President William Ruto during the handover of 1,080 homes built under the Affordable Housing Programme in Mukuru, Nairobi on May 20, 2025.
The affordable housing programme is changing the face of urban Kenya even as naysayers argue that the government has no business building houses for citizens.
Instead, it should create an enabling environment for the private sector to provide houses on the basis of the forces of demand and supply, they say.
However, the reality is that approximately 277,000 Kenyans – primarily in the 20-24 age bracket – migrate to urban areas every year.
This creates additional annual demand for decent housing of 200,000 to 250,000 units, which far exceeds supply that stands at 50,000 units. The resultant deficit has occasioned the sprouting of slums. Approximately 60 per cent of Kenya’s urban population lives in slums.
The private sector has not kept pace with the rising need for housing, citing increasing costs of land and building materials, inadequate financing and legal challenges, among other factors.
It is noteworthy that the Constitution guarantees the right to accessible and adequate housing and reasonable standards of sanitation.
Housing is also addressed by Sustainable Development Goal 11: Sustainable Cities and Communities, which includes ensuring access to adequate, safe and affordable housing and basic services by 2030.
To step up to its constitutional mandate, the government has set a goal to build 200,000 housing units annually with focus on social, affordable and market-rate categories. Since colonial days, the government has traditionally been responsible for provision of housing.
Colonial authorities created the Central Housing Board in 1953 – financed directly from the Exchequer – to provide housing mainly for African workers. The houses were built on government or local authorities’ land.
Housing policies
The National Housing Corporation (NHC) took over the role of the implementing agency on housing policies and programmes in 1967.
NHC, with support from partners through the National Treasury, built council houses, complete with infrastructure and social amenities, including schools, power, health centres, recreational facilities and shopping centres.
Housing estates like Dandora, Umoja 1, Umoja 2, Buru Buru and others were built through the framework of Site and Service schemes or Starter Units.
Under the Site and Service model, the NHC obtained loans channelled through the Exchequer as the guarantor. The NHC would then sign loan agreements with local authorities, which would ultimately allocate plots to applicants as loans repayable over agreed periods.
Under the Starter Units programmes, NHC extended loans to local authorities to build single units with provisions for expansion. Loans would then be provided to beneficiaries to complete the construction of the units.
The local authorities were responsible for collecting rent from the units until the loans were fully repaid, and the ownership of the houses transferred to the beneficiaries.
The government housing programmes succeeded to a large extent due to their affordability. In 1986, however, the International Monetary Fund and the World Bank introduced the Structural Adjustment Programmes (SAPs).
The SAPs restricted the role of the government to creating an enabling environment to facilitate the private sector to provide housing through the price mechanism.
Given its profit motivation, the private sector started providing housing for the high-end and middle-class categories, ignoring low-income earners.
Meanwhile, thousands of young people who trooped to towns every year could not secure decent housing. Kenya started experiencing phenomenal growth of slums, which have since become tourist attractions for all the wrong reasons.
Community-Based Organisations are running social intervention programmes in slums, and eliminating these structures will certainly destroy the ecosystems within which the organisations operate.
The idea of affordable housing did not start with this administration. Upon assuming office in 2003, the National Rainbow Coalition administration reviewed the housing policy, and incentivised private entrepreneurs to invest in the sector.
The Jubilee administration (2013-22) attempted to implement the housing levy, but stopped when the Central Organisation of Trade Unions and the Federation of Kenya Employers successfully challenged it in court, citing lack of public participation.
It took the determination of President William Ruto to have the housing programme on its feet.
Multiplier effect
Almost every constituency is a construction site, and the multiplier effect on the economy is unimaginable. All categories of construction professionals – architects, engineers, quantity surveyors, project managers, plumbers, electricians, masons, environmentalists and labourers – are engaged in sites.
It is estimated that for every $1 (Sh129) spent on the construction of a house, the return on investment is $7 (Sh903). In the long run, it will translate to an expansion in the Gross Domestic Product, wealth creation and higher tax revenues for the Exchequer.
Ultimately, the affordable housing programmes are poised to contribute towards fiscal consolidation besides creating many direct and indirect jobs.
Thousands of Kenyans are going to live in cleaner and safer environments, with reduced public health expenditure and fewer incidents of insecurity.
Given that the poor tend to spend higher proportions of their incomes on housing, affordable housing is, therefore, a key factor in bridging the inequality gap between them and the rich.
The potential benefits of the programme notwithstanding, the government should pay attention to the issues Kenyans are raising.
If, for instance, private investors are engaged to utilise public land to provide housing, such houses should be sold at discounted prices to factor in the free land. In addition, the public should be engaged on every aspect of the programme.
In conclusion, the affordable housing programme affords Kenya an ample opportunity to stamp out the menace of slums.
The government should also use public land to build rental properties for those who are not keen on buying houses. Besides, it could consider a cross-subsidy framework where a portion of houses built on public land are sold at market prices, and the proceeds used to build affordable houses.
In future, the government should consolidate the Social Health Authority, the National Social Security Fund, the Housing Levy and Pension to create a fund that goes towards medical, insurance, housing and pension needs of Kenyans. This approach has been implemented in Singapore, Brazil, Malaysia and India, among other countries, with tremendous success.
Lastly, the government should ensure the housing units are allocated to deserving individuals.
Prof Ongore is a Public Finance and Corporate Governance Scholar based at the Technical University of Kenya. [email protected]
