Pan African housing: Kenya requires $50 billion to fund cheap houses

Kenya requires $50 billion (Sh5.2 trillion) to adequately address the current housing deficit estimated at over two million units, a Pan African housing development financier has said.

Shelter Afrique said dealing with the shortage and making affordable housing a reality requires focused political leadership.

Chief Executive Officer, Andrew Chimphondah said the affordable housing project launched by the government will enable it to achieve 500,000 housing units for the low-income group by 2022.

“High population growth, increased urbanisation, poor urban planning, dysfunctional land markets, rising construction costs, proliferation of informal settlements and underdeveloped financial systems are some of the leading causes of the housing crisis,” he added.

Collaborative effort

The solution, Chimphondah argues, lies in a well-co-ordinated and collaborative effort among all stakeholders, including governments, multilateral institutions, non-profit organisations, and the private sector represented by both established developers and financial institutions.

Chimphondah (pictured) made the remarks in Nairobi yesterday after the company signed a Memorandum of Understanding (MoU) with Habitat for Humanity International (HFHI) on how the two could work together to mobilise capital for affordable housing in Africa. 

 He said the establishment of Kenya Mortgage Refinancing Company is the best way to improve access to affordable housing finance.

“Research from our Centre of Excellence shows that the overall shortage of housing in Africa is estimated now to be 56 million housing units. Out of this, more than 90 per cent (or 45 million units) are in the affordable housing bracket,” said Chimphondah. 

Charles Mwaura, Housing and Urban Development, Principal Secretary said while the number of housing units required in Kenya stands at two million, not all of them are meant for the social housing bracket.

He said the affordable housing programme will be carried out in partnership with the private sector – where the government’s main task will be to facilitate the process, while the private sector will build the units.

“Under the Big Four agenda, the government will provide 500,000 decent, affordable housing units by 2022. These houses will be done in partnership with the private sector,” Mwaura said.

Tax incentives

He said under the arrangement, the government provides land, tax incentives for private sector players, bulk infrastructures such as roads, water and lighting. The rest is done by the private sector.

For the government to achieve the 500,000 low-cost units, at least 100,000 units will be constructed at an estimated cost of Sh2.6 trillion per year. The money is provided by the private sector.

County and national governments have allocated 542 hectares in Nairobi’s Eastland’s area with a combined total of 42,700 houses.