The success of Kenya’s Big Four agenda will not amount to much if the government forces out the private sector, says the World Bank report.
According to the report, Kenya Economic Update, Kenya needs support from the public and more importantly the private sector if it is to achieve the Big 4 Agenda covering agricultural and food security, affordable housing, increased share of manufacturing, and universal health coverage.
“Given narrowing of fiscal space and the extent of resources needed to achieve the Big 4, the public sector could play the important role of creating a conducive environment to catalyze private sector resources to achieve the Big 4. Public sector resources devoted to the Big 4 would need to be contained within a fiscally sustainable resource envelope and should seek to reduce inefficiencies in spending to maximize impact,” the report noted.
By offering the private developers an appealing and attractive environment, the government is better placed to achieving the dreams of providing affordable housing to Kenyans.
The global lender identified the absence of affordable loans to the private sector, a tedious property registration process, lack of access to land and inadequate infrastructure as the hindrances that might see the affordable housing agenda fail.
In the agenda, the state is looking at constructing more than 1 million units for a period of 5 years. Of all the units to be constructed, 20 percent will be social housing, and the rest, 80 percent will be designated to the private developers.
Apparently, if Kenya doesn’t adopt policies that will ensure the private sector is encouraged, much of the agenda will remain stagnant. This will be a disadvantage to the economy and the issue of housing deficit in the country.
Currently, many Kenyans are unnecessarily living in slum dwellings, because of limited supply and lack of affordability. According to the report, there is an estimated housing shortfall of 2 million units, and with an additional 500,000 new city dwellers every year, this is aggravating an already untenable situation where 61 percent of urban households live in informal settlements.
“There is a critical need to deliver housing at the lower end of the income spectrum. Given Kenya’s growth and urbanization rates, the problem will only become acuter over the next decades without a serious focus on housing and the finance of housing for the average Kenyan,” said the World Bank.
From the report, one can deduce as much as to point out that addressing the housing deficit will be good for economic growth, creating jobs, and deepening the financial sector, which goes a long way in pushing the Big 4 agenda forward.
Some of the recommendations put forth – apart from ensuring the private sector has a conducive environment for development – include addressing the supply bottlenecks to housing supply, which entails initiatives for boosting housing supply, implementing supporting regulations to the Lands Act among others, and addressing constraints to the housing demand. This includes the reviewing of stamp duty for first-time buyers as well as the standardization of mortgage contracts to lower property financing.