The Return of Housing Levy: What it Means for Kenyans
The return of the housing levy comes at a time when there is a stretch in the pockets of Kenyans.
Caroline Wanjugu
On Tuesday, March 19, 2023, President Ruto signed the Affordable Housing Bill into law. Under this new law, employees will have 1.5 percent of their gross monthly salary deducted, with employers expected to match a similar percentage. The enactment of the bill comes months after the High Court declared the housing levy deductions unconstitutional.
The new law seeks to incorporate Kenyans in the informal sector, and the unsalaried will also be expected to contribute 1.5 percent of their gross earnings to fund President Ruto’s pet house project.
According to President Ruto, the affordable housing programme will “transform the lives of Kenyans at the bottom of the pyramid by creating jobs, providing decent housing, and reducing agricultural land fragmentation.”
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Last week, the National Assembly and the Senate approved the bill and brought the county government on board. Governors will come up with county liaison committees that will be in charge of supervising the uptake of the affordable housing program.
The government's affordable housing program is part of Kenya Kwanza’s initiative to create jobs for the youth in Kenya. Land and Housing Cabinet Secretary Alice Wahome said that the housing projects have already employed 120,000 people, and they aim to ensure that at least 300,000 people will be working on the house project by the end of the year.
The return of the housing levy comes at a time when there is a stretch in the pockets of Kenyans. In a survey report, Tala, a digital lending firm, reported that a third of Kenyans would exhaust their savings within a month after losing their regular income. This shows that Kenyans are already struggling to make ends meet, and the housing levy would add to their already overstretched finances.
Employers have also been reducing wage bills in response to a difficult business operating environment. In 2023, Stanbic Bank Kenya’s Purchasing Managers Index found that companies had sustained layoffs. This is a result of reduced consumer spending, which has reduced sales and impacted company profits.
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