According to research released by Shelter Afrique in 2017, 60 percent of Nairobi’s population is currently living in slums. The number of slum dwellers is expected to rise even further as the rate of urbanization is predicted to reach 50 percent from the current 40 percent by 2030.
These are the worrying statistics may have formed the backdrop of the decision by H.E. Uhuru Kenyatta to have the provision of housing as part of the Big Four agenda. While the plan to create affordable housing units is noble and the idea to increase local borrowing to make it happen is viable, the Government needs to think about how it can engage the private sector in helping Kenyans to own homes.
The cost of a quarter acre parcel of land in Karen is approximately Ksh18 million. However, 20 kilometers away from the city in Ngong, the same parcel retails at slightly more than half a million shillings. If the land in Ngong is subdivided into a 1/8 acre, it retails for as little as Ksh 300,000, which is very affordable for lower-middle-class income earners. Lower middle-class earners are the worst hit by the housing crisis.
Real Estate companies make the land even more affordable by offering flexible payment plans such as monthly installments for periods of twelve or twenty-four months and even more. The Government needs to capitalize on the systems which are already in place. For instance, instead of trying to borrow from the already ailing economy, it could empower and give more incentives to private real estate companies to get more people to buy land. People who buy from these private developers already have their chamas through which they raise money, which is a creative source of the mortgage.
Developed countries have come up with the concept of satellite cities which reduce pressure in the large cities. African countries like Ethiopia have adopted the same concept where a light train was installed, and mass housing units set up in Addis Ababa’s environs to eliminate the slum problem. The Government should look into how it can speed up projects such as Konza to achieve the housing part of the Big Four Agenda.
In areas such as Ngong, Nakuru, and Machakos get better roads, tap water, a light speed train, enhanced security, and amenities such as hospitals, industries, Government offices and recreational parks, people would be more willing to forgo leaving in the city center and settle down in areas where land is cheap.
The private developers should also be encouraged to come up with more mixed-use neighborhoods away from the city to reduce pressure on the City as a large number of people go to work daily.
The Government also needs to implement more laws to protect and promote the housing sector. For instance, it could lower taxes for real estate investment companies and private developers who create over a hundred units of housing annually. These moves will support developers who bring affordable housing to the Kenyan market.
Lastly, the construction industry needs to be thoroughly standardized. Currently, the Government is doing very little to arrest and prosecute landlords who build substandard houses that end up collapsing and killing tenants. The Jua Kali nature of the construction sector needs to be disrupted. Experts in real estate purchase, resale and development need to be the ones in charge of housing creation so that the standard of the construction end-product can improve and collapsing buildings will be a thing of the past.
The author is the CEO of Username Investments Limited Reuben Kimani.