Kenya's Housing Levy: Unpacking the Controversy of Illegal Treasury Bond Investments

The allure of power and wealth often drives politicians, granting them access to substantial public resources. Unfortunately, this access can lead to a prioritisation of personal gain over public service, a concern increasingly evident in Kenya's political landscape. Recent developments concerning the Affordable Housing Fund, particularly the investment of KSh20 billion collected from the housing levy into Treasury Bills, have sparked a heated debate, raising profound legal and ethical questions. This fund was established under the Affordable Housing Act of 2023, a law that has since been declared illegal by the courts. The Affordable Housing Act mandates that funds from the housing levy, a 1.5 per cent deduction from employees' gross salaries matched by employers, be used exclusively for affordable housing projects. However, parliamentary scrutiny, led by the Housing and Planning Committee, has questioned the approval process for investing the KSh20 billion in Treasury Bills, demanding clarity on documentation and the involvement of the Housing Levy Fund Board. Lands Cabinet Secretary Alice Wahome has argued that investing the KSh20 billion in Treasury Bills for short periods, typically three to six months, constitutes prudent financial management. However, this argument fails to address the fundamental legal issue. The primary concern is not the short-term nature of the investment but whether it aligns with the legislative intent of the Affordable Housing Act. From a legal standpoint, even if procedural steps were followed, diverting these funds into Treasury Bills fundamentally contravenes the legal mandate of the Act, which prescribes exclusive use for housing projects. Principal Secretary Charles Hinga maintains that halting the housing levy collection was impossible due to ongoing legal disputes. Yet, this reasoning does not justify the investment of the funds in Treasury Bills. In the face of legal uncertainty, the more logical approach, if concern existed about KSh20 billion lying idle, would have been to suspend collections until a definitive court ruling was made. Investments made under such legal ambiguity do not conform to the statutory purpose of the fund. Further buttressing the argument against the government’s claim of an idle fund are the numerous stalled and unfinished housing projects across the country. Projects like Buxton, Likoni, and Mzizima, launched with ambitious goals, have been plagued by delays and incomplete phases. This stark contradiction between government declarations and the reality on the ground has been highlighted by organisations like Haki Yetu, through their “Housing for Who campaign,” and by former Buxton tenants, who have exposed economic crimes and public land theft under the guise of affordable housing. Official pronouncements, such as Dennis Itumbi’s tweet celebrating Mashujaa Day with the theme “BomaYangu” to highlight the Affordable Housing program’s success, stand in stark contrast to the ongoing legal and practical troubles. Personal testimonies from former Buxton and Likoni tenants vividly illustrate the daily struggles caused by incomplete developments, serving as tangible evidence of the government's failure to deliver on its promises. The constitutional framework for managing public funds in Kenya mandates transparency and accountability. Article 201 requires public money to be used openly and responsibly, while Article 207 affirms that public money should only be used for purposes prescribed by law. The Public Financial Management Act (PFMA) 2012 reinforces these principles. 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 Affordable Housing Act and undermines the intended use of the funds. The situation is further complicated by the ongoing legal challenge to the 2023 Affordable Housing Act, led by Busia Senator Okiya Omtatah. With both the High Court and the Court of Appeal having ruled the Act unconstitutional, it should be considered void ab initio under the doctrine of legislative validity. This effectively renders the entire affordable housing program, and any investments made from its fund, legally impotent. Public officials bear a fiduciary duty to act in the best interest of the public, managing funds transparently and in accordance with legal requirements. The legislative intent behind the 2023 Affordable Housing Act was unequivocally clear: funds from the Housing Levy were to be exclusively used for affordable housing projects. Therefore, the investment of KSh20 billion in Treasury Bills, even if procedurally accurate, is fundamentally illegal and undermines the program's objectives. By choosing to invest the housing levy funds in Treasury Bills, the government not only reveals but confirms a concerning motive behind the levy—a potential strategy to divert money and misappropriate public land from Kenyans for ulterior purposes. This financial manoeuvring raises valid concerns about the siphoning off of public resources for personal benefit, disguised as financial prudence, reflecting a wider trend of political and economic manipulation.