The Affordable Housing Programme (AHP) was launched in 2017, as one of the key pillars of the ‘Big Four Agenda’. The initiative targeted to deliver 500,000 affordable homes for Kenyans across all 47 counties by 2022, in five years. However, the target was far from achieved by the end of the 5-year tenure, with an estimated 13,529 units only being delivered with minimal delivery in the social housing category, amounting to less than 3.0% of the intended target. In 2022, President William Ruto, upon assuming office upheld the initiative, integrating it as one of six foundational pillars of his government’s agenda, with a goal to achieve an annual delivery of 200,000 housing units, hence one million houses in 5 years. Since his inauguration, the President has initiated several affordable housing projects, which include Shauri Moyo A, Kings Boma Estate, Gichugu, and most recently, the Bahati and Milimani affordable housing projects situated in Nairobi, Kiambu, Nakuru, and Kakamega counties respectively.
Current State of Housing in Kenya
Home ownership in Kenya remains low compared to other African countries, at 22.0% in urban areas as at 2022, compared to other African countries such as South Africa and Ghana with 69.7% and 52.0% urban home ownership rates, respectively. This underscores the urgent need to prioritize investment in affordable housing, with the aim of addressing the housing deficit and promoting homeownership, particularly among low-income individuals in the country. The graph below shows home ownership percentages for different countries compared to Kenya;
Source: CAHF, United States Census Bureau, United Kingdom Office for National Statistics
Affordable Housing Initiative in Kenya
- Achievements of the Affordable Housing Initiative
The initiative by government to provide access to decent and affordable homes to citizens has over the years resulted in various achievements in the Kenyans housing market as follows;
- Launch of the Boma Yangu Platform
- Operationalization of the Kenya Mortgage Refinance Company (KMRC)
- Construction of Affordable and Social Housing Projects
- Legislation of the Affordable Housing Levy
- Incentives to Developers
- Challenges Facing the Affordable Housing Initiative
The timely delivery of the Affordable Housing program has been impeded by several bottlenecks, with the government delivering an estimated 13,529 units only by 2022 with minimal delivery in the social housing category, amounting to less than 3.0% of the intended target of 500,000 within 5 years since 2017. Some of the bottlenecks that have been hampering the affordable housing initiative include; i) Rising costs of construction, ii) Limited sustainable development financing, iii) Nonexistent Capital Markets Finance, iv) Inadequate access to affordable financing for homebuyers, v) Prolonged bureaucratic transaction timelines, and, vi) Inadequate supply of development land.
Recommendations and Conclusion
From the above lessons, the following can be implemented to accelerate the affordable housing initiative by the government and further solve the housing deficit in the country;
- Focus on Affordable Renting: It is imperative for the government to integrate rental housing into the affordable housing framework. This strategic move will help bridge the gap between housing demand and supply, rectifying the existing mismatch. By doing so, the government can take significant strides toward resolving the housing problem and reducing the housing deficit in the country. Incorporating rental housing into the affordable housing agenda will be a pivotal step in achieving the overarching goals of the affordable housing initiative.
- Removing Obstacles in the capital markets: The private sector’s participation in the development of affordable housing in Kenya has been crippled by the unavailability of financing for development activities. The government should therefore stimulate the capital markets and expand their investor base thus increasing the availability of capital for development projects, while reducing reliance on traditional financing channels such as bank loans. This can be achieved by; i) reducing the minimum investments in REITs, ii) allowing sector funds, iii) eliminating conflicts of interest in the governance of capital markets, and, iv) improving market transparency to provide investors with more information,
- Program monitoring and Evaluation Systems: Create a robust system for continuously monitoring and evaluating the impact of affordable housing initiatives. Regular assessments can identify areas for improvement, measure program effectiveness, and ensure that government efforts are yielding the desired results,
- Focus on Social Housing: Instead of displacing slum residents to remote areas for the constructing of replacement housing projects, the government can focus on upgrading and improving existing slums. The approach prevents the disruption of community ties, access to livelihoods, and essential services. This can be through providing financial assistance to eligible beneficiaries who seek housing loans for purchasing, or constructing homes,
- Standardized mortgage contracts: Standardize mortgage practices and lending processes to increase efficiency in affordable housing financing. Creating efficient administrative procedures can reduce costs, accelerate approvals, and make homeownership more accessible, and,
- Establishing long-term affordability of housing through Community Land Controls: By enabling communities to maintain control over their land and housing, these CLTs can act as guardians of land, taking it out of speculative real estate markets and ensuring that affordability remains a permanent fixture in the housing landscape.
In conclusion, while Kenya has made notable strides in advancing the affordable housing initiative such as with policy reforms, there remains a considerable gap between the current achievements in terms of housing delivery and the broader goals set forth in the Affordable Housing Programme (AHP). The journey towards addressing the housing deficit is a complex and evolving one, requiring the continuous collaboration of public and private sectors, innovative financing mechanisms, and strategic policy frameworks. With ongoing efforts and commitment, Kenya can take substantial steps towards providing decent and affordable housing for all its citizens, ultimately enhancing living standards and fostering sustainable urbanization. For more information, please see our Progress of Affordable Housing topical.
