Government to securitise Housing Levy to fund Ksh100 billion housing loan plan
Government to securitise Housing Levy to fund Ksh100 billion housing loan plan
Kenyan workers could continue paying the housing levy for years after the government unveiled plans to use the deductions as security for a proposed Ksh100 billion loan.
Budget documents tabled in Parliament indicate that the State Department for Housing intends to securitise future housing levy collections to raise funds from development partners, a move that could make it difficult for future governments to abolish the controversial levy.
According to the Budget and Appropriations Committee report on the 2026/27 Budget Estimates, the Affordable Housing Programme requires Ksh228.3 billion to meet its targets but is facing a funding shortfall of Ksh118.3 billion.
To bridge the deficit, the government plans to mobilise Ksh150 billion through the securitisation of the housing levy to raise Ksh100 billion, with the remaining Ksh50 billion expected from the sale of completed housing units.
The proposed borrowing plan, which ties future levy collections to debt repayment, could lock the deductions into workers’ payslips for the foreseeable future.
The United Opposition has previously pledged to scrap the housing levy should they assume power after President William Ruto’s administration, but the new financing structure could complicate such efforts.
Securitisation involves pledging a predictable revenue stream as collateral for borrowing, and in this case, the government plans to use future housing levy collections to guarantee repayment of the proposed loan.
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Any attempt to discontinue the levy before the debt is fully repaid could expose the government to financial penalties or difficulties in meeting its obligations to lenders.
Responding to concerns over the proposed borrowing arrangement, the State Department for Housing maintained that the housing levy has always been the primary source of financing for the programme.
The department argued that a national project of the housing programme’s magnitude was never expected to rely solely on a single source of funding and would obviously require additional capital mobilisation measures.
According to the department, meeting the financial demands of the Affordable Housing Programme requires a deliberate capital-raising strategy that incorporates various financing instruments, similar to other large-scale housing ventures around the world.
Since 2024, employees across the country have seen 1.5 per cent of their gross monthly salaries deducted under the Affordable Housing plan, with employers required to match the contribution.
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