Critics describe it a whimsical decision – the announcement by President William Ruto to introduce a housing tax that has been rebuffed by the High Court and Court of Appeal, now awaiting the verdict of the Supreme Court. Ruto promotes it as novel despite the resistance the project faces.
At the heart of a national debate that pits the executive and legislature on one side against the judiciary are the constitutional, legal and financial grey areas that expert warn have the potential to drive the hitherto East Africa’s largest economy into the ground.
A comparative analysis of the Singapore affordable housing model that Ruto has borrowed without deep understanding of the propellers of Singaporean low-cost housing programme, and the Kenyan ‘derivative’ brings to the fore incongruency that is feeding the growing resistance to what has become the president’s pet project.
Ruto is adamant he will execute regardless of the stiff resistance from employers, workers and the court which cite overburdened pay-cheques and galloping inflation, currency depreciation and runway graft.
Former lecturer at the University of Nairobi who is currently a consultant and advisor to South African ministry of human settlements, Prof Atsango A. Talukhaba, says the foundation of Kenya’s of affordable housing as conceived and being advocated by the president is fraught with grey areas – especially funding model – that can easily morph into a quest for grail, with the losers being the taxpayers forced into the housing scheme.
Prof Talukhaba proposes the strengthening of the National Housing Corporation (NHC), a state agency created by the colonial government in 1953 to provide shelter for natives who were migrating to urban areas in numbers previously unimagined, to take over the programme with increased public funding.
The history of affordable housing in Singapore is – too – replete with instances of colonial government involvement. However, the policies were modified to align with the programme with rapid economic growth that resulted in a rapidly rising housing demand powered by booming economy and sharp rise in labour-force from foreign countries.
A government document titled, Living in Singapore: Housing Policies between Nation Building Processes, Social Control and the Market, available in Housing and Development Board (HDB), the Ministry of National Development notes:
“But with the intensification of immigration to colonial Singapore from China, India and from the rest of the Malaysian peninsula, housing conditions considerably worsened. Following the results of a 1918 commission of enquiry about housing conditions, the Singapore Improvement Trust (SIT) was created in 1927. It built about 20,000 housing units between this date and 1959 when Singapore was granted self-government. Most flats were proposed under the form of rentals and most sit estates were situated not far away from the existing city-centre of the time. But the growth of shantytowns was much faster than the deliveries of public flats or than the capacities of the private market to propose affordable housing solutions.”
The statement has echoes of Nairobi, Mombasa, Kisumu and Nakuru before independence when the colonial government, via NHC, initiated housing schemes to accommodate hordes of Africans who were flocking colonial settlements to work in the high potential agricultural industries and railways, among others.
After independence, President Jomo Kenyatta government in 1965, through a board inherited from the colonial government “decided to undertake direct construction of dwelling in areas where Local Authorities were unable or unwilling to do so. In the same year through an amendment of Housing Ordinance of 1953, National Housing Corporation (NHC) was established thereby replacing the Central Housing Board.”
NHC was mandated “to promote low-cost houses, stimulate the building industry and encourage and assist housing research. The NHC became the government’s main agency through which public funds for low cost housing would be channelled to Local Authorities, and for providing the technical assistance needed by those authorities in the design and implementation of their housing schemes.”
While NHC still has the expertise and the backing of the law and the constitution, it has not been enabled to research and implement the concept of low-cost housing.
The difference between the Singapore and Kenya housing programmes, according to the HDB report, is escalating rounds of economic boom provided the impetus for rapid implementation of the housing programme in post-independence Singapore. The Kenyan version is a compulsory scheme that is bereft of public policy, hence the prevailing fear and suspicion that the executive – which consists of individuals have in the past been implicated in grand corruption – the executive had hatched a grand plan skim investors in housing of money.
The World Bank’s economic outlook for Kenya suggests low margins in growth at 5.5 per cent, which could shrink as the economy absorbs the impact of maturing foreign from June this year.
The opposition led by Raila Odinga has described new the housing levy and use of an amorphous body to implement the affordable house programme a “white collar” plot the executive to skim poorly paid workers’ earnings.
“I know the country is taking a wrong turn when workers take home only a third of their basic salaries, the rest going to taxes. It is wrong when a person earning Ksh50,000 has to surrender 20.5 per cent of that money to compulsory taxes,” Raila says.
Before the housing programmes kicked off in earnest in Singapore, then Prime Minister Lee Kuan Yew set the ground rules its execution in 1964 that included punitive punishment for corruption.
Yew warned, “No private landowner should benefit from development at public expense and the price paid on acquisition for public purposes should not be higher than what the land would have been worth had the government not contemplated development generally in the area. I said I would introduce legislation which would help to ensure that increases in land values because of public development should benefit the community and not for the land-owner. Land is becoming a scarce commodity and with the mounting pressure on land at present, we must try to control land values for public purposes’”
Unlike Kenya, says Prof Talukhaba, the housing development programme was undertaken by the government, financed from a special fund set up by Singapore’s Ministry of National Development. In Ruto’s housing programme, it is not clear what the government’s end-game is. In the Singapore plan, the private sector is locked out to prevent corruption.
“Singapore has over the years had budget budgetary surplus as a result of prudent spending and sound economic management policies that have not been undermined by corruption. The Kenya government wants to implement a programme that is not underpinned by policy framework,” Prof Talukhaba told the Tell from his base in Johannesburg, South Africa.
“In South Africa, we have a housing programme for Blacks that was necessitated by apartheid, which restricted Africans to shanties without social amenities – water, hospitals, electricity, roads. However, the Ministry of Human Settlements has set up a fund into which the government and donors deposit money that then is used to put up affordable houses for low income earners, with the lowest (house-helps, gardeners, office assistants) earn a minimum of 250 South African rand (Ksh2500) per day.
The programme according to the architect is determined by demand for houses that on average cost 250,000 South African rand or roughly Ksh2.5 million per unit.
“The houses are allocated to people who need houses. The whole process is anchored on policy implementation that cannot be abused by powerful people or altered through corruption,” explains Prof Tulakhaba.
The Singaporean housing programme also addresses ethnicity with resident communities – foreign or indigenous – is allocated a quota in every project as way of stifling domination by groups with economic and political influence.
In Kenya’s case, the government began taxing salaried people before publishing policies that will shape the programme. Even more intriguing, the executive, which has been championing the programme has not made clear role and function of the National Housing Corporation (NHC).
In striking out the housing levy from Finance Act on November 27, three judges of the High Court, Justices David Majanja, Christine Meoli and Lawrence Mugambi described the tax discriminatory and unconstitutional since it solely targets salaried Kenyans in the formal sector. Justice Majanja pointed out that the levy a comprehensive legal framework and contravened Article 10, 2 (a) of the Constitution.
“The levy against persons in formal employment to the exclusion of other non-formal income earners without justification is discriminatory, irrational, arbitrary and against the constitution,” Justice Majanja declared.
In Singapore, where the Kenya borrowed the housing concept from, the homeowners programme was inspired by an economic boom from mid-1970s that attracted immigrants from India, China, Malaysia, Pakistan and Middle east, among, according to official governments records.
On May 23 last year, President Ruto announced at joint press conference Singaporean Prime Minister Lee Hsien Loong in Nairobi that his government’s decision to adopt the East Asian public housing model, billed as one of the best human settlement programmes in the world.
“We have also agreed to actively explore methods of acquiring knowledge and support from Singapore’s highly prosperous housing model. Kenyans are currently engaged in the housing debate, with approximately 6.5 million people lacking affordable and decent housing. Singapore has one of the most successful stories on matters of public housing. The PM has informed me that 85 per cent of all Singaporeans live in decent and affordable public housing. Their journey did not start overnight, it began 60 years ago, around the same time we established our housing policy. They took some hard decisions and made some sacrifices where they undertook mandatory savings, and the results are there for everyone to see,” Ruto said.
The hard decisions did not include mandatory taxation, but frugal spending in a powered by a robust economy that often resulted in budgetary surpluses. The surpluses were deposited in the HDB kitty.
According to government records Kenya has more than 1,100 slums in Nairobi, Mombasa, Thika, Kisumu, Mombasa, Nyeri, Nakuru, Kisii and other major urban centres.
However, without clear policy framework and implementation roadmap, President Ruto’s housing programme has come under heavy criticism from housing and human settlement experts, accompanied by a flurry of lawsuits that cite untenability of the Kenyan version of affordable housing.
- A Tell report / Juma Kwayera