Ekaterina Handa Calls for Accountability and Reform of Housing Levy, Says Fund Must Revolve Before More Taxes or Loans

 Incoming Women JSC Representative Ekaterina M. Handa has called for urgent reforms in the management of Kenya’s Affordable Housing Fund, warning that the current Housing Levy model risks placing an increasing financial burden on Kenyans without delivering homes at the scale promised.

Handa said the Government’s recent admission that the mandatory 1.5 per cent Housing Levy is insufficient to finance the targeted 200,000 housing units annually raises important questions about the sustainability, accountability and legal administration of the programme.

Housing Principal Secretary Charles Hinga recently disclosed that the State collects approximately Sh6 billion monthly from the levy, amounting to about Sh72 billion annually, but acknowledged that the collections alone cannot sustain the Government’s annual housing target.

According to Handa, the figures expose a significant gap between the amount collected from workers and the cost of delivering affordable housing.

She noted that delivering 200,000 units at an estimated average cost of Sh2 million per unit would require approximately Sh400 billion annually, meaning the Housing Levy would cover only a fraction of the required financing.

Handa argued that the Affordable Housing Fund was established as a revolving fund and should therefore operate on a model where housing is constructed, sold, proceeds recovered and reinvested into new projects.

“A revolving fund that does not revolve is just a tax,” Handa said, calling for greater transparency on how levy collections are being invested and how proceeds from completed housing units are returned to the Fund.

She further raised concerns over reported gaps in enforcement and oversight, particularly where employers fail to remit the levy and where the Affordable Housing Fund operates outside the direct oversight of the Controller of Budget.

Handa said public accountability must remain central to the programme, arguing that the collection and expenditure of public resources should comply with constitutional principles of openness, accountability and prudent financial management.

She also cautioned against expanding the programme through additional borrowing before the existing model has demonstrated that it can sustainably generate revenue and deliver houses to Kenyans.

As a practical solution, Handa proposed that the Government first focus on completing, titling and selling already constructed housing units before launching additional large-scale projects.

She also suggested using Housing Levy collections as a guarantee to unlock private financing from pension funds and SACCOs, allowing private capital to participate in housing development while reducing direct pressure on public finances.

Handa further called for reforms to strengthen the enforcement chain and restore stronger oversight of the Fund, including greater involvement of the Controller of Budget.

She said the Government should also prioritise housing projects in areas where demand is already established, including Nakuru, Eldoret, Kisumu and Mavoko, arguing that faster sales and occupation would enable the Fund to recover its investment and finance subsequent projects.

According to Handa, the Housing Levy should ultimately demonstrate a clear connection between the money collected from workers and tangible housing outcomes.

She warned that Kenyans would be more likely to support the programme if they could see completed, affordable homes, occupy them and access transparent information on how their contributions are being utilised.

“The solution is not to increase the levy, borrow more or promise another 200,000 houses. The priority should be making the current Fund actually revolve,” she said.

Handa said the Government does not necessarily need another tax to make affordable housing work, but rather stronger financial discipline, transparent administration and a sustainable model that allows proceeds from completed houses to finance future developments.

She maintained that accountability should come before expansion, noting that the success of the Affordable Housing Programme will ultimately depend on whether the Government can demonstrate that the levy is being used efficiently and that the Fund can sustain itself over time