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The allure of power and wealth can be a powerful motivator for most politicians as leadership positions offer access to significant resources like public funds, lucrative contracts and influential networks. Unfortunately, this access can tempt some to prioritise personal enrichment over genuine public service.
In today’s political climate marked by widespread distrust in leaders, the growing menace of greed and selfishness is evidently prevalent. In Kenya, this concern has been particularly revealed by recent developments regarding the Affordable Housing Fund which surfaced in May. The use of the KSh20 billion collected from the housing levy and particularly its investment in Treasury Bills has sparked a debate that raises serious legal and ethical questions. The Affordable Housing Fund was created under the Affordable Housing Act of 2023, a law that has since been declared illegal. This law requires that funds collected from the housing levy be used exclusively for affordable housing projects. The levy, a 1.5 per cent deduction from the gross salaries of Kenyan employees that is matched by their employers is intended to support the construction of the so-called affordable housing units.
Scrutiny by members of parliament has brought into question whether the process for investing KSh20 billion from the Housing Levy Fund in Treasury Bills was properly followed. The Housing and Planning Committee led by Emurua Dikir MP Johana Ngeno has demanded clarity on the approval documentation and the involvement of the Housing Levy Fund Board in this decision. (The Board is tasked with overseeing the administration and allocation of funds collected through the housing levy. Its responsibilities include ascertaining that funds are used effectively for affordable housing projects and ensuring compliance with the statutory regulations and policies related to housing development.)
Legal and ethical implications of the investment
While Lands Cabinet Secretary Alice Wahome’s argument that investing KSh20 billion in Treasury Bills for short periods – three to six months – is a prudent use of the funds might seem practical from a financial management perspective, it does not address the core legal issue. The fundamental concern is not merely about the short-term nature of the investment but whether such an investment adheres to the legislative intent of the Affordable Housing Act. From a legal perspective, even if the correct procedural steps were taken, the investment of these funds in Treasury Bills is legally questionable. The Affordable Housing Act and associated regulations prescribe specific uses for the housing levy collections which are intended exclusively for affordable housing projects. Therefore, diverting these funds into Treasury Bills even for a short period fundamentally contravenes this legal mandate.
Charles Hinga, Principal Secretary at the State Department for Housing and Urban Development, maintains that it was not possible to halt the collection of the housing levy due to the ongoing legal disputes over the tax and pending a final court decision. However, PS Hinga’s reasoning does not justify the investment of the funds in Treasury Bills. In my opinion, until the court provides definitive guidance, investments made under the current legal uncertainty do not conform with the statutory purpose and if there had been a concern about the financial implications of leaving KSh20 billion idle, the logical step by the government would have been to suspend the collection of the housing levy until a clear legal determination is made by the courts.
Incomplete housing projects
To buttress the argument that the government’s claim of an idle affordable housing fund is unfounded, one must consider the ongoing issues of stalled and unfinished housing projects across the country. For instance, projects like Buxton, Likoni and Mzizima, which were originally launched with the ambitious goal of delivering affordable housing within a specified timeframe, have been marred by delays and incomplete phases. This contradiction not only challenges the government’s credibility but also reveals a serious discrepancy between government declarations and the actual status of housing developments as evidenced by Haki Yetu Organization’s Housing for Who campaign and the claims of former Buxton tenants who have been instrumental in exposing economic crimes and the theft of public land under the guise of affordable housing.
As Kenya geared up for Mashujaa Day, Dennis Itumbi, Head of Presidential Special Projects and Creative Economy, tweeted, “This year’s Mashujaa Day will be themed #BomaYangu to highlight the success of the Affordable Housing program.” This celebratory theme blatantly contrasts with ongoing legal and practical troubles that still loom large. For instance, former Buxton and Likoni tenants have offered personal testimonies that vividly illustrate the daily struggles and frustrations faced due to the incomplete state of the housing development. Their firsthand accounts serve as tangible evidence of the government’s failure to live up to its promises in the undeniably flawed housing plan.
Constitutional compliance in public fund management
The legal framework governing public funds is explicitly outlined in the constitution and various statutory provisions upholding the importance of transparency and accountability in their management. Article 201 mandates that public money must be used openly and responsibly while Article 207 further affirms that public money should not be used for purposes other than those prescribed by law, emphasising strict adherence to statutory directives. The Public Financial Management Act (PFMA) 2012 echoes these principles by requiring that public financial management be based on openness, accountability and integrity and that expenditures must be authorised by the constitution or an Act of Parliament. Additionally, Article 232 upholds accountability as a core value of public service. These constitutional and statutory provisions collectively support the argument that the investment of KSh20 billion from the Housing Levy Fund in Treasury Bills – regardless of procedural correctness – fundamentally contravenes the provisions of the Affordable Housing Act and undermines the intended use of the funds.
Besides, the ongoing legal challenge to the 2023 Affordable Housing Act led by Busia Senator Okiya Omtatah further complicates the situation. If both the High Court and the Court of Appeal have ruled that the Affordable Housing Act is unconstitutional, the Act should be considered void ab initio under the doctrine of legislative validity, rendering the affordable housing programme or any investments made from the housing fund legally impotent. In other words, since the legitimacy of the affordable housing programme is in question, any expenditures undertaken are also illegal.
Public officials have a fiduciary duty to act in the best interest of the public. This includes managing funds transparently and in accordance with legal requirements. The 2023 Affordable Housing Act was specifically crafted to ensure that funds from the Housing Levy are exclusively used in affordable housing projects. Put another way, legislative intent is clear in the statutory language which prescribes specific uses for these funds. Therefore, the investment of KSh20 billion from the Housing Levy Fund in Treasury Bills, even if procedurally correct, is fundamentally illegal and undermines the programme’s objectives.
By choosing to invest the housing levy funds in Treasury Bills, the government not only reveals but also confirms the true motive behind the levy – to divert money and steal public land from Kenyans for ulterior purposes. Given the significant resources involved in affordable housing projects, there is a valid concern that the financial manoeuvring could be a strategic move to misappropriate public funds, a scenario that reflects a wider trend of political and economic manipulation where public resources are siphoned off for personal benefit under the guise of financial prudence.
