Formal sector workers are set to start contributing five percent of their monthly incomes towards a proposed housing fund as part of President Uhuru Kenyatta's Big 4 Agenda.
Housing Principal Secretary Charles Mwaura stated that regulations on the proposed fund were being finalized and would be published in the Kenya Gazzette with a roll-out planned for June.
Employers will also be required to match their employees' contributions as part of the plan.
"As an employee, you’ll put money into the fund, and whatever you put into it, your employer is going to be required to match the same amount. It’s like a pension, but for housing,” he explained.
The State Department for Housing and Urban Development maintains that the plan is aimed at increasing home ownership among the urban population and especially targets low-income earners.
[caption caption="Cabinet Secretary for Transport, Infrastructure, Housing and Urban Development James Macharia"]
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If successful, the proposed fund will become the third statutory fund after the National Social Security Fund (NSSF) and the National Health Insurance Fund (NHIF).
Mwaura noted that many employers ignored a constitutional provision making them responsible for ensuring their employees have proper housing.
Section 31 of the employment acts reads: “An employer shall at all times, at his own expense, provide reasonable housing accommodation for each of his employees either at or near to the place of employment, or shall pay to the employee such sufficient sum, as rent, in addition to the wages or salary of the employee, as will enable the employee to obtain reasonable accommodation.”
The plan is likely to face opposition from employers who argue that the new deductions will greatly reduce workers' take-home.
Federation of Kenya Employers (FKE) Executive Director Jacqueline Mugo further noted that many organizations already had housing plans of their own.
“It’s a commendable idea as long as it is well received by employees and employers are not expected to chip in because the number and level of statutory contributions made by employers is already high...
“The creation of yet another fund when we have not yet fully sorted out existing ones like NSSF and NHIF will complicate matters," she stated.
Mwaura also stated that they were looking into working with saccos to provide interest-free mortgages to low-income earners and launching the Kenya Mortgage Refinance Company to cater for those with incomes of above Sh50,000.
[caption caption="File image of Housing PS Charles Mwaura"]
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