President Uhuru Kenyatta during the launch of the affordable housing programme. (Credits: Standard Media)
There is no doubt that the President means very well with this affordable housing initiative and it should be done, however how it’s being structured and executed leaves many key questions unanswered, and leaves doubt as to its sustainability.
The key issues being raised by the public seems to be around public participation and operating the fund, but for me, the key issue is that the math does not seem to add up. If the math does not add up, it shall be a very short-lived legacy.
1. On pg. 9 of the presentation below, the cost of construction is Kshs. 31,328 per square meter. On pg. 12, a One bed will be 30 SQM and will be sold for Kshs. 1M. Now, 31,328 times 30, is Kshs. 940, 000 for construction costs alone. Before the cost of funds, assume even 10%, and consultants costs - architect, QS, C&S, etc... Let’s assume even 8% in total, that brings the basic cost to Kshs. 1.1M (940, 000 * 1.18), without even a profit margin. So who is this developer who will be producing houses for Kshs. 1.1M and selling for Kshs. 1M? And I have not even included the cost of land, which I have assumed will be free.