Housing Fund: PS Hinga Changes Tune On Mandatory Contributions

Housing and Urban Development Principal Secretary (PS) Charles Hinga on Wednesday, May 24 divided the Housing Fund into two schemes, mandatory and voluntary.

Speaking during a press briefing at State House in Nairobi, Hinga indicated that the voluntary scheme would be available for those working in the informal sector.

The PS further urged Kenyans to register through the Boma Yangu system to own a home, and choose whether they are contributing voluntarily or mandatory.

“The people who work in the informal sector are allowed to save through the voluntary scheme. The Housing Fund has two schemes, it has mandatory and voluntary.

"You will never own a home unless you registered on Boma Yangu and you are contributing whether mandatory or voluntary,” he stated.

Hinga though argued that the contentious housing levy contribution under the Finance Bill, 2023, should be made mandatory as this would give assurance to investors the government seeks to engage in putting up houses.

“Some of you are asking why can’t we make this voluntary. But when it is driven by law, if I’m going to get a billion a month, it means I can go out there and call investors and tell them that as long as the law is there, I will be collecting money after three years,” he said.

While likening it to the fuel levy paid by Kenyans, the PS noted that the government could not have built roads if it was not assured of cash flow every month to present to road construction companies.

“We went to the markets and told them to give us a lot of money today we build roads and in the next 15 years we will be paying that levy and we will be able to pay you out. If we didn’t have that, they would tell us we can’t afford that.

“The highest-earning Kenyans will only pay Ksh2,500, the majority will pay Ksh1,000 and below. So when we put this all together as a country, we will be able to go out to the market and tell investors that the government is providing land at no cost for Kenyans to own homes, build houses in mass, give me the keys and go. If I don’t have the housing fund, they will refuse to build," he added.

PS Hinga further revealed Kenya benchmarked with Singapore, Mexico, Brazil, Nigeria and China before tabling the proposal.

“Sometimes to know how not to do it, and they said let us save together; they told their employer save this and I will save that,” said the PS.

Nonetheless, he gave an option for Kenyans who have retired to opt out of the fund while the rest will have to wait for seven years before opting out.

“If you have not retired, seven years is an event where you can opt to take out your money, you can opt to transfer it to your pension or transfer it to your child. It is absolutely your money but if you have not yet retired you continue but you have an exit at that point,” said Hinga.