Alternative approach to Kenya’s Big Four Affordable Housing: Housing Levy
There has been quite a backlash on the Kenya government directive for employers to deduct 1.5% housing levy from their employees’ salaries towards helping Kenyans assess affordable housing.
The world over; government’s role is well optimized in providing an enabling environment for socio economic development where market forces of demand and supply work best and innovation thrives. This in contrast where government is an active player often as a monopoly which leads to socialism tendencies and artificial less optimal prices that is subsided using tax payers.
A good case is cost of electricity in Kenya that is high due to absorption of wastage, redundancy and theft cost that would otherwise not be incurred had electricity generation and distribution be private sector operated.
The best approach to the housing challenge in Kenya would be done through performing a root cause analysis by distilling, isolating and solving the fundamental challenges or needs.
Kenya government can approach the issue from two policy perspectives; boosting incomes to enable Kenyans afford decent housing or address factors affecting cost of housing
Focusing on factors affecting cost of housing; three factors can be identified; Building code, taxes and levies on land and cost of public utilities. By no means are these factors exhaustive.
Kenya’s building code is archaic and needs to be amended to reflect the reality of 21st century building practices and technology. For instance in the US and Canada there is widespread use of unprocessed timber something that is not allowed in Kenya.
For instance can Kenya develop regulations and standards around building using locally available materials such as mangrove, rice and coffee husks among others which are also cheap. There is also the emergence of new building technology that is yet to be exploited in the form of interlocking bricks and pre-fabs among other that are cheaper than current material.
The cost of land is high attributed to factors of government levies and taxes. Tax amnesty can be considered for land earmarked for building houses similar to housing relief for savings towards housing
Finally; cost related to getting electricity, water and sewer connection must be addressed. Kenya can borrow a French leaf from South Africa where county government sets aside land for housing and providing all housing amenities of electricity, water and sewer. Kenya through public private partnership can develop special housing zones for this.
https://viffaconsult.co.ke/alternative-approach-to-kenyas-big-four-affordable-housing-housing-levy/