Rédaction Africa Links 24 with Daily Nation
Published on 2024-02-05 18:14:38
The Parliamentary Budget Office (PBO) has issued a warning that the government’s affordable housing programme will benefit high-income earners more than lower earners, contradicting its primary goal. The allocation of funds towards the development of houses for Kenyans earning up to Sh149,000 monthly is set at 60 per cent, even though they constitute 77 per cent of the workforce. On the other hand, Kenyans earning above Sh149,000, who make up just 23 per cent of the workforce, have been allocated 36 per cent of the funds.
The Affordable Housing Bill of 2023 allocates 30 per cent of the funds collected from the Housing Levy to social housing projects, 30 per cent to affordable housing projects, and 36 percent to institutional housing programme and projects. However, statistics from the State Department of Housing and Urban Development indicate that the majority of formally employed and informally employed persons earn less than Sh149,000 per month, making them the target beneficiaries of the social and affordable housing projects. Yet, their categories of housing units are only being allocated 60 per cent of the total funds in the fund.
The PBO has also expressed concerns about the possibility of misuse of money in the hands of the Fund that remains unused at the end of each financial year, due to a lack of clarification on how it should be treated. The Public Finance Management (PFM) Act, 2012, requires that the accruals to a national public fund are retained in the fund unless the Cabinet Secretary directs otherwise. However, the bill is silent on how accruals to the fund at the end of each financial year should be handled, contradicting the provision of the PFM Act, 2012.
The office raised these concerns in a report analyzing the financial and economic implications of the programme, at a time when the government is facing legal hurdles over its implementation. The court of appeal has affirmed a decision by the High Court to halt the collection of the Housing Levy from workers and employers in the formal workforce.
The PBO also proposes that the law guiding the implementation of the programme should require beneficiaries of the houses to be active contributors to the levy, which is currently not a consideration in the Bill. Moreover, there is no clarity on how funds allocated towards the Kenya Slum Upgrading, Low-Cost Housing, and Infrastructure Fund (Kensuf) will be utilized.
In the year ending June 2024’s budget, the government had projected to collect Sh63.2 billion from the Housing Levy. The PBO observes that the government is already undertaking 13 social and affordable housing projects within the Nairobi Metropolitan Area and 290 constituency affordable housing projects across different counties using monies from the Housing Levy.
The PBO warns that the government faces huge risks on ongoing projects under the programme following the nullification of the Housing Levy, which could expose taxpayers to risks on contracts the government has entered with property developers. If the current status is not addressed and the Levy remains nullified, the government will be exposed to fiduciary risks due to the contractual obligations it has already entered with property developers for the ongoing projects since its GoK Exchequer funding is constrained.
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