Andrew Saisi, CEO, National Housing Corporation (NHC)

Andrew Saisi, CEO, National Housing Corporation (NHC)

Interview: Andrew Saisi

What new measures could solve the housing gap?

ANDREW SAISI: It is estimated that the gap between supply and demand for urban housing in Kenya is over 200,000. This shortage is mainly in the low-income section of our country. There are numerous interventions that could help us shore up this gap.

One of the top priorities is encouraging more involvement by the corporate private sector in housing development by providing incentives. These incentives include the following, among others: implementation of the reduced corporate tax from 30% to 15% for developers who put up over 400 low-income houses; and reimbursement of the costs incurred by developers when developing necessary housing infrastructure. Doing so would extend affordability not only to developers, but also to potential homeowners.

At the same time, we need to encourage the use of appropriate building materials to deliver houses faster, thus realising the time value of development. This goes hand in hand with putting into place rules and regulations that will facilitate fast delivery of housing; for example, completion of reviewing the Building Code to make specifications efficient and effective.

That being said, we also need to address the various funding challenges that are currently confronting the housing market. I think a solid first step would be to set up a fund to develop social housing. This fund could be financed through a statutory levy acceptable to developers. Furthermore, an institutional framework could also be set up in order to direct funds remitted by Kenyans in the diaspora into an assured investment instrument, as well as mobilising pension and provident funds for housing development.

How can mortgage penetration be increased?

SAISI: Statistics show that by 2015 there were about 24,500 mortgages, valued at about KSH203.3bn ($2bn), with an average mortgage valued at KSH8.5m ($82,934). In order to deepen mortgage penetration, stakeholders could work in a couple of directions. First, lower the cost of accessing mortgage finance in the country. Some levies charged by financial institutions in processing mortgage loans make access unnecessarily expensive. Second, develop innovative lending programmes to increase access. One such programme is a multi-generation mortgage, which allows senior citizens to access mortgages without being subjected to punitive short-term conditions. We could also work towards the enhancement of national saving so as to make funds available for lending.

As of June 2015 customer deposits in Kenya were KSH2.6trn ($25.4bn). This accounted for more than 71.5% of the banking sector’s liabilities. Most of these savings, however, are short term. Lastly, small and medium-sized enterprises play a critical role in the housing market, and we need to find ways to tap into this market segment for micro-mortgages. This can be supported through enhanced involvement by the cooperative movement in the mortgages market.

What solutions will facilitate easier and cheaper land transactions?

SAISI: One of the first things that may be done is enhancing the efficiency of land administration through ongoing digitisation of land registries, which is a good thing. As part of this, the government has embarked on activities aimed at improving land titling to make it more efficient. There also needs to be more involvement from private sector landowners in housing development through collaboration with key public sector institutions. NHC is already engaged in such negotiations with a number of private landowners. It can further be observed that public sector institutions own a tremendous amount of land that could be released for the purpose of housing development. This can be accomplished through public institutions entering into partnership agreements with organisations that have the ability to develop housing.

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Andrew Saisi

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The Report: Kenya 2017

Construction & Real Estate chapter from The Report: Kenya 2017

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