China Wu Yi’s Sh10 billion housing materials factory and supermarket at Athi River Machakos County. The materials are tipped to reduce construction costs. photo | salaton njau
Last month, President Kenyatta indicated his last term would focus on the big four for economic development in Kenya. These are food security, affordable housing, manufacturing, affordable healthcare, and the article focuses on the first three.
A considerable challenge with food security at the moment is that it is dominated by small-scale farmers who operate at a subsistence level with limited financial resources and technical support that would allow them to make farms more productive and get products to market.
A key element for this sector would include a reinstatement of technical support to rural farmers in the form of agricultural extension officers.
Additionally, storage has to be vastly improved to ensure food does not rot before reaching market, but also allow farmers to use stored produce as collateral for credit to improve farm inputs.
Finally, financial support should be targeted at the sector to improve the quality and cost of farm inputs and encourage the strategic use of farm technology.
Linked to this is the crucial need for government entities that purchase food products from farmers to pay in a timely manner, such that farmers can have a seamless farm cycle.
Manufacturing is linked to agriculture. The manufacturing sub-sectors of focus are the blue economy, agro-processing, leather and textiles, all of which require agricultural inputs.
The government first ought to coordinate manufacturing inputs with agricultural strategy such that factories have robust source markets. And as the President pointed out, the skills gap for the sector has to be addressed so that there are enough individuals with the appropriate skills sets to drive manufacturing.
In addition, the cost of production must be cut to make Kenyan products more competitive. Thus the step taken to cut the cost of power is important although clarity is required on how it will be implemented and implications for fiscal policy.
Finally, the sector ought to benefit from fiscal incentives such as tax rebates, deductions and other strategies to encourage the development of capacity.
It is encouraging to see affordable housing as a priority, as this sector has been direly neglected in the past. As of 2015, the annual housing requirement stood at about 132,000 units with a backlog of 1.85 million units.
This has created a dynamic where excess demand fuels price escalation in terms of home prices and rents charged.
First, the government ought to encourage the adoption of technology and materials that reduce construction costs. Secondly, it must improve access to land and facilitate the registration and transfer of titles. Thirdly, financing for the construction and purchase of affordable homes must be incentivised.
Savings and Credit Cooperative Organisation (Saccos) have overtaken commercial banks and mortgage providers in the provision of home construction loans in and account for more than 90 per cent of home loans in Kenya. However, there are no fiscal incentives that target saccos, which must be rectified.
Finally, the government must create a registry of who qualifies for affordable housing. Currently, when cheap houses are constructed, wealthy individuals purchase several units and rent them out, barring low income individuals from purchasing the homes. This must stop.
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