, Singapore’s GDP was $64,584 (Sh5.55 million), while Kenya’s was $1,812 (Sh155,832).

Singapore has one of the best housing solutions in the world. If Kenya wants to achieve its Vision 2030 goals, there are a couple of things it could learn from this Eastern country.

The majority of the residential housing developments in Singapore are publicly governed and developed. About 85 per cent of Singaporeans, or 17 in 20 of the resident population, live in such houses.

Public housing in Singapore is generally not considered as a sign of poverty or lower standards of living, as compared to public housing in other countries.

Although they are cheaper than privately built homes, they are also built in a variety of quality and finishes to cater for the middle- and upper middle-income groups.

The housing managed by Housing Development Board, equivalent of the National Housing Corporation in Kenya, are built primarily to provide affordable housing for the masses, with their purchases financially aided by Central Provident Fund, which is the equivalent of the National Social Security Fund (NSSF) in Kenya.

The fund is a compulsory comprehensive savings plan for working Singaporeans, primarily to fund their retirement, healthcare and housing needs.

The employer has to contribute 16 per cent of the employee’s monthly gross salary, while the employee contributes 20 per cent of his or her monthly gross salary.

Compare this to the newly NSSF introduced six per cent compulsory amount whereby an employee has to contribute three per cent and the employer the remaining three per cent of one’s gross salary.

“NSSF needs to give us a reason to save money with them beyond the minimum required amount. As it is now, there is no incentive to give that extra Sh1,000 to NSSF,” says Patrick Wameyo.

He adds: “The banks are also to blame for the low saving culture because “they operate in a shallow system”. Why should I save money with you at two to three per cent interest rate, only for you to loan me the same amount at a 18 to 20 per cent interest rate?”

— koguoko@standardmedia.co.ke