What challenges and opportunities exist in Kenya as the government forges partnerships with communities, institutions, and investors to give more citizens an opportunity to live in and raise their families in a dignified environment?
More than 60 years after the end of colonial rule, affordable housing in Kenya remains a pipe dream for her rapidly growing population. The accelerating rate of urbanization and demand for housing far exceeds supply as a huge section of the citizens find themselves in the middle of a severe housing crisis as many are forced to make their homes in informal settlements all over the urban areas. This article discusses the current state of affordable housing in Kenya, and the key challenges and potential opportunities that they present.
A Crisis Among Us
The growth of urban areas around the country has presented an unpleasant housing deficit, particularly in the major cities like Nairobi. Recent estimates indicate that the country requires an annual supply of about 250,000 new housing units in order to meet the current demand, yet only around 50,000 units are being constructed each year. And of the 50,000 units, majority are beyond the reach of the average income earners in terms of affordability. This annual shortfall of new housing unit targets is contributing to the housing crisis and will continue to be a major challenge if not tackled. And one of the main effects of the crisis according to a study by Habitat for Humanity is having 60% of Nairobi’s 5.3 million population living in informal settlements.
Challenges in Affordable Housing
Some of the challenges facing the average income earner and contributing to the deficit when it comes to buying or renting an affordable home are described as:
- Growing Rate of Urbanization: The growing rate of urban population in Kenya has put immense pressure on the housing infrastructure. The expansion of cities like Nairobi and Mombasa is still faster than the pace at which housing projects are coming up. This gap in supply and demand has led to overcrowded and substandard urban areas and a decline in service delivery and living conditions.
- The High Price of Land in Urban Areas: Land in urban areas are super expensive, and this makes it difficult for private developers to build affordable housing and make profit. Speculation, high land tax rates, outdated land use policies, corrupt practices like land grabbing all limit the availability of land for low-income housing projects.
- Outdated Housing Policies: Current housing policies and by-laws in counties, cities, and towns around the country have not been effective in addressing the concerns that lead to the housing deficit. Incompetent housing department public officials have also contributed to the lack of progress in reducing the housing deficit. There is a lack of goodwill to implement existing policies that will encourage the development of affordable housing in support for average and low-income families.
- Access to Home Loans: Many Kenyans in the low-income brackets still struggle to access affordable financing to buy or build their homes. Traditional mortgage products are still out of the reach for a large segment of the population due to high interest rates and economic instability and there is a need to find and implement innovative financing solutions to encourage borrowing for housing development.
- High Costs of Construction: The cost of construction materials and labor in 2024 is still considered high. This is due to lack of enough local suppliers and the cost of import duty for construction materials. This has led to the current high price of buying or building a house and makes it challenging for private developers to construct affordable housing units and make a decent profit.
Opportunities for Improvement
Despite these challenges, there is light at the end of the tunnel on the state of affordable housing in Kenya. Opportunities that have been tried and tested in other countries can work here with enough goodwill. Some are mentioned below:
- Innovative Home Loan Products: As mentioned above, creating affordable housing finance options by institutions like microfinance, Saccos, and rent-to-own firms can help increase access to housing loans for low-income families. PPPs between the government, private sector, and financial institutions like Housing Finance Group and other major banks can assist in facilitating of affordable and inclusive housing finance products.
- Public-Private Partnerships (PPPs): PPP agreements can accelerate the development of affordable housing by merging the strengths of both sectors, for example the government’s resources like land and financing, and the private sector’s strengths like expertise and technological skills, and combining both to maximize on productivity will result in more affordable housing projects being started.
- Housing Policy: Outdated housing policies need to be reviewed for the benefit of the citizens and in order to create a more favorable environment for affordable housing investment. Policies like the approval process for building, design and building material standards, tax incentives, and land use policies that prioritize affordable housing can help meet the annual housing targets and reduce the deficit.
- Building Technologies: New building technologies such as prefabricated buildings and sustainable materials that can significantly reduce construction costs and time should be applied in order to increase the number of affordable homes. PPPs can encourage innovations and make them available and feasible to produce high-quality, affordable homes at scale.
- Public Participation: Communities should be involved in the planning and development stages of housing projects in order to ensure the new homes will meet the actual needs of residents. Community-driven projects can lead to more sustainable and acceptable housing solutions.
- Land Reforms: Land laws should be reviewed and enacted to minimize or end speculation, stop land grabbing by corrupt officials, and make unused land available and affordable for affordable housing development. Proper land use planning and clear laws and regulations can make sure that land is available for affordable housing projects.
The Role of the Government and Private Sector
The government and the private sector can form PPPs to address Kenya’s housing crisis. The government has the authority to create an enabling environment through reforms, providing the infrastructure, and incentives for affordable housing. The private sector can bring the investment, efficiency, and innovative solutions to the table.
Kenya faces significant challenges in providing affordable housing, but there are also ample opportunities to address these issues. Innovative financing, public-private partnerships, embracing new technologies, and public participation in the development process, are all ways that the country can make progress in tackling and reducing its housing deficit to ensure that one day all Kenyans will live in decent and affordable homes and communities. This will he concerted efforts of the government, the private sector, and the citizens to work together and turn the challenges into opportunities to tackle the housing crisis in Kenya.
