The government has proposed an allocation of KES 15.5 billion to the housing, urban development and public works sector in the Budget Statement released by the National Treasury for financial year 2020/2021.
In the budget, the government has allocated KES 6.9 billion to cater for the Affordable Housing Programme, KES 7.5 billion for the Kenya Urban Programme while KES 1.1 billion for the ongoing construction of Gikomba, Githurai, Chaka, Kamukunji and Dagoretti markets.
The Ministry of Transport, Infrastructure, Housing and Urban Development, also received KES 172.4 billion to improve and expand the existing infrastructure.
Addressing the National Assembly, Treasury CS Ukur Yattani said the Government had established the Kenya Mortgage Refinance Company (KMRC) whose to provide long term funds to primary housing mortgage providers in the housing sector.
He said the company will offer fixed rate long term loans at concessional rates to mortgage providers who are expected to pass the benefit to citizens at lower than market rates.
The company has raised a capital of Ksh 2.0 billion while the National Treasury has mobilized an additional Ksh 35 billion from development partners to support the Company’s operations.
Other international and financial institutions including six local banks have agreed to pump KES 300 billion into the company to help Kenyans buy affordable homes. The government’s meagre allocations to affordable housing point to the fact that the programme will be largely funded by private capital.
The Treasury CS also mentioned that the government is in the process of operationalizing the Nairobi International Financial Centre (NIFC) to attract investments and private capital to support economic growth and mobilize financing for “Big Four Agenda” projects and Kenyan businesses.
The government is moving to eliminate tax relief for income due to Home Ownership Saving Schemes with respect to HOSP deposits. The move is expected to reduce the income available for distribution to depositors as interest, negatively impacting their ability to purchase homes.
The National Treasury has revised its economic growth estimates from 6.1% to 3%.