Acting on recommendations from a committee in which UN-HABITAT played a major role, Kenya’s Finance Minister last week made major pledges aimed at increasing access to housing for low income earners.
The move by Finance Minister, Mr. Amos Kimunya, is also a boost to a resolution passed at the 21st Session of the Governing Council of UN-HABITAT on sustainable public-private partnership incentives for attracting investments in low income housing. UN-HABITAT has already formed a task force to implement the resolution.
A committee on housing sector incentives put forward proposals on how to make housing more affordable for low income earners, which was reflected in Minister Kimunya’s budget. Two of UN-HABITAT staffers sat on the committee which brought together members from the housing and finance ministries, private developers as well as other stakeholders.
Key incentives agreed by the committee included tax exemption for businesses that produce homes and an institutional framework for the implementation of public private partnerships in the housing sector.
“I look to Kenya with heartfelt gratitude for introducing the resolution entitled, Sustainable public-private partnership incentives for attracting large-scale private sector investment in low-income housing,” said Mrs. Anna Tibaijuka, UN-HABITAT’s Executive Director, in her closing speech to the Governing Council, a body of governments that oversees the agency’s work programme and budget.
“I am convinced that this further strengthens the focus on partnerships and the need to bring the private sector on board in our mission. We are all only too aware that governments alone cannot finance the amount of housing need to lift people out of slums. We have to have the private sector with us here.
In his budget speech, the Kenyan minister proposed to give industrial building allowances to persons constructing residential buildings for rental purposes to the low income earners. Rental of buildings for residential purposes will be exempted from paying value added taxation.
In his raft of proposals, the minister further proposed to amend the Retirement Benefits Act so as to allow contributors to use their pension funds as collateral for housing loans. He also removed taxes on goods and services for those developing at least 20 units of houses targeting the low income groups.
“This would be subject to the development of appropriate regulations to ensure the spirit of pension benefits is not eroded and also to ensure that not all the pension benefits amount is used for the security of the housing loan,” Mr. Kimunya said.
In addition, Mr. Kimunya also announced that the government was in the process of finalizing the policy, legal and institutional framework for the implementation of public private partnerships.