The National Treasury plans to spend Sh35.2 billion on housing in the next financial year 2023/24, National Treasury Cabinet Secretary has said.

Presenting the budget statement in Parliament yesterday, Treasury Cabinet Secretary Njuguna Ndung’u said the government will facilitate the development of 250,000 houses per year, a move that will see it create over 100,000 jobs in the construction sector directly and indirectly.

“Mr. Speaker,the cost of housing is a heavy burden to majority of Kenyans and is the main factor driving the proliferation of slums in the country. The Government’s commitment is to turn the housing challenge into an economic opportunity to create quality jobs for over 100,000 young people graduating from TVETs every year directly in the construction sector and indirectly through the production of building products,” he said.

Of the Sh35.2 billion allocation, Sh7.3 billion will go the Kenya Urban Programme (KenUP), Sh3.2 billion will be used for Construction of Affordable Housing units, while Sh3.3billion will go towards the Construction of Social Housing Units.

Kenya Mortgage Refinance Company was allocated Sh5 billion for enhancement of the company’s capital as well as for on lending to primary mortgage lenders.

Other key proposed allocations to the Housing, Urban Development and Public Works sector includes Sh5.5billion for the Kenya Informal Settlement Improvement Project-Phase II, Sh5.2 billion for construction of markets, and Sh932 million for maintenance of Government Pool Houses.

A sizeable chunk (Sh1.1billion) will be used for the construction of Housing Units for the National Police and Kenya Prison and Ksh637 million for the Kenya Municipal Programme.

Construction of foot bridges was allocated Sh150 million while Sh300 million was allocated for the Development of Appropriate Building Technology.

To provide funds for the constructing of affordable housing in the country, Treasury has introduced an affordable housing levy, a move that has attracted praise and condemnation in equal measure.

Physical infrastructure

“Mr. Speaker, in order to provide funds for development of affordable housing and associated social and physical infrastructure as well as the provision of affordable home financing strategy, I propose to the National Assembly to introduce an Affordable Housing Levy through an amendment to the Employment Act, 2007 to provide for a monthly levy payable by the employer and employee at 1.5 per cent per month of an employee’s gross monthly salary,” Ndung’u told Parliament.

He said given that construction is labour-intensive, the government expects every housing unit constructed to create new jobs among the professionals, youth and Micro, Small and Medium Enterprises along the production value chain of affordable housing.

According to Ndung’u, 36,000 affordable housing units have been constructed in the last eight months.

Housing and settlement is one of the five strategic sectors identified by the Kenya Kwanza administration as having the largest impact and linkages to the economy as well as on household welfare.

The other four are Agricultural Transformation, Micro, Small and Medium Enterprise Economy, Healthcare, and Digital Superhighway and Creative Industry.

The government plans to increase its investment in these strategic sectors.

“Special focus will be placed on the interventions that: reduce the cost of living; create jobs; achieve more equitable distribution of income; enhance social security, expand tax base for more revenues to finance development; and increase foreign exchange earnings,” the CS said.