Return of construction levy is recipe for graft

Affordable housing as one of the key pillars of the Big Four agenda, is at the heart of President Uhuru Kenyatta’s legacy.

Kenya has an annual housing demand of 250,000 units with an estimated supply of 50,000 units, culminating in a housing deficit of 2 million units, or 80 percent deficit. The President targets to have established at least 500,000 housing units by the end of his term in office next month.

The construction industry does not just erect structures, it contributes greatly to the country's economic growth through the procurement of local supplies, provision of employment to local workers especially the youth, training and creation of opportunities for investment and profit-making.

At least one out of every 10 school leavers go through construction work locally known as “mjengo” in their journey of job seeking. A large percentage of the construction work is sub-contracted to local artisans.

According to the Competition Authority of Kenya (CAK), in most construction projects, especially building projects, it is common for 80 percent to 90 percent of the work to be subcontracted to the locals.

The construction industry is a major contributor to Gross Domestic Product (GDP) in the country. According to the Kenya National Bureau of Statistics (KNBS), the Kenyan construction industry contributes on average 7 percent of the Gross Domestic Product (GDP) annually.

Notably, the sector's contribution to the Kenyan economy has been following an upward trend since 2016. However, the GDP from Construction decreased to Sh1.42bn in the first quarter of 2022 from Sh1.44bn in the fourth quarter of 2021.

The government in its own wisdom initially removed the fees imposed by the NCA and other agencies such as the National Environment Management Authority in 2017, arguing that they have been a barrier to investments.

The recent reintroduction of construction levies and other numerous rules including the requirement that contractors are to pay a levy of 0.5 percent of the contract value for construction above Sh5 million, mandatory acquisition of a National Construction Authority of Kenya (NCA) Compliance certificate, recruitment of NCA accredited skilled workers and site supervisors among other myriads of requirements could deter growth of the industry.

According to the Treasury, the government has invested heavily on the construction sector in order to improve on infrastructure such as road networks and at the same time provide new residences for the locals.

With increase in population, job opportunities exist for the youth in the construction of residential, commercial and industrial buildings, including prefabricated low-cost housing.

One of the biggest roles of National Construction Authority is to weed out quacks and put an end to shoddy works in the local construction industry. This can only be achieved when corruption is also weeded out of the industry.

Corrupt NCA officials take advantage of the construction laws to extort money from unsuspecting public rendering the process of developing affordable housing for the growing population very expensive.

The reintroduction of the building levy is providing a cash cow for a few NCA field officers who intimidate with government vans threatening dire consequences should you fail to bribe them. With the NCA vehicles, they drive from one construction site to another soliciting bribes from the public in the name of inspecting projects.

The construction laws are supposed to provide guidance and to ensure that building and construction work do not pose health threats to the public. According to NCA the building levy contributes more than 70 percent of the authority’s revenue. A part from the revenue it contributes to the state, the law must not be subverted by a few individuals for extortion.

Law must be used as an instrument to guide and not to punish. Corrupt NCA officials are using these laws to terrorise contractors with threats of heavy fines if you fail to bribe them.

Ordinarily, the work of NCA should be to provide guidance to contractors to ensure they comply with the said requirements, inspect construction and building projects around the country to ensure high quality of work to reduced building collapses in the construction industry, reduce the use of substandard building materials, increased the quality of workmanship, reduced quack contractors and incompetent construction workers and supervisors, put an end to shoddy works in the local construction industry and close projects posing health risks.

The government must create the right environment for developers through friendly laws. Such support can come in the form of working with the private sector to attract financing through financing instruments, standardisation of mortgage contracts, the establishment of appropriate mortgage foreclosure regulations, a clear legal and regulatory framework around construction of building and clear roles of each stakeholder in the industry.

The state must come up with measures to ensure, that the public are aware of such requirement, and that such corrupt public officials are charged in a court of law. As a country, we cannot fight corruption just by empty rhetoric but through action.

Otieno Panya, a writer and Researcher, Jomo Kenyatta University