The government has admitted that it is planning to borrow billions of cash to fund construction of affordable houses. This is the latest twist in the controversial housing program.
This is despite the government parking billions of unused funds that have been collected through the controversial housing tax in treasury bills.
According to Housing Principal Secretary Charles Hinga, the government is planning to borrow the money because it cannot afford to build 200,000 per year from the current collections.
“We are targeting 200,000 units per year. If you use a conservative estimate of Sh2 million per unit, that is about Sh400 billion annually. The housing tax brings in at most Sh72 billion, so we must leverage that,” Hinga told a local media house. “We are partnering with investors to bring in private capital and use the levy as an off-take guarantee.”
Hinga claimed that the government has so far collected Sh120 billion since the tax started but has signed contracts worth Sh300 billion. He claimed that in 2026, the government will be going into the market to raise about Sh129 billion through a Sukuk bond and REITS listed on the Nairobi Securities Exchange.
Ironically, this plan comes even as the government through President William Ruto announced in yet another shocking twist that funds from the housing tax would be diverted to build markets and nursery schools, responsibilities that are currently under the county governments.
READ MORE: Housing tax to be diverted to build markets, nursery schools
At the same time, though the government has been claiming that it will build between 200,000 and 250,000 houses per year, the latest statistics from the 2025 Economic Survey shows that residential housing units that were completed by the government in 2024 were only 1,655.
Since the inception of the controversial tax, the government has completed zero houses, leave for one housing project whose structure had been constructed by the previous administration.
In the financial year ended June 2024, the government collected Sh54.16 billion under the controversial housing tax. However, out of these funds, only Sh16.65 billion was used on the project, a report from the office of the Controller of Budget Dr. Margaret Nyakang’o shows.
