Housing Principal Secretary Charles Hinga on Wednesday, May 24, lifted a lid on plans and contribution framework for the Affordable Housing Project.
While addressing the media at State Housing, Hinga explained that those who intend to withdraw their savings will only do so after seven years of contribution, and they will not receive all the cash in their accounts.
According to Hinga, part of the contribution will remain in the account in order to continue cushioning the government against adverse financial activities.
"If you want to withdraw your money, you will only be able to take your portion of personal contribution after seven years. However, your employer's money will remain in the kitty.
"The employer's portion is the one that protects the capital of the fund so that if there are obligations of the fund, then we will keep that kind of money," Hinga stated.
He further noted that the mandatory housing levy contribution under the Finance Bill, 2023, will serve as assurance to investors the government seeks to engage in putting up houses.
"It should be understood that after 14 years, you now be able to withdraw even the employer's contribution.
“The highest-earning Kenyans will only pay Ksh2,500, the majority will pay Ksh1,000 and below. So when we put this all together as a country, we will be able to go out to the market and tell investors that the government is providing land at no cost for Kenyans to own homes, build houses in mass, give me the keys and go. If I don’t have the housing fund, they will refuse to build," Hinga stated.
The Principal Secretary assured Kenyans of getting around Ksh1 billion a month, and the amount will be used to give assurance to investors.
"It means I can go out there and call investors and tell them that as long as the law is there, I will be collecting money after three years.
"I have got over 200 investors and all they are asking for is an offtake plan. All they want to know is how they will get their money back," PS Hinga.
However, weighing in on the matter, Economist Brian Wachira explained that the government's hopes for closing the 2.5 million housing deficit will take different forms and many other terms will be proposed before the levy becomes law.
"Some people support the levy, arguing that it is a necessary step to address the country's housing crisis. Others oppose the levy, arguing that it is a tax on the poor and that it will not be effective in solving the housing problem, but what is clear is that the government is pushing this matter down many people's throats," Wachira stated.
Wachira observed that President William Ruto's government seemed to have benchmarked with Singapore, Mexico, Brazil, Nigeria and China before tabling the proposal.
However, he also noted some the proposals therein will make it difficult for citizens to have the programme which when properly modeled may end up benefiting so many people.
"It is unrealistic for someone to wait for 14 years for them to get back their savings. That is not realistic and should be considered as an error.
"When selling a policy, you can't communicate to people over their money from a grandstanding point of view. It shows serious contempt," Wachira stated.