The 2022 target of 500,000 units remains a piper's dream as there is still no clear path to achieving that.
British Foreign Secretary Dominic Raab announced that Kenya is expected to receive at least 8.0 billion shillings from the United Kingdom for the construction of approximately 10,000 affordable houses through Acorn Holdings, a local real estate developer.
The funds which will be released in tranches will consist of 1.0 billion from the UK funded InfraCo and another 7.0 billion from private investors.
The investment affirms UK’s government’s support for the Big Four Agenda on affordable housing that is aimed at delivering affordable homes for Kenyans.
Kenya government has continued to push for the delivery of the targeted 500,000 units but the implementation of the projects has continued to lag behind with less than 1,000 units delivered so far mainly through the Park Road Project and Pangani Estate, while other projects such as Shauri Moyo, Makongeni and Starehe houses are still in the pipeline.
The main challenges facing the delivery have included;
(i) unavailability of affordable financing to developers,
(ii) bureaucracy and slow project approval processes,
(iii) the pending operationalization of the Integrated Project Delivery Unit (IPDU) which was tasked with being a single point of regulatory approval for developments, infrastructure provision, and developer incentives,
(iv) failure to fast track incentives provided in support of the affordable housing initiative, (v) ineffectiveness of Public-Private Partnerships,
(vi) obstacles in our capital markets regulatory framework, which make it difficult to raise capital for a real estate development
(vii) the current economic slowdown due to the ongoing pandemic.
The implementation of approximately 10,000 housing units is still a drop in the ocean given the relatively high demand evidenced by more than 300,000 individuals who have registered to purchase affordable homes through the Boma Yangu initiative.
Additionally, the 2022 target of 500,000 units remains a piper’s dream as there is still no clear path to achieving that.
“In our view, despite the milestones achieved by the government in driving the affordable housing initiative, the above-stated challenges still need to be addressed to fast track the supply of affordable housing units,” said Cytonn.
In addition, there is a need for the vigorous raising of funds for the initiative especially in the wake of reduced budget allocation towards the same for FY 2020/21 at Kshs 6.9 bn 34.3% lower than the Kshs 10.5 bn allocated in FY 2019/2020.