State told to invest in cooperative societies to achieve affordable housing agenda

Experts propose the setting up of an affordable housing revolving fund.

In Summary

•The fund could be similar to the Higher Educational Loan Board (Helb) kitty, to be channeled through cooperative societies to accelerate construction of housing units for members.


President William Ruto speaking to workers during the launch of Emgwen affordable housing projects in Nandi County on January 16, 2024.
President William Ruto speaking to workers during the launch of Emgwen affordable housing projects in Nandi County on January 16, 2024.
Image: PCS

On Friday last week, the appellate court declined to extend an order, allowing the government to continue collecting the housing levy.

A bench of three judges ruled that public interest tilts in favour of not granting the order sought by the government.

"Public interest, in our view, tilts in favour of not granting the stay or the suspension sought. Public interest tilts in favour of awaiting the determination of the issues raised in the intended appeals," a bench consisting of Justices John Mativo, Lydia Achode, and Mwaniki Gachoka ruled.

The latest court ruling adds a twist to the country's dream to fix a housing deficit estimated at two million units, against an annual production of only 50,000 units, according to the Kenya National Bureau of Statistics (KNBS).

President William Ruto has committed to staying true to the quest to make housing more affordable for many as stipulated in the Constitution of Kenya 2010 and the National Development Plan, Vision 2030 Strategy.

These blueprints have targeted the provision of 200,000 housing units annually for all income levels.

Although the affordable housing plan has been critiqued, with the court terming the 1.5 per cent levy on payslips as an illegality, cooperative movement expert and real estate investor and Urithi Housing Cooperative Society chairman Samuel Maina remains optimistic and offers answers to what can make affordable housing plan a success.

"The cooperative society movement system is the best way to voluntarily win the public into the affordable housing project. It has decades-long structure and society owned, hence easy to manage the traceability element," Maina told the Star in an exclusive interview.

He proposes the setting up of an affordable housing revolving fund to be channelled into cooperative societies similar to the Higher Education Loan Board Helb that transcends generations.

"I speak from a ground experience. Urithi Housing Cooperative Society has over 30,000 members and 16 successful housing projects. Most of our members do not have payslips. They contribute and move together as a family into owning homes," Maina says, a beam of happiness showing on his optimistic face, betraying his passion for solving the country's big housing deficit.

He is asking the state to invest and ride on the country's rich 25,000 cooperative societies with at least 15 million members to effortlessly deliver the housing agenda.

"We have seen what producers' cooperative societies delivered for the agricultural sector. The Cooperative Societies Act just needs to be amended to, for instance, allow deposit-taking cooperatives to invest more in real estate."

He says that the state just needs to boost members' deposits a little bit, ensuring the cess collected is channelled towards the building of infrastructure and social amenities that complement the housing sector.

According to him, if the state for instance just pumps Sh10 billion into 100 housing cooperative societies, it will accelerate the construction of housing units with the state's funds slowly recovered through beneficiaries' deposits and with state funds sustainably recovered and passed to preceding members in the schemes.

He suggests that those funds be managed by each cooperative society based on their absorption capacity, but supervised by the Ministry of Cooperatives.

He believes that this will help the state ease the administrative burden, and make the affordable housing agenda people-owned, traceable, and self-sustaining.

"Cooperative societies are big families with shared aspirations. It is easy to appraise off-takers and make them participate in the development of designs and associated social considerations," Maina told the Star.

He says that unlike the current setup of affordable housing, which lacks public willingness, vague house allocation plan, complex management of funds, for political undertones and court battles, drawing from his industry experience spanning over a decade, Urithi Chairman is confident that Cooperatives hold the key to the implementation of this seemingly complex yet noble idea.

"It will be a journey of the willing and demand-driven,as opposed to hypothetical supply driven projection. Through the Cooperative Societies, it will be easier to provide houses in far-flung areas where individuals own land and need to upgrade if only they are supported by government interventions. There is already an existing infrastructure in terms of offices,staff, and networks currently owned by the Cooperatives.

"Why reinvent the wheel?"

He adds that it is voluntary and hence will depoliticise the concept. It is important to note that there is an already existing demand through the membership, who in turn nominate their kin and kith hence making it easy to transfer the property in case of non-performance or demise.

"It is also self-sustainable- security, deposit, less risky, easy to manage, traceability etc. As a cooperative, we have been executing the dream of affordable houses even before the government took it up as a national agenda," he said.

"We know where the shoe pinches having suffered the teething problem in the implementation of this important agenda. We believe our involvement will tweak the matrix," Maina asserted.

He quips that by supporting the cooperative societies, the government will be stimulating the economy at the bottom of the pyramid in line with the Kenya Kwanza manifesto, thereby creating employment through organised artisan Saccos, who in turn become beneficiaries of the scheme.

He says it is easier to manage cooperatives through the ministry than fragmented projects.

"The ideal path for Kenya's Affordable Housing Programme (AHP) is clear: voluntary participation fueled by a well-designed revolving fund. However, reality often presents a less elegant picture," says Muchemi Ndiang’ui, Project Lead – Building Homes, Building Lives at AIB-AXYS Africa Limited.

Voluntary contributions, while aesthetically pleasing, Muchemi says it has not yielded the desired results in Kenya's existing housing cooperative system.

"The revolving fund concept, though promising, remains unimplemented. This leaves the government with a stark choice: embrace the politically unpopular option of mandated contributions, or explore avenues with limited appeal,"he said.

According to Muchemi, debt, a tool already utilised in the AHP framework through the KMRC mortgage loan extension, is not a desirable option at present.

Kenya's government is facing fiscal constraints, making further debt accumulation unpalatable.

With limited runway available, the government seems to be left with the "bitter pill" of mandated contributions, often referred to as the housing levy.

According to him, the adoption of mandated contributions is a pragmatic, albeit undesirable, solution.

It is a temporary measure, one hopes, to bridge the gap and pave the way for a future where voluntary participation can truly flourish.

"The success of this programme will depend on transparency, accountability, and a clear roadmap for transitioning to a more sustainable, voluntary system," he said.

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