REMARKS OF H.E. RAILA ODINGA, EGH, AT ALMA PHASE ONE LAUNCH.
JULY 18, 2019
Ladies and gentlemen;
It has always been our dream to provide affordable and adequate housing to our citizens.
That dream has fared differently under different regimes. But it has never died.
Despite several efforts to address it, housing remains a huge challenge, particularly in our urban centres.
It is estimated that the country’s urban centres face a shortage of 200,000 housing unit annually.
On average, we are only able to construct 50,000 new housing units every year against the demand of 200,000 units.
The hardest hit are the youth, students who are coming out of colleges and middle-income earners.
This is the category of our citizens who are struggling to settle down as they start new jobs or look for jobs and as they struggle to start families and push our country forward.
While Nairobi’s housing demand falls short by close to 150,000 units annually, the city receives at least 500,000 people from rural homes to the city annually in search of employment opportunities.
We are certainly in a crisis when it comes to housing.
We therefore should not be surprised that slums are sprouting everywhere and rents are forever going up.
Because of supply are inadequate, urban residents spend approximately 34 per cent of their income on rental charges.
That eats into the capacity of the most significant age group to save and invest in our economy. When nearly half of your salary goes into paying rent, you will hardly invest in business, farming, education or anything else.
The houses are both unavailable and unaffordable.
As at last year, the average price of a 1 to 3-bedroom unit stood at Ksh14m.
At the same time, a 4 to 6 bedroom property stood at Ksh42m. Houses with prices of Ksh. 3 million and below remain in acute shortage or simply don’t exist while high end houses are in over supply.
House are unavailable and unaffordable partly due to the high cost of construction.
Developers incur additional infrastructure cost when constructing houses because much of the land is unserviced and land is extremely expensive.
The average land and infrastructure cost in Kenya makes up 10 to 35 per cent of the total cost of construction.
This is happening at a time mortgages are unaffordable and inaccessible. We need to address these urgently and comprehensively.
As things stand, the prevailing scenario is a recipe for the economy to stagnate.
Against this background, it is encouraging that the government has identified housing as one of its Big Four Agenda.
The national government’s plans to construct about 500,000 affordable houses to bridge the housing gap by 2022, if realised, would be a long overdue milestone for our country.
We may differ on how the dream of providing decent and adequate housing can be financed and realised. But we cannot debate the need for new public housing units in our urban centres.
To fully realise our dream of housing every Kenyan especially in urban areas, we need to internalise the fact that housing is a basic human need.
Having internalised that, we will then need to accept that when the provision of housing is left purely to market forces, segments of our population will not be adequately housed.
The government will therefore need to intervene in the market to ensure that our people can have decent housing.
Our approach and vision has been, and remains that we need to build subsidised public housing for citizens with household incomes below a designated threshold. That model has worked successfully in places like Singapore.
Today, 86 per cent of the Singapore population live in public housing. Nine out of ten public housing dwellers own their flats. That is something we can do in Kenya if we commit to it.
There is real gain in having citizens own homes, especially in multi-ethnic, multiracial and multi-cultural urban centres.
Home-ownership enhances a citizen’s commitment to his country, and contributes to political and social stability. Community living in a public housing area enhances unity and a sense common purpose among citizens.
As we seek to build new houses, we must also develop and implement an aggressive Estate Renewal Strategy to revamp the old estates.
But the government cannot achieve this ambitious dream alone.
To accelerate the development and access to affordable and adequate housing, we need to be open for public private partnership.
I wish to encourage the Government to embrace the private sector as partners in the provision of affordable housing.
The completion of Phase 1 of Alma is an example of what we can achieve if we are working together as government and private sector.
The government must actively support the sector by creating the right environment for mortgage lenders and housing developers.
Such support can come in the form of improving access to land, providing basic infrastructure, and improving the efficiency of mortgage registration and title transfers.
We must address the affordability gap in the housing market by ensuring that we create adequate institutions to fund mortgages.
We need to pursue policies that can encourage SACCOs to help bridge the gap in the housing finance market.
It is my hope that this example set here can be embraced and replicated elsewhere across our towns.
I wish you well as you pursue this dream that is in line with our overall goals as a nation with regard to housing our people.