NAIROBI — Kenya’s government is weighing changes to the Affordable Housing Levy after weeks of mounting pressure from salaried workers who say the policy is squeezing already tight paycheques.
Speaking to senators during a plenary session on Wednesday, Treasury Cabinet Secretary John Mbadi admitted the levy, introduced last year, has become a major sticking point. While he defended the programme’s long-term value, he conceded that growing unrest among formal sector employees cannot be brushed aside.
“There is a discussion on seeing how to restructure it because it has a lot of serious benefits, in my view,” Mbadi told lawmakers. “But at the same time, individual employees with payslips have complaints that cannot be ignored.”
The levy, which came into force under President William Ruto’s administration in 2023, is part of his flagship plan to tackle Kenya’s housing crisis. Under the current rules, workers give up 1.5 percent of their gross monthly salary, matched by their employer. In effect, 3 percent of each employee’s salary is redirected to the housing fund.
But the plan has not sat well with many workers, especially in the formal sector. Critics argue that while the goal is noble, the implementation has been tone-deaf to the realities of high living costs, stagnating wages, and a lack of clarity on how the funds will be used.
Labour unions and civil society groups have increasingly called on the government to either scrap the mandatory deductions or make them voluntary.
“You can’t force a man earning KSh30,000 to fund a house he may never live in,” said Stella Muthoni, a primary school teacher in Nairobi. “It’s like being taxed for someone else’s dream.”
A number of court petitions have also been filed challenging the constitutionality of the levy. In January, the High Court temporarily halted the deductions, only for the decision to be overturned on appeal.
Despite the resistance, President Ruto has insisted the scheme is key to addressing Kenya’s urban housing gap, estimated at 200,000 units annually. The administration says it aims to build at least 250,000 affordable homes each year, offering subsidised prices to low- and middle-income earners.
For now, Mbadi says the Treasury is reviewing the scheme’s framework.
“A lot of restructuring is going on, and more pronouncements will come in due course,” he said, without giving a specific timeline.
Policy experts say any changes must walk a fine line ensuring the fund remains viable while easing the strain on workers.
“Transparency and flexibility will be crucial,” said Wycliffe Odera, an economist at the Institute of Public Finance. “If the government wants buy-in, it must clearly show how the money is being spent and offer workers some level of choice.”
The coming weeks are likely to see more debate, both in Parliament and on the streets, as Kenyans wait to see whether the government will shift course or double down.
