President William Ruto signing The Finance Bill to law at State House, Nairobi on Monday June 26.
Questions are being asked whether President William Ruto’s Kenya Kwanza administration is going back on its word to voters by imposing punitive levies to finance housing and healthcare projects.
In its manifesto, the ruling coalition did not directly indicate it would impose a levy on Kenyans which would shrink their monthly incomes to finance the housing projects and also proposed a contribution capped at Sh3, 000 per household to finance healthcare.
Instead, the coalition detailed financing models that gave the impression, that if elected as the next government, it would not raid workers’ payslips but explore other means to mobilise resources including budgetary allocations.
However, once in power, in its implementation of housing and healthcare programmes, the government has imposed levies at 1.5 percent and 2.7 percent of gross monthly earnings, respectively, for every worker that have been challenged in court. The employers match the contributions for the schemes.
When he launched his Kenya Kwanza manifesto, then UDA presidential candidate William Ruto promised to commit Sh250 billion for the period 2022/23- 2026/27 for the housing project to address the huge deficits in the supply of this critical amenity.
To raise the funds, in the manifesto, he promised Sh50 billion in budgetary allocations for the period and Sh200 billion to be financed by pension funds and “other collective investment schemes including diaspora bonds.”
The manifesto estimates Sh1.5 trillion in Assets Under Management (AUM).
The Kenya Kwanza manifesto does not, however, mention the imposition of a 1.5 percent levy on the people’s monthly salaries to finance the affordable housing project.
Under the healthcare programme, the manifesto says; “our preliminary analysis shows that a progressive contribution system can achieve the Sh200 billion requirement with contributions ranging from Sh300 to Sh3000 per household per month.”
This translates to Sh3,600 for unsalaried households and Sh36,000 for salaried Kenyans per year.
The Social Health Insurance Act formulated by the Kenya Kwanza administration states that 2.75 percent shall be deducted from the basic monthly pay of salaried Kenyans towards the Social Health Insurance Fund (SHIF) that is critical in the achievement of UHC.
The law also states that a household whose income is not derived from salaried employment shall pay an annual contribution to the Social Health Authority (SHA) at the rate of 2.75 percent of the proportion of household income as determined by the means testing instrument.
The law further provides that a person who has attained the age of 25, and has no income of his or her own or is living with the contributor, shall be treated as a household separate from the contributor and shall pay Sh300 every month.
The manifesto only talks about a household contributing Sh300 a month for health coverage. So, what changed?
Is the government shifting goalposts?
Yesterday, Kikuyu MP Kimani Ichung’wah and Kericho Senator Aaron Cheruiyot, the majority leaders in the National Assembly and Senate, respectively, did not respond to our inquiries sent to their known phone numbers on why Kenya Kwanza was shifting goalposts on the financing of the affordable housing project.
The two are President Ruto’s pointmen in the two Houses of Parliament.
State House spokesman Hussein Mohammed also did not respond to “Nation’s” inquiries on Tuesday.
Another of the President’s confidantes — Mr Cleophas Malala the secretary-general of UDA — an affiliate of Kenya Kwanza coalition, did not also respond to questions on why the coalition is shifting from what it promised Kenyans.
The government has been deducting 1.5 percent every month from 3.2 million Kenyans in formal employment since July 2023 for the affordable housing project.
This was until last week when the Court of Appeal slammed brakes on the housing levy, saying it was introduced without a legal framework and it was discriminatory for targeting a section of Kenyans in formal employment.
Housing levy
The President has since promised to appeal against the ruling on the housing levy.
In an interview at State House early this month, President Ruto admitted that the government collects about 6 billion a month in affordable housing levy from Kenyans.
But even as Mr Ichung’wah and Mr Cheruiyot declined to comment, Nairobi Senator Edwin Sifuna accused the government of taking Kenyans for a ride in the financing of the affordable housing project.
“They have just confirmed to us that Kenya Kwanza lied their way to power and those who believed them are fools,” said Mr Sifuna adding; “Kenyans are now just counting days before they can kick President Ruto out.”
The Kenya Kwanza Manifesto divides the housing project into two- urban housing and rural housing and settlement.
Under affordable housing, the manifesto says that the requirement for new urban housing is estimated at 250,000 units per year, against a production of 50,000 units, translating to a deficit of 200,000 units.
It notes that as a result, more than 60 percent of urban Kenyans are living in slums and other low-quality housing without adequate sanitation, “undermining their dignity and exposing them to health hazards.”
To address this deficit, the President promised to increase the supply of new housing to 250,000 annually and the percentage of affordable housing supply from the current two percent to 50 percent.
“We will achieve this by structuring affordable long-term housing finance schemes including a National Housing Fund and Cooperative Social Housing Schemes that will guarantee off-take of houses from developers,” Dr Ruto said.
Low-cost mortgages
He also promised to grow the number of mortgages from 30,000 to 1 million “by enabling low-cost mortgages of Sh10,000 and below as well as strengthening the Jua Kali industry’s capacity to produce high quality construction productions and giving developers incentives to build more affordable housing.”
Some Kenyans have since been allocated some houses.
But Senator Sifuna notes that the units were constructed by President Ruto’s predecessor Uhuru Kenyatta “without taxing Kenyans and that he is yet to put up a structure of his own from the proceeds of levies collected from Kenyans.”
“If the Kenya Kwanza administration meant well, it would have completed all the remaining housing projects that were started by President Uhuru. But unfortunately, they have stalled as he continues to demolish people’s houses,” said Mr Sifuna.
Recognising that a majority of Kenyans live in their own rural homes, the President admitted in the manifesto that rural Kenya also has its fair share of land and settlement-related challenges.
This includes landlessness, insecure land tenure, and notably the historical squatter problem in the Coast region.
To ensure this succeeds, the President committed a budget of Sh150 billion to be financed by pension funds and other investment funds, including diaspora bonds.
