The Nigeria housing ecosystem is faced with many challenges. According to The World Bank, there is at least 22 million housing deficit in the country.
Built experts have always questioned the political will of various administration and government to address the issues affecting the housing sector.
This is not the case in Kenya, an east African country where, according to reports, in the last two decades, the real estate market has grown exponentially as evidenced in its contribution to the country’s GDP.
Kenya is working steadily toward improving mortgage affordability and increasing the number of qualifying borrowers which has helped expand the primary mortgage market and home ownership.
Like Nigeria, Kenya has a growing population which is currently estimated at 56million, the housing deficit however in the country is about 2 million.
Kenya’s government approach to addressing the deficit in their country presents good lessons for Nigeria to follow and learn from because they embody practical application for affordability.
It should be noted that the housing was central in the manifesto of the newly elected president of Kenya, William Ruto, promising to supply 250,000 housing units annually and laying out practical ways his ambitious housing plans will be achieved.
In the same vein, speaking with Festus Adebayo, Nigeria Leading Affordable Housing advocate who also is the founder of Housing Development Advocacy Network (HDAN) on a special One-on-One with CEOs, A Zoom Interactive Session organized powered by Housing TV Africa, Mr Johnstone Oltetia, the Chief Executive Officer and Managing Director of Kenya Mortgage Refinance Corporation (KMRC) outlined various areas the Kenyan government have been helpful in pursuance of combating the housing deficit in the East-African country.
Mr Oltetia stated that the government has been committed in the development of housing and the establishment of KMRC was driven by government.
He also noted that the Kenya government has made policies that will address housing simultaneously on the demand and supply side with KMRC established to drive the demand side.
On the supply side, the KMRC MD said the government also has various agencies including a department of housing in the federal ministry that runs other institutions such as the National Housing Corporation that is primarily involved in development and influencing government policy.
He added, “The other key thing the government has done is provide incentives and majority of the incentives has been directed to the supply side.
“One of the key incentives is that government provides lands, government lands for purposes of development of houses and a number of housing units have been developed using government lands.
“Land contributes about 20-30% of housing cost and as such, when government provides land, that cost is removed.”
Another area that the Kenya government has been helpful to the country’s housing sector according to Mr Olteta is addressing the challenges of registration, he stated that the government has been distributing titles and that various land registries has been digitized which aids the registration and overall housing process.
He added, “Another key incentive that is provided by government is the tax incentives. For example, in terms of development which is supply, the government provided an incentive by reducing the corporate tax of any entity that develops at least 100 houses in a year by half.
“Ordinarily, the corporate tax in Kenya is 30%, but if a company develops at least a 100 houses in a year, the tax is reduced by half to 15% and that key incentive is driving the supply of houses.”
He also stated that on the demand side, the government is enabling first home buyers by eliminating the payment of stamp duty.
Stamp duty is a tax which usually stands at 2-4% for first home buyers in Kenya but that has been removed by the government to make demand for houses more attractive and easier for Kenyans.
The government has also been very supportive to institutions like the KMRC in areas of funding and reducing the cost of funds available. He explained, “KMRC raises funds through institutions like the Africa Development Bank and The World Bank. These funds were collected as sovereign debts and that is where the government has been very helpful because the government takes up the cost of forex and passes the money to KMRC in local currency.
“This reduces the cost of funds available at the KMRC and as a result, KMRC distributes funds to the end user at a very low cost.”
