With the hurdle that threatened to stall the government’s pledge to deliver 500,000 affordable houses by 2022 out of the way, the plan can now be rolled out.
Central Organisation of Trade Unions (Cotu) had moved to court to oppose 1.5 per cent taxation of gross pay of salaried Kenyans arguing the levy was unconstitutional and amounted to double taxation.
But a truce between the government and Cotu means Treasury can now set up the National Housing Development Fund, where the tax deductions will be deposited.
The fund guarantees private sector developers of financing to execute the programme, in which they are expected to deliver 60 per cent of the houses.
If properly administered, the levy will see the government collect between Sh6 billion and Sh18 billion every month.
Setting up of the Kenya Mortgage Refinance Company is also a plus for the initiative as the firm will refinance primary mortgage lenders such as commercial banks, microfinance institutions and saccos, that will then provide affordable mortgages to the public.
The Boma Yangu online platform, which Kenyans will use to monitor contributions and select houses, has been well received, with more than 200,000 people registering within the first few weeks of its launch.
Developers are keen to see if the government will live to its promise on incentives including tax rebates, provision of serviced land and faster approval of construction permits. Delivery of the promise would set the right foundation for the success of the plan.
The programme stands the best chance of succeeding if the government also makes good on its other promises including buying all houses built by private partners and speeding up approval processes at the Lands ministry.
Already, negotiations are going on with cement manufacturers ready to offer favourable prices to developers. Local manufacturers of windows and doors have been assured of a ready market while importers of machinery will get tax incentives.
With all these initiatives, it should be all systems go and the government has no choice but deliver on its agenda.
President Uhuru Kenyatta will leave a legacy if he succeeds in addressing the housing deficit, currently standing at around two million units and increasing by about 200,000 every year.