Thursday, May 25, 2023

Loyalty and affordable housing

Preamble

This will be a bit long so find something else to read if you don't have the patience for wonky, ill-written, badly-argued, semi-literate analyses.

I

I pledge my loyalty to the President and Nation of Kenya. My readiness and duty to defend the flag of our Republic. My devotion to the words of our national anthem. My life and strength in the task of our nation's building. In the living spirit embodied in our national motto - Harambee! And perpetuated in the Nyayo Philosophy of Peace, Love and Unity.

II

"mandatory patriotism"

III

"eradicating slums in Kenya"

IV

No one wants to live in sub-prime housing. No one wants a house in a neighbourhood plagued by blocked sewers and drainage, where garbage piles on for years in end, where the street lights have never been installed, where footpaths turn into muddy rivers in the rainy seasons, where access to water is only through the sufferance of water shylocks who charge extortionate prices and where, if you survive all this, the "house" is a four-walled metal shack that barely fits two and is vulnerable to the privations of violent criminals and equally violent police. Suffice to say what electricity is available in these places is neither official nor cheap.

V

The reasons for the deductions into the Housing Development Fund have varied. It is designed to offer the downpayment for an affordable house. It is a savings scheme for Kenyans. It is a source of financing for the private development of affordable housing. It will spur employment among the youth of Kenya. It is meant to supplement ones retirement benefits scheme funds.

I don't think there is a Kenyan who has any fundamental objection to a scheme that provides affordable housing for Kenyans, especially Kenyans living and working in cities and urban areas who don't have access to affordable housing. The mainstream news press has breathlessly repeated the statistics that say Kenya suffers from a severe housing shortage and ignores the explanations offered by economists and professional architects that the shortage is artificial due to, among other things, the high taxes imposed not he housing industry and the high prices charged for the thousands of vacant housing units in places like Nairobi City.

It would pay if we knew what we were being told, and whether what we were told squared with the facts on the ground.

VI

The [National Housing] Corporation may, from the National Housing Development Fund and from time to time, in the manner provided by this Act...make loans to any company, society or individual person for the purpose of enabling such company, society or individual person to acquire land and construct thereon approved dwellings or to carry out approved schemes...[and] construct dwellings, carry out approved schemes and lay out and provide services for approved schemes. - Housing Act, Cap. 1117 [s. 8(1)(b) and (c)]

VII

The functions and powers of the county are...County planning and development, including...housing. [Paragraph 8(d), Part Two, Constitution of Kenya]

VIII

When Mr. Raila Odinga, as Minister of Roads, Public Works and Housing in the first Mwai Kibaki Government, initiated the Slum Upgrading Programme in 2004, he set off a chain of events that ended in the complete subversion of the role of local government in the provision of social and affordable housing in Kenya. Of course, we can't ignore the fact that local government had become a hotbed of corruption - the failure of the City Council of Nairobi and the Nairobi City Commission are stark reminders of that corruption. However, instead of making the necessary corrective changes in governance and integrity, Mr. Odinga, with he support of the central government bureaucracy that had become wedded to contractors, took over a role it had never performed and undertook the project without further reference to the people ostensibly for whom the project was initiated.

Anyone who has followed up on the Slum Upgrading Programme will be able to confirm that while the "affordable" housing units were indeed constructed and delivered for occupation, the current occupants are not the original targets of the Programme; many of them, if not all, rent out the units to Nairobi's who can afford to pay the rent, and they have gone back to the slums from which they were supposed to be "rescued".

The 2018 Affordable Housing Scheme was challenged in the High Court and the Employment and Labour Relations Court. Among the arguments was that too was a usurpation of the role of county governments in the development of housing as prescribed by the Fourth Schedule to the Constitution. Both courts granted injunctions preventing the implementation of the Programme. The petitions were withdrawn, without the superior courts rendering a judgment, after the law was amended to repeal all references to the Programme. The re-introduction of the Programme, in the same way it was introduced in 2018, using nearly the same language, in the absence of a definitive ruling by the superior courts, risks the same kind of litigation that saw it being suspended for two years and then scrapped.

IX

I read once in the tabloid press that there are place sin Nairobi where the price of an acre of land has exceeded one billion shillings. There are many factors affecting the price of land, not least being the scarcity of serviced land at affordable rates for the construction of affordable housing. In more mature markets, such as South Africa, a flat of 100m² costs less than ten million shillings. In Nairobi, prices start at twelve million shillings. The continued existence of large swathes of the City being "single dwelling bungalows in quarter-acre" is a scandal of poor physical and land use planning.

The redevelopment of "leafy suburbs" like Lavington, Kilimani, Kileleshwa and Jamhuri was long overdue. The same re-zoning should be done for Parklands, Westlands, Spring Valley and Kitisuru to open up uneconomically utilised land for higher housing density instead of concentrating the densification of housing in Eastlands which, in any case, has long passed saturation point. In the long run, Muthaiga, Nyari and Runda should also cease to be low-density residential areas given their proximity to the Central Business District. Re-zoning these areas will unlock land at affordable rates and spur the private development of affordable housing, and thereby obviate the need for an additional tax on already highly-taxed Kenyans.

Coda

There is a large swathe of land in Nairobi between the Makadara Railway Station and the Central Railway Station that is ripe for redevelopment. Part, if not all, of it is owned by the Kenya Railways Corporation Staff Retirement Scheme. It will cost and arm and a leg to compulsorily acquire but not is the best alternative option to a mandatory tax on hard-taxedKenyans and it may stave off the day that Runda, Muthaiga and Nyari have to be converted into high-rise paradises. The National Social Security Fund, and the retirement benefits schemes for the employees of the former local authorities, have the money to acquire and redevelop the land. If they buy in, the dozen or so major private retirement benefits schemes will have the confidence to buy in as well. Private funds for the redevelopment of the land is available. There is no need to trouble salaried Kenyans unless they wish to buy into REITs.

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