Uhuru Makes 1.5% Housing Levy on Workers Voluntary

President Kenyatta says the proposed 1.5 percent housing levy that was to be deducted from the salaries of all Kenyans in formal employment has been made voluntary.

Kenyatta made this announcement on Thursday when he led Kenyans in celebrating the 56th Jamhuri Day at Nyayo Stadium in Nairobi. The decision to make the levy voluntary was informed by court cases and opposition from both workers and employers, according to Kenyatta.

Various civil groups including the Federation of Kenyan Employers (FKE), the Central Organization of Trade Unions (COTU) and the Consumer Federation of Kenya (COFEK) have filed cases in court challenging the imposition of the housing levy on workers. The government had announced that that funds raised from the levy would go towards the affordable housing project, which seeks to build 500,000 housing units by 2022.

In his speech on Thursday, Kenyatta said the government has already commissioned the first phase of the affordable housing project, in which 100,000 units will be constructed. He directed the Treasury and the Ministry of Housing to make the necessary changes to the Housing Fund Levy and table them before Parliament for adoption.

“The implementation of the Housing Fund Levy as a mandatory contribution, for both employees and employers, has at every turn, been fraught with an avalanche of legal hurdles and obstacles…,” said Kenyatta.

“In this regard, and to ensure that the implementation of the program is not derailed any further, I hereby direct and order that the National Treasury, the ministry responsible for Housing moves to Parliament, a revision to the legal requirement in respect to the Housing Fund Levy, to make the contribution voluntary, with immediate effect.”

This week, Housing Principal Secretary Charles Hinga revealed that 17,000 Kenyans are already making voluntary monthly contributions to the government’s affordable housing scheme.