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Economy

FKE stops formation of Housing Fund board

FKE executive director Jacqueline Mugo.
Federation of Kenya Employers (FKE) executive director Jacqueline Mugo. FILE PHOTO | DIANA NGILA | NMG 

Federation of Kenya Employers (FKE) Thursday obtained orders barring the government from establishing an advisory board that will run and manage the Housing Fund built by a 1.5 per cent levy charged on workers’ monthly pay.

The court also stopped the government from appointing members of the Advisory Board for the multi-billion shilling fund.

In an application certified urgent by Justice Jorum Abuodha, FKE accused the Ministry of Infrastructure, Housing and Urban Development of unilaterally calling for nominees to the Advisory Board without public consultation.

FKE further said the Housing Act does not give the CS the mandate to establish an advisory board.

In an advertisement through the media on December 24, the ministry called for nominations of advisory board from among members of Central Organisations of Trade Unions, Kenya National Union of Teacher (Knut), Federation of Kenya Employers (FKE), Union of Kenya Civil Servants and the Kenya Private Sector Alliance.

Nominate three members

Each was asked to nominate three members and were to be received by the Transport and Housing ministry on or before January 4.

But FKE through its executive director Jacqueline Mugo said the move contravenes the provisions of section 6 of the Housing Act, which provides that the Housing Fund is under the control of the National Housing Corporation.

In December, Cotu obtained orders stopping the government from deducting 1.5 per cent from workers’ wages, after challenging the constitutionality of Section 31 (a) of the Employment Act, which calls for the deductions towards the Housing Fund.

Finance Act demands a cut of 1.5 per cent of the gross pay per month to be matched by employers and capped at Sh5,000.

Employees are expected to reclaim contributed funds to purchase affordable homes if they don’t qualify for homes built by the fund.

Pension scheme

If not the funds may be transferred to a pension scheme, another beneficiary or cashed out after 15 years of contribution or retirement, whichever is earlier.

Ms Mugo said it was fair that the constitutionality of the Housing Fund as well as the constitutionality of establishing of an advisory board be determined.

“The notice is unlawful, irregular and has no basis in law as it is against the constitution, which calls for public participation,” Ms Mugo said in a sworn statement.

Hearing starts on January 24, directed the judge.

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