Elephant In The Parlour: The Tough Questions In Affordable Housing
By Stephen Osomba
From New York City in the United States of America (USA) to Nairobi City in Kenya, housing remains a contentious issue. As the global economy expands and urbanisation spreads, many more people in thriving cities are finding it increasingly difficult to secure decent accommodation. They have effectively been priced out of the market. In the USA, this has resulted in a spike in homelessness, with more streets now dotted with tents, commonly referred to as rough sleeping in the United Kingdom. In Kenya, we have seen the mushrooming of slums as the working poor try to cope with the fast-paced and expensive city life.
The Reflections
Undeniably, governments around the world are attempting to address the housing challenge through various policy interventions. The Kenyan government, for its part, initiated an affordable housing scheme to provide modest shelters for the working poor living in major towns across the country. This initiative began in 2017 under the Jubilee government as part of its economic transformation legacy action plan, christened ‘the Big Four Agenda’. It was an ambitious plan by any measure, and many economic pundits doubted how the country would manage given the persistent fiscal challenges. Even so, against all odds, the government went ahead and initiated the project, with the first affordable housing project consisting of 1,370 units launched in Ngara along Park Road, Nairobi City. Soon after the launch, and following much reflection, many began wondering how exactly the scheme was going to work. The tough key questions that lingered in people's minds included: How will the projects be funded? How will locations for the projects be identified and selected? How will the units be allocated after completion? How will the newly created communities be managed and maintained? Let us tackle each in turn in the subsequent sections.
Funding of the Affordable Housing
If you have been following Kenya’s national budget statements closely, you may have noticed that there isn’t enough cash for development. This is because approximately 61% of the budget is spent on financing recurrent expenditures, while a paltry 39% is set aside for development, a balance that is often misappropriated. And there is no respite, as it is increasing steadily. Compounding the already dire situation, the country is not raising enough revenue from tax collections, which have been on a downward spiral since 2013. Consequently, the fiscal deficit has been widening every year. By the end of 2020, the budget deficit stood at 9.0% of the country's GDP. The government plans to cut it to 7.5% in 2021/2022, according to the finance ministry's draft budget policy statement.
Given the country's fiscal situation, it was important to scrutinise the financing of the affordable housing projects. The honchos at the National Treasury had a light-bulb moment. In their wisdom, they introduced a housing levy mandatory for everyone in formal employment. It was a contentious issue because not everybody wanted to own a home in the city or anywhere else, for that matter. As such, one cannot be forced to pay for what they do not want or have others benefit at their expense. It was not long before the matter was brought to the courts of law, and that train was stopped right in its tracks.
The government has since changed tack and is now using the public-private partnership model to roll out the scheme. In this model, the government provides public land and brings on board private developers to finance the projects, then agrees on leasing until the developer recoups their investment. Thus far, this approach appears to be working, with several initiatives launched in different areas across the country.
Site Location Identification & Selection
In real estate, there is a cardinal maxim that every practitioner adheres to: location is everything. If you are shopping for either a house or an office, chances are that you will give priority to their location. If it is a home for your family, you will consider factors like proximity to your workplace, school, and hospital, among other social amenities that will certainly improve your quality of life. When everyone needed to contribute to the scheme before the court declared an injunction, many were worried if they would like the locations of the affordable housing projects.
The government attempted to resolve the issue of location by redeveloping old public housing estates that were previously owned by the defunct municipal authorities and have since been inherited by the county government. It promised to give priority to the residents who were evicted from the houses to make way for redevelopment. They are also putting up projects on reclaimed land in slum settlements, which mostly occupy public land. Even so, what happens if someone does not like the location? And can they wait for a project in their preferred locations? In other words, there is no public participation in the location of the affordable housing projects. Put succinctly: here are the available projects; take it or leave it.
Allocation of Completed Units
Of all issues, this is perhaps the most controversial since the affordable housing scheme was first touted. When the scheme was first announced, many were elated that the government was finally doing something in the realm of social development. However, soon after, everyone was snapped out of the dream and faced with reality. How will the houses be allocated?
After the launch, this question was put to the authorities, but they were caught flat-footed. All along, as the government worked tirelessly to put together a plan, they did not think about how they would allocate the units. It quickly turned into a storm. They were compelling all those formally employed to contribute to the scheme but could not guarantee them a unit once the construction was completed. It became a real crisis that threatened the success of this noble initiative.
The government bureaucrats went into a retreat to crack the matter. They came back claiming to have a sustainable solution to the public's concerns. Everyone was all ears, and they convened a press conference. To the utter shock of the public, they said that the units would be allocated using a lottery. If you are a punter or a good student of probability, then you know that there are high chances that you may never win a lottery in your lifetime. Despite the lamentations from the public, the government stuck to its guns. This approach eroded what little public confidence was left. Nobody in their right mind would like to gamble when the odds are not in their favour.
Management and Maintenance of Affordable Housing Communities
For those who will successfully manage to play and win the affordable housing lottery, there is a need to think about the future of the newly created gated communities. In privately developed gated communities, the tradition usually involves putting in place an estate management company whose shareholders are the homeowners. The management is mandated, among other things, to formulate rules and regulations to govern the community. This typically includes the upkeep of the estate, and homeowners are expected to pay a service charge to foot the maintenance bill. It covers garbage collection, street lighting, landscaping, water supply, security, and cleaning services, among others.
However, if you visit any public housing estates owned by the county government, you will notice that estate management and maintenance are practically non-existent. Naturally, this would cause anyone to worry if they bought a unit in any of the affordable housing schemes. Will there be a proper estate management company or committee to oversee the welfare of the community members? Will it work, given that the majority of the current public housing schemes are dilapidated due to lack of maintenance?
Final Thoughts
Housing is one of the biggest social problems in the world today. It is therefore important for any government worth its salt to pursue responsive policies that will mitigate homelessness and the lack of decent housing. Overall, there is no doubt that the affordable housing scheme by the government of Kenya was a noble project. Boma Yangu, as it is now called, has 11 affordable housing projects scattered across the country. Some of the notable ones include Buxton Affordable Housing Project in Mombasa, Kitui Affordable Housing Kalawa Road, Pangani Affordable Housing Project, Starehe Affordable Housing Project, Mariguini Informal Settlement, NHC Stoni Athi View, Kibera Soweto East Zone B, Mavoko Sustainable Housing Programme, and the pioneering project, Ngara Park Road Affordable Housing. There are many more projects lined up in the pipeline as indicated on the Boma Yangu website. As to the approach they have adopted, the jury is still out.
By Stephen Osomba
From New York City in the United States of America (USA) to Nairobi City in Kenya, housing remains a contentious issue. As the global economy expands and urbanisation spreads, many more people in thriving cities are finding it increasingly difficult to secure decent accommodation. They have effectively been priced out of the market. In the USA, this has resulted in a spike in homelessness, with more streets now dotted with tents, commonly referred to as rough sleeping in the United Kingdom. In Kenya, we have seen the mushrooming of slums as the working poor try to cope with the fast-paced and expensive city life.
The Reflections
Undeniably, governments around the world are attempting to address the housing challenge through various policy interventions. The Kenyan government, for its part, initiated an affordable housing scheme to provide modest shelters for the working poor living in major towns across the country. This initiative began in 2017 under the Jubilee government as part of its economic transformation legacy action plan, christened ‘the Big Four Agenda’. It was an ambitious plan by any measure, and many economic pundits doubted how the country would manage given the persistent fiscal challenges. Even so, against all odds, the government went ahead and initiated the project, with the first affordable housing project consisting of 1,370 units launched in Ngara along Park Road, Nairobi City. Soon after the launch, and following much reflection, many began wondering how exactly the scheme was going to work. The tough key questions that lingered in people's minds included: How will the projects be funded? How will locations for the projects be identified and selected? How will the units be allocated after completion? How will the newly created communities be managed and maintained? Let us tackle each in turn in the subsequent sections.
Funding of the Affordable Housing
If you have been following Kenya’s national budget statements closely, you may have noticed that there isn’t enough cash for development. This is because approximately 61% of the budget is spent on financing recurrent expenditures, while a paltry 39% is set aside for development, a balance that is often misappropriated. And there is no respite, as it is increasing steadily. Compounding the already dire situation, the country is not raising enough revenue from tax collections, which have been on a downward spiral since 2013. Consequently, the fiscal deficit has been widening every year. By the end of 2020, the budget deficit stood at 9.0% of the country's GDP. The government plans to cut it to 7.5% in 2021/2022, according to the finance ministry's draft budget policy statement.
Given the country's fiscal situation, it was important to scrutinise the financing of the affordable housing projects. The honchos at the National Treasury had a light-bulb moment. In their wisdom, they introduced a housing levy mandatory for everyone in formal employment. It was a contentious issue because not everybody wanted to own a home in the city or anywhere else, for that matter. As such, one cannot be forced to pay for what they do not want or have others benefit at their expense. It was not long before the matter was brought to the courts of law, and that train was stopped right in its tracks.
The government has since changed tack and is now using the public-private partnership model to roll out the scheme. In this model, the government provides public land and brings on board private developers to finance the projects, then agrees on leasing until the developer recoups their investment. Thus far, this approach appears to be working, with several initiatives launched in different areas across the country.
Site Location Identification & Selection
In real estate, there is a cardinal maxim that every practitioner adheres to: location is everything. If you are shopping for either a house or an office, chances are that you will give priority to their location. If it is a home for your family, you will consider factors like proximity to your workplace, school, and hospital, among other social amenities that will certainly improve your quality of life. When everyone needed to contribute to the scheme before the court declared an injunction, many were worried if they would like the locations of the affordable housing projects.
The government attempted to resolve the issue of location by redeveloping old public housing estates that were previously owned by the defunct municipal authorities and have since been inherited by the county government. It promised to give priority to the residents who were evicted from the houses to make way for redevelopment. They are also putting up projects on reclaimed land in slum settlements, which mostly occupy public land. Even so, what happens if someone does not like the location? And can they wait for a project in their preferred locations? In other words, there is no public participation in the location of the affordable housing projects. Put succinctly: here are the available projects; take it or leave it.
Allocation of Completed Units
Of all issues, this is perhaps the most controversial since the affordable housing scheme was first touted. When the scheme was first announced, many were elated that the government was finally doing something in the realm of social development. However, soon after, everyone was snapped out of the dream and faced with reality. How will the houses be allocated?
After the launch, this question was put to the authorities, but they were caught flat-footed. All along, as the government worked tirelessly to put together a plan, they did not think about how they would allocate the units. It quickly turned into a storm. They were compelling all those formally employed to contribute to the scheme but could not guarantee them a unit once the construction was completed. It became a real crisis that threatened the success of this noble initiative.
The government bureaucrats went into a retreat to crack the matter. They came back claiming to have a sustainable solution to the public's concerns. Everyone was all ears, and they convened a press conference. To the utter shock of the public, they said that the units would be allocated using a lottery. If you are a punter or a good student of probability, then you know that there are high chances that you may never win a lottery in your lifetime. Despite the lamentations from the public, the government stuck to its guns. This approach eroded what little public confidence was left. Nobody in their right mind would like to gamble when the odds are not in their favour.
Management and Maintenance of Affordable Housing Communities
For those who will successfully manage to play and win the affordable housing lottery, there is a need to think about the future of the newly created gated communities. In privately developed gated communities, the tradition usually involves putting in place an estate management company whose shareholders are the homeowners. The management is mandated, among other things, to formulate rules and regulations to govern the community. This typically includes the upkeep of the estate, and homeowners are expected to pay a service charge to foot the maintenance bill. It covers garbage collection, street lighting, landscaping, water supply, security, and cleaning services, among others.
However, if you visit any public housing estates owned by the county government, you will notice that estate management and maintenance are practically non-existent. Naturally, this would cause anyone to worry if they bought a unit in any of the affordable housing schemes. Will there be a proper estate management company or committee to oversee the welfare of the community members? Will it work, given that the majority of the current public housing schemes are dilapidated due to lack of maintenance?
Final Thoughts
Housing is one of the biggest social problems in the world today. It is therefore important for any government worth its salt to pursue responsive policies that will mitigate homelessness and the lack of decent housing. Overall, there is no doubt that the affordable housing scheme by the government of Kenya was a noble project. Boma Yangu, as it is now called, has 11 affordable housing projects scattered across the country. Some of the notable ones include Buxton Affordable Housing Project in Mombasa, Kitui Affordable Housing Kalawa Road, Pangani Affordable Housing Project, Starehe Affordable Housing Project, Mariguini Informal Settlement, NHC Stoni Athi View, Kibera Soweto East Zone B, Mavoko Sustainable Housing Programme, and the pioneering project, Ngara Park Road Affordable Housing. There are many more projects lined up in the pipeline as indicated on the Boma Yangu website. As to the approach they have adopted, the jury is still out.