Kiharu MP Ndindi Nyoro has raised alarm over the impact of the housing levy on Kenya’s economy, pointing to a sharp contraction in the construction sector, as revealed in the latest Kenya National Bureau of Statistics (KNBS) report. According to the data, the construction sector shrank by over 2 per cent in 2024, halting an 11-year growth streak.
Nyoro attributed the sector’s decline to the mandatory 1.5 per cent housing levy deduction from employees’ gross salaries, introduced by the government in 2023. He argued that the levy has reduced disposable income, limiting household spending and stifling economic activity in key sectors like construction.
“Someone who would send their parents Sh5,000 to buy cement or build a semi-permanent house can no longer afford to do so,” Nyoro said. He also pointed out that cement consumption dropped by 7.2 per cent to 8.54 million tonnes in 2024, while bank lending to the sector decreased from Sh602.7 billion to Sh528 billion.
Despite the government’s target to build 200,000 affordable housing units annually, the KNBS report shows rising construction costs, with a 50kg bag of cement now costing between Sh720 and Sh1,250, a 15–30 per cent increase. Employment in the sector also dipped slightly, from 226,000 workers in 2023 to 223,400 in 2024.
Nyoro welcomed plans by the Treasury to review the levy and called for its complete removal. Treasury Cabinet Secretary John Mbadi, speaking in the Senate on June 5, acknowledged the widespread dissatisfaction the levy has triggered among workers.
The MP also criticized recent cuts to education funding, warning that slashing Sh5.9 billion from national exam capitation could lock out disadvantaged children. “Let’s take the education sector seriously,” he urged, noting that free education, introduced by the late President Mwai Kibaki, had been a key equalizer for poor families.
Nyoro further expressed concern about the ballooning public debt, which has grown from Sh8.7 trillion in 2022 to Sh11.5 trillion, warning that continued borrowing poses long-term risks to economic stability.
