The Opportunities Around the Half a Million Homes Project by Government.
Last week on Monday I attended the 6th edition of the Nation Leadership Forum (NLF). It was held at the usual Manu Chandaria Auditorium of the University of Nairobi. And the discussion for the day was centered on building dreams. Actually, the dream of every Kenyan is in owning a home and so the discussion was all about affordable housing to make the Kenyan’s dreams a reality.
Affordable housing is among the big four agenda put forward by the Kenyatta government alongside universal health coverage, agriculture as well as manufacturing. Manufacturing is to create a million jobs (no pun intended), this will enable the people to think of housing as a fundamental human need after agriculture has solved their food issues. Then universal health coverage rounds up the near perfect live sought after by all citizens.
Statistics show that the city’s population is about five million people. Of those, eighty percent are renting while the remaining twenty percent own a home or homes. Of the eighty percent renting Nairobi residents, sixty percent live in slum areas. It thus becomes very crucial for the government to think of quality, decent but affordable housing for the Kenyans.
The government has segmented those housing plans on a scale of the income levels of individuals. There is the zero to fifteen thousand income earners to whom owning a home is a ‘hallucination’, then there is the fifteen to fifty thousand who must be helped to afford a home. And finally the fifty to one hundred thousand income earners who are categorized as the mortgage gap because they can get mortgage loans to help finance them in their quest to own a home. This is where the government is concentrating its efforts.
As a matter of fact there is a deficit of about 2.3 million homes against the backdrop of 500,000 homes the government intends to build in the next five years. The CS for infrastructure was quick to note that the government is actually intending to attain over a million homes in the next five years. To achieve this, they are working closely with county governments to actualize their dreams.
To help address the whole housing deficit issue, the government projects that a total of slightly over 3 trillion shillings will be needed. But you realize that is a tall order for the ministry and this is where private public partnerships come to play. The first opportunity arises here for developers because the government intends to provide the land for building for free. In return, the private sector investor community will develop the places and the proceeds earned agreed upon to be shared between the parties. Costs for the purchase of the land are wavered off, infrastructure like roads, water and electricity are provided by the government including the planning. It thus means that a lot of the costs have been borne by the government.
I am thinking that what one of the guests noted is sound. His idea was that cooperatives, chamas (merry go rounds) and all these funds in insurance and retirement schemes can help in this whole plan. The issue of financing is a big challenge especially when the barriers to entry in the business space are so huge in Kenya. To win the investor confidence means we need to put all matters in order and ensure that matters of trust don’t cripple the whole dream.
Supposing everything goes on well as planned, what other more opportunities are there for the business community beside the PPP in the construction process? First there is the aspect of the building materials to be used to actualize the dream. Tonnes of materials will be required from cement, to steel, mortar, labor, roofing materials and many more other supply materials.
The materials needed here are to be achieved in two ways. One is through import of newer materials used in construction as well as through local manufacturing of the rest of the materials. However, litigation will be necessary to ensure local traders and manufacturers are protected. For the demand of labor, a lot of professionals will be engaged including planners, architects, engineers, EIA experts among others. Then there is the technical skilled labor that include masons, carpenters, painters, craft artisans and many more others. In one way or the other, employment opportunities will arise for the locals.
The successful completion of the project will also spiral a new creep of other opportunities. This will work best especially in the social housing that is supposed to be built in the slums. The low cost housing in these areas means that we are to do vertical development hence house much more people. And where there are many people, there is need to get access to all the basic amenities.
Part of these amenities include healthcare services, education centers, security, social welfare, water, transport services etc. Besides those, there will be need for basic consumer goods which include food and groceries purchases, personal care products, cleaning services and clothing. Successful completion means there will develop an ecosystem that will be very critical to some of the individuals, not only those residing in those areas but also others, which means the issue on unemployment will be dealt with even if on a small scale.
Other issues to do with the sustainability of the whole project especially now that it touches on people, land and money have to be ironed out wisely. Issues to do with rightful allocation of the houses once complete, corruption issues, the proper engagement agreements between government and the private investor community as well as issues to do with bureaucracies have to be worked out properly if we could wish to see a complete and successful project.
All said and done, I am hopping the government is well prepared and has all the necessary measures put in pace to ensure there is nothing short of success for this project. Once it succeeds, the ripple effect can take credence and perhaps we could have become an inch better than how we are today.
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