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18th of July 2018

Economy



FKE, ministry to hold talks on housing plan

Economy Wednesday, July 4, 2018 21:10

By CONSTANT MUNDA

Jacqueline Mugo FKE executive director Jacqueline Mugo. FILE PHOTO | NMG 

Employers are headed for fresh talks with top State officials in an meeting expected to decide the fate of the government's affordable housing plan.

The Federation of Kenya Employers (FKE) has rejected the Treasury’s proposal, which requires its members to deduct 0.5 per cent of employees’ monthly salary (to a maximum of Sh5,000 per month) and match up for the National Housing Development Fund.

Treasury secretary Henry Rotich plans to enforce the proposed contributions from January 1 through the Finance Bill 2018, which is before the National Assembly for approval.

FKE executive director Jacqueline Mugo said the umbrella employers’ organisation has been invited for a meeting by the State department for Housing and Urban Development following their public objection to the fund on June 21.

Employers, she said, will be seeking answers on the governance structure of the fund, its implementation and how companies which have housing plans for their employees will be treated. “I think the truth is that this is just an additional tax. The government wants some quick money into a kitty, but there’s a limit to what the citizenry and the corporates can be taxed,” Ms Mugo said in an interview in Nairobi.

“We are not opposed to the plan to build affordable houses. It is how the government wants to do it which is our problem. It (0.5 per cent of monthly salary) is a lot of money to an individual employee and yet it may not achieve the desired end (owning a house).”

The establishment of a housing fund is provided for under the Housing Act.

The Ministry of Housing said in April it was working on regulations to operationalise the fund.

Ms Mugo maintained employers have not been consulted and that the new statutory contributions were likely to pile up costs for businesses and hurt growth in jobs.

“In implementing this plan, you should also address the fact that there are employers who already have arrangements for housing. Some are paying house allowances and there are those who are housing their employees. What happens to those ones? Do they still pay?”

The ministry’s plan is to put up at least 500,000 affordable houses through partnership with private developers by 2022.

The government plans to service public land to attract the private developers to build houses, with about Sh18.4 billion allocated for this purpose this financial year.

Houses under the plan will cost an average of Sh1.5 million, Housing and Urban Development secretary James Macharia said in April.

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