Civil servants take Sh6.2bn home loans in State scheme

The National Treasury building in Nairobi on Sunday, May 24, 2020. PHOTO | DENNIS ONSONGO | NMG

The State issued civil servants Sh6.2 billion in loans to build or purchase houses by June last year as the government mortgage scheme picked up.

Latest data shows that the Civil Servants Housing Scheme Fund (CSHSF) gave 1,321 civil servants mortgage loans through the Kenya Commercial Bank (KCB) Group and Housing Finance (HF) Group as at June 30, 2021.

KCB advanced loans worth Sh4.42 billion while HF disbursed Sh2 billion. The CSHSF said 865 civil servants got the loans from KCB while 456 staff secured the money through HF.

The scheme — intended to encourage uptake of mortgage among civil servants — allows government workers to access loans and pay their mortgage up to five years after the official retirement age of 60.

The State rolled out the scheme in 2015 in the public service to attract and retain top talent in the face of increasing competition from the private sector. The mortgage loan scheme is fully funded by the Exchequer.

“The loans issued to civil servants within the fourth quarter of financial year 2020/21 amounted to about Sh194.5 million facilitating 30 civil servants,” Charles Hinga, the Housing Principal Secretary and the administrator of the Fund said in a brief accompanying the books of accounts for 2020/21 financial year.

The Fund facilitated 989 civil servants in 2018 with mortgages worth Sh4.4 billion through the KCB Group and HF Group. However, the Treasury failed to allocate cash to the State Department for Housing for disbursement of loans under the Civil Servants Housing Scheme in the 2018/19 and 2019/20.

The delay in disbursements of the Treasury allocations was occasioned by the housing ministry which unveiled draft regulations that required beneficiaries to contribute for at least six months and save up to 10 percent of the house price to qualify for affordable houses.

The ministry says out of the houses developed through the Fund in the year to June 2021, a total of 491 housing units were reserved for rental to civil servants.

The rented flats are 96 in Ngara estate, 140 in Shauri Moyo estate, 175 in Jogoo Road estate and 40 in Kisumu Shauri Moyo estate.

The government is developing commercial premises including the Ngara housing units and shopping centre comprising ten shopping spaces and nursery school complex.

The report of the financial statements of the Fund tabled in Parliament shows that the fund purchased and allocated 548 houses at Park Road for civil servants on either outright or tenant purchase scheme.

The fund said it faced a number of challenges that hindered the delivery of housing units to civil servants.

The scheme cited allocation of government land earmarked for construction projects to private individuals or developers and delayed remittance of CSHSF monies by government ministries, departments, agencies and county governments

State Department of Housing raised rents on all government-owned residential houses by 10 percent effective April 1, 2022.

Civil servants occupying State houses are required to pay 10 percent more of the prevailing rates.

Mr Hinga said in a notice that the new rates will still be way below the market rate since government residential houses are part of employer-assisted housing for civil servants.

The rent raise, he said has been occasioned by the fact that there have been several reviews on house allowance for civil servants since 2001 yet the amount they pay in rent has remained stagnant over the period.

In June last year, Auditor General Nancy Gathungu tabled a report in parliament showing that nearly half of civil servants occupying government houses do not pay rent as required.

According to the report, rent collections on government houses for the year to June 2020 was Sh724.3 million out of an annual rent potential of Sh1.5 billion when fully occupied.

The total number of government houses across the 47 counties stands at 56,892 houses.

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