What ails affordable housing project

Last week, and with the financial year coming to a close, expectations were high that the consultants would be paid during the traditional end of fiscal year scramble when ministries rush to clear payments lest monies be returned to the Exchequer. A meeting called at a Nairobi hotel on Friday with the consultants resolved the dispute.

It is not a god sign because in view of the scope of this giant project, maintaining the support from the community and fraternity of consultants is critical to delivery and success.

Read: Fate of stalled projects to be decided in February

From what I have gathered from private conversations with the players in this space, it seems decision- making is impeded by lack of clear lines of command within the bureaucracy running the project.

Holding an office is not the same thing as being in power. Cabinet Secretary Alice Wahome holds a big office and so does the Principal Secretary, Charles Hinga. But from my reading when I map the play of effective power and decision- making is that Housing Secretary, Said Athman, is also a very powerful player.

Clearly, rolling out this project is going to be the biggest test on President Ruto administration’s capacity to successfully roll out large infrastructure projects. It reminds me of Francis Fukuyama’s writings on the concept of State capacity, described as the ability of a government to deliver large infrastructure projects on time.

Within the region, the government of Ethiopia is regarded as having a better record at delivering projects on time and within budget. Does it surprise that we have contracted the Ethiopians to sell to us a lot of electricity from its dams? Even little Rwanda is rated higher than us in terms of capacity to implement large infrastructure in time and at cost.

We went into this massive affordable housing project without thinking through it properly and before agreeing on the feasible model. Clearly, the government has been involved in miss and hit experimentation.

When it started, the model was based on an invitation to private sector to ‘design, finance, build and transfer’ affordable houses at fixed price of Sh50,000 per square metre on the guarantee of an off-taker. The government would buy all the units on completion. Indeed, the most attractive aspects of the programme was free land and the off-taker guarantee.

The next stage was to provide a proof of concept. This was achieved after President Uhuru Kenyatta’s administration contracted the Chinese group, China State Corporation- who built and completed 1,300 affordable housing units in the Park Road area in Ngara, Nairobi.

With the concept having been approved, the Ministry of Lands and Housing went on a spree of advertising free land sites. I have lost count of the number of newspaper adverts put up by Mr Hinga to offer free land to developers in different parts of the country.

Read: Incomplete projects hit Sh1.3trn amid a pending bills nightmare

At some point, the model was suddenly changed from ‘design, finance, build, and transfer’ to a ‘development split’ model whereby the government would only guarantee off-take of 70 percent of the units, with the developer allowed to sell the remaining units at market rates.

With the change of model- and without an off-taker guarantee, the developers dried up. The second round of the project covering Starehe, and Shauri Moyo in Nairobi was hit by inadequate investor appetite. As a matter of fact, one developer walked away. The collapse of the housing levy bill was a big factor.

In January 2022, 59 sites throughout the country were advertised. Only Kingdom Developers and Gulf showed up. After the General Elections, Mr Hinga advertised 70 additional sites- including land belonging to the Kenya Police and Kenya Defence Forces. There was even a time when university student’s halls were brought on board. Still, no serious takers.

With the advent of President Ruto’s administration, the model changed again because-this time around- the housing levy had been enacted. The government now became the designer. All that was needed was to engage construction companies.

Although the response to offers was very good, the bids were way higher than the fixed price of Sh50,000 per square metre. Consultants had to be brought in to review the designs. They have not been paid.

The upshot is that several years since the project started, the only completed project you can point is the Park Road project that happened under Uhuru Kenyatta.