A parliamentary committee has warned that the legislative delay in granting the Office of the Controller of Budget (CoB) independent powers over Sh63 billion in annual housing levy collections is exposing the funds to potential abuse.
The National Assembly Constitutional Implementation Oversight Committee (CIOC), in a report to the House, says that amendments to the Public Finance Management (PFM) Act to ensure all special funds and levies operate under CoB would have provided “the much-needed effective oversight of public funds.”
The CIOC report on the status of implementation of the constitution by CoB captures Controller of Budget, Dr Margaret Nyakang’o, saying the loophole in the law “prevents any independent oversight” of the housing levy billions “severely undermining” her supervisory mandate.
“The controller of budget clarified that the Housing Levy falls outside the CoB's oversight mandate due to its classification as a levy rather than a budgeted fund,” the CIOC report reads as it pushed for the law change.
The CoB office is established to oversee implementation of the budgets of the national and county governments by authorising withdrawal from public funds.
It is also mandated to prepare, publish and publicise statutory reports, conduct investigations based on its own initiative or on a complaint made by a member of the public on the usage of public funds.
“The CoB's oversight mandate is severely undermined by legislative limitations and lack of enforcement mechanisms,” reads the CIOC report, adding that, “the Housing Levy's exclusion from oversight creates significant accountability gaps.”
CIOC also wants the National Treasury to implement the OCoB-Central Bank of Kenya (CBK) integrated payment system to track funds from approval to expenditure to ensure accountability.
Housing and Urban Development Principal Secretary Charles Hinga has previously told the National Assembly’s Housing, Urban Planning and Public Works Committee that between Sh5 billion and Sh6 billion is realised every month from Kenyans in housing levy deductions.
According to the PS, the government is investing the money, meant to finance construction of the affordable houses, in Treasury bills and bonds despite CoB’s revelations that the delivery of the housing units remains behind schedule.
The MPs also want the Controller of Budget Act amended to grant enforcement powers to implement recommendations of the office, remove restrictions on economic reporting and provide sanctions for violations.
President William Ruto , through his affordable Housing programme, undertook to construct at least 200,000 housing units annually to address the housing deficit and create jobs for low- and middle-income earners.
To finance the affordable housing project, Parliament enacted the Affordable Housing Act, which became operational on March 19, 2024. The Act establishes a mandatory levy to fund the affordable housing projects for Kenyans as part of President Ruto’s Bottom-Up Economic Transformation Agenda (Beta).
The levy is charged at the rate of 1.5 per cent of an employee's gross monthly income, an allowable pre-tax deduction, with a matching contribution from the employer.
However, Dr Nyakang’o in her August 2025 national government budget implementation and review report for the financial year 2024/25 revealed that the much hyped affordable housing project largely remains behind schedule three years on.
In her submission when she appeared before CIOC, Dr Nyakang’o identified legislative and operational constraints as “critical limitations” in the CoB Act, frustrating her work.
For instance, the law bars her office from reporting on economic developments and fiscal forecasts, and there are no enforcement powers to ensure implementation of recommendations.
“For the avoidance of doubt, the reports submitted to parliament shall not include reports on recent economic developments and outlook, including revenue, grants and loans forecasts and receipts,” reads section 9 (4) of the CoB Act.
The CoB also identified inadequate sanctions for violations of public finance management laws and restricted access to critical financial information from some national government entities as other hindrances to her work.
