Ignore the bad press, affordable housing a real deal for workers

On Tuesday, I had an interesting conversation with Charles Hinga Mwaura, the Principal Secretary, State Department of Housing and Urban Development on the Hosing campaign he is spearheading as part of President Uhuru Kenyatta’s Big 4 Agenda.

According to the good PS, the Affordable Housing Programme (AHP) that seeks to plug the huge housing deficit is on course.

The importance and need for decent and affordable housing notwithstanding; the story on the housing programme by the government is a rich story yet to be told well. What with a housing deficit of over 2 million units and nearly 61 per cent of urban households living in slums. Bad picture if you ask me.

To make it worse, this deficit continues to rise due to fundamental constraints on both the demand and supply and is exacerbated by the 4.4 per cent urbanization rate- equivalent to 0.5 million new city dwellers every year.  Not good at all.

What it’ll take

As my conversation with the PS goes on, I gather that he has all that he needs to execute the project backed by in-depth information about all the plans. Systemic market inefficiencies have resulted in a housing deficit which has in turn led to the proliferation of informal settlements and slums across the country.

Involving the devolved units in the delivery of the project is a major boost. In the scheme of things, each county will deliver 2,000 affordable houses.

Secondly, although the primary objective of the AHP is the delivery of decent and affordable houses, the Sh1.3 trillion programme will also be a catalyst towards social and economic development. In other words, investment in affordable housing will have a multiplier effect on the economy given the number of linked sectors. The estimates are that it will lead to the creation of at least 132,000 new jobs.

Stimulating the economy through the creation of direct and indirect job opportunities in not only the construction, real estate sectors but the auxiliary industries as well. Obviously, better housing conditions are also linked to improved health and education outcomes.

Thirdly, the backward linkages are going to be massive; for example, it will see about 44 million bags of cement amounting to almost Sh30 billion required. Transport services of this product alone will translate into massive work opportunities. Obviously, the multiplier effect of this capital injection and opportunities, the Government projects a doubling of the contribution by the construction and real estate sector to GDP to 14 per cent by 2022 and the creation of an average of 3 to 5 direct jobs and 8 indirect jobs per house. For every $1 invested into the project, it estimates that $3 will be injected into the economy.

Fourth, and obviously, during the implementation of the programme, there will be a rise in the consumption of the various building materials that are locally manufactured while other opportunities will be in facilities management aimed at ensuring that common property infrastructure and services are of a quality. Enterprises like the iBuild Kenya using technology to address challenges in the housing and construction industry should be encouraged.

A step in the right direction is ensuring the active participation of the Jua Kali/SME sector in the programme through ring-fencing the supply of certain components such as doors and windows. Local artisans and other professionals such as plumbers and electricians will exclusively deliver these components.

For example, Mr Hinga tells me that for the Park Road Housing project in Nairobi, three Jua Kali associations have been engaged by the developer to provide products and services worth Sh200 million which includes the production of 8,400 doors at a value of Sh122million. That already, there is a signed MoU to produce quality, standardized materials such as doors, windows and hinges. This will help the sector formalize their operations and create jobs for youth.

Not a tax

And the Housing Fund? The contribution is not a tax measure but a contributory scheme that is supported by the Government. The contributions will go into the Housing Fund whose main objectives is to enhance affordability and access to competitive financing for homeowners and provide certainty of market to developers. This will in turn enable them to deliver affordable housing at the required scale. Contributions whose members will not be allocated a house will earn a return-based on the overall return of the Housing Fund which will be announced by the board on an annual basis. Contributions to the Housing Fund can be accessed 15 years after a member’s first contribution or upon the attainment of retirement age. The plan is to create a possibility for multi-generational mortgages.

Prof Mogambi, Communication and Social Change Expert, teaches at the University of Nairobi; Email: hmogambi @ yahoo.co.uk