In today’s Business Daily, the PS for Trade, Alfred K’ Ombudo, makes a very sensible argument in defence of the Housing Fund but fails, miserably, to address the key issues that its opponents raise.
In summary, he says that the housing fund will 1) create jobs, 2) advance manufacturing, 3) stimulate standardization of building technologies, 4) formalize informal artisans into organized industrialists, and 5) increase exports.
We salute all these points in defence of the Housing Fund, and none of the points is contentious at all. We concur 100%.
Read more: President Ruto’s Housing Fund: A Great Idea Badly Structured?
What PS K’Ombudo fails to address at all are the 6 key issues that the opponents of the fund have raised:
- Where is the Policy document? Why not produce a detailed document called the Housing Policy Plan that covers all the elements of the proposed plan so that We, the People, can read and understand? The fund structure, construction costs, allocation process, returns, operations, risk management, governance, etc. “The plan” is being communicated through tweets, opinions, talk shows, articles, and sound bites. Isn’t it more sensible to engage the public in a debate based on a document? Especially given that Article 21.2 of the Constitution has specifically addressed this housing issue and put on the state the onus to produce a “policy”, and we have people well paid by taxpayers to do this work, why is there no draft policy document to debate?
- Basic math does not add up: Basic math is not adding up. For example, he talks about putting up 200,000 houses. But 200,000 times Kshs. 1.5m per house, that would be Kshs. 300 billion per year to deliver 200,000 houses. Even if the housing fund went through as originally contemplated, it would collect only Kshs. 120 bn per year, where would the balance of Kshs. 180 billion come from? And how will, say, someone earning Ksh. 50k and contributing Kshs. 1,500 per month translate into a house? The huge gaps in the numbers being thrown around by senior government officials demonstrate a lack of thought through the initiative, and that makes the public assume they are being taken for a ride.
- Allocation criteria: There is a real fear that allocation will go to the connected few. Why not address allocation criteria? Why not release to the public the track record of how Buxton and Park Road Ngara were allocated so that you calm these fears? Did these houses go to the intended beneficiaries? The public, especially the intended beneficiaries, see the Housing Fund as a device to grab public land, tax the public 3% and transfer the two to a connected few. No one has dispelled those fears; if anything, the failure to release the summary beneficiary profiles on Buxton and Park Road seems to confirm the fears.
- Track record of government funds and enterprises. Look at KQ, NOCK, NBK, Youth Fund, Mumias, Sony, Uchumi, Uwezo Fund, etc.. All of them have been bottomless pits for taxpayers’ monies; why do we think the Housing Fund will be any different? Even the latest kid on the block, Hustler Fund, we are not being transparent enough to disclose the loss ratio.
- What is the expected return to the contributors? The public wants an idea of what the return would look like, not a guarantee.
- Why not partner with the private sector? Why have all the efforts towards the Housing Fund, yet so far, both the Housing Department and Treasury have not done much to enable the housing sector? Zero effort in the private arena, yet zealous and sweaty efforts are being made to hurriedly create another parastatal despite the bad track record of parastatals dabbling in private enterprise. For example;
- Real estate remains unregulated despite being the second largest contributor to GDP, why not create enabling legislation?
- The minimum investment for development reits is Kshs. 5 million. Who has that kind of money? Lower it to enable more Kenyans to save for real estate
- We have not enabled pensioners to use their money to buy houses
- We scrapped the Home Ownership Savings Plan, HOSP, where people can voluntarily save to buy homes.
- We have retained banks as the sole trustees/prefects in real estate investment plans
Kenyans need housing and jobs, and we need them badly. The need and benefits of the Housing Fund are not debatable for a right-thinking Kenyan; It will address housing needs, create jobs, deepen our capital markets and improve our saving rates. But we are simply not convinced that the current proposal will lead to houses and jobs.
Take a step back, listen to critics and keenly and directly address the above market concerns, and you will see the initiative gain traction. Don’t be as defensive and dismissive as some of your colleagues have been.
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