MPs raise alarm over missing Sh4.2 billion earned from housing levy investments
The revelation has sparked concern over the transparency and use of funds collected through the controversial housing levy.
Members of Parliament have questioned the whereabouts of Sh4.2 billion earned as interest from the investment of Housing Levy funds in Treasury Bills, accusing the government of failing to include the money in the 2025/26 national budget.
The Budget and Appropriations Committee (BAC) revealed that the State Department for Housing and Urban Development loaned the government Sh46 billion, which earned Sh4.2 billion in interest income. However, this amount was not reflected in the budget estimates for the coming financial year.
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“The State Department for Housing and Development reported earning Sh4.2 billion in interest income from funds invested in Treasury Bills, however, this has not been factored into the 2025/26 budget estimates,” said BAC chairperson Samuel Atandi.
The revelation has sparked concern over the transparency and use of funds collected through the controversial housing levy.
Many Kenyans had already expressed dissatisfaction after learning the government was investing the levy proceeds in Treasury Bills instead of directly funding affordable housing projects.
BAC also warned that unspent money collected through the housing levy is expected to increase by Sh30.3 billion in the next financial year, raising further concerns about the state’s ability to use the funds effectively.
“The committee observed that appropriation-in-aid (AIA) allocation from the Housing Levy is expected to rise by Sh30.3 billion in the financial year 2025/26 due to unutilised carryovers from the previous financial year,” the committee said.
The underuse of the funds has been partly blamed for the move to invest in Treasury Bills, a decision that has angered many Kenyans who want the money used for its intended purpose.
In the first year, the levy raised Sh54.6 billion. This has now reached Sh88 billion by May of the current financial year, and Treasury expects collections to hit Sh96 billion in 2025/26, much higher than the earlier projection of Sh70 billion.
Despite the increasing collections, the committee noted that several housing projects are struggling, with developers threatening to abandon them due to a lack of funding. Some donor-funded projects have nearly stalled as the government has failed to meet its part of the funding obligations.
These include the Kenya Informal Settlements Improvement Project (KISIP II), the Kenya Urban Support Programme (KUSP II), and the Kenya Informal Settlements Redevelopment Project (KISRIP). The total government contribution required for these projects is Sh890 million, but only Sh34 million has been provided so far.
Meanwhile, Treasury Cabinet Secretary John Mbadi has hinted at a review of the levy, acknowledging that many workers are unhappy.
“There is a discussion to restructure it because it has serious benefits and quite a number of projects are coming up, but at the same time, the individual employees have complaints which you cannot ignore. A lot of restructuring is going on and there will be pronouncements in due course,” he said.
The World Bank has also weighed in, recommending the removal of the levy for workers earning below Sh32,000 per year to ease the tax burden on low-income earners.
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