The National Social Security Fund (NSSF) plans to fund the construction of 30,000 low-cost houses in Mavoko, Machakos County at an estimated cost of KSh. 500 billion as part of the affordable housing project. The initial phase will entail the putting up of 8,200 units on 55 acres of land and another 15,000 units on 1000 acres belonging to the NSSF.
The prospective project is set to be a flagship project under the Kenya Vision 2030 and the fund is currently seeking a joint venture with various partners to meet the requirements of the 30% real estate investment cap for pension schemes. The Retirement Benefits Authority, allows a maximum of 30% investment in real estate for all pension schemes.
According to a report by the National Construction Authority (NCA), at least 30 per cent of the 500,000 houses to be constructed in the affordable housing agenda will be in Machakos county. NSSF is also set to launch a large housing project in Kisumu County’s Milimani residential area.
Following the NSSF Act of 2013, members are now eligible for mortgage provision at lower rates after the Treasury allowed the Fund to provide home loans through commercial banks. Kenyan government Treasury Cabinet Secretary Henry Rotich, made the exemption in a legal notice that now allows pension schemes to put their money in financial institutions with the ultimate goal of securing interest rates for their members.
This exemption will allow NSSF to use cash in banks for onward lending to its members at a rate that analysts say would range between six and nine percent based on similar arrangements in corporate Kenya.
Under the arrangement, NSSF will receive interest from the cash deposits placed in banks while the lender will get a fee for administering the mortgage scheme on behalf of the Fund’s members. NSSF is currently free to invest its assets in financial institutions to facilitate lending to its 3.9 million members at an unspecified rate.
According to the NCA report, NSSF now has the capacity to utilize this opportunity in helping low income earners gain access to mortgages, bridging the housing deficit, particularly in the bottom segment of the market. NSSF is hoping to ride on the new contributory rates developed to boost its cash deposits for capital intensive projects without breaching regulatory requirements.
NSSF holds large investments in the local property market where its list of investment assets are valued at billions of shillings. Some of these include the Social Security Building at Nairobi’s Community area, Hazina Trade Center, Mountain View Estate in Kangemi and Bruce House in Nairobi’s Central Business District (CBD). The provident fund of NSSF also developed the Nyayo Estate in Embakasi and the 35 million shilling apartments in Milimani, in 2014.