The Housing Levy has sparked intense debate across Kenya, with many citizens calling for its removal due to concerns over mismanagement and lack of results. However, industry experts like Edwin Dande, CEO Cytonn Investments, have pointed out that scrapping the levy entirely may not be the right move. Instead Dande, has favored a bold redesign that keeps the good intentions behind the levy but transforms it into a more effective and transparent solution to Kenya’s housing crisis, which according to the 2024 Kenya Housing Survey, 64.1% of Kenyan families still live in informal settlements, with only a handful 21.1% enjoying proper housing.
To make the levy work, the focus should shift to harnessing the expertise of the private sector. Financial institutions such as banks, insurance firms, and fund managers are better placed to manage housing funds efficiently. By allowing these institutions to run dedicated housing investment funds, we can ensure that the money actually goes into building homes for Kenyans, rather than being lost to mismanagement. This approach reduces the government’s direct control, which has historically been linked to inefficiency and corruption.
A second key improvement would be to give workers the freedom to choose where their contributions go. Just like one picks a money market fund, employees should be allowed to select a housing fund managed by a trusted institution. This promotes accountability, empowers workers, and brings healthy competition to the housing finance sector. Trusted names in the financial sector will be encouraged to deliver strong results, because their performance will directly influence workers’ choices.
Another important feature would be to lock in the contributions for a set period say, seven years. After this period, workers could either use the funds to purchase a home or withdraw them, depending on their needs. To encourage participation, the interest earned on these contributions should be tax free, making housing funds both a saving tool and a long-term investment. This not only promotes personal financial discipline but also helps bridge the gap between renters and homeowners.
Further, access to these housing funds should be restricted to vetted affordable housing developers. This would ensure that only competent and credible builders receive the funding blocking politically connected contractors who often misuse public resources. Tying the money to quality projects protects contributors and strengthens the integrity of the housing program.
Finally, the government still has a role to play but it should focus on supporting financing, not managing funds directly. Institutions like the Kenya Mortgage Refinance Company (KMRC) can help make loans cheaper for home buyers. This support would make affordable housing more reachable for low and middle income earners without exposing the funds to political misuse.
With the right systems in place, the Housing Levy could finally live up to its promise by delivering real homes to real people, and helping solve one of Kenya’s biggest challenges.
