Hello and welcome to the Money Weekly Newsletter, where we are covering the plans to securitise the Housing Levy for a Ksh100 billion loan.

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Govt to Securitise Housing Levy for Ksh100 Billion Loan

The government is planning to use the 1.5% Housing Levy collections as collateral for a Ksh100 billion loan.

The move could make the deduction introduced by the Kenya Kwanza administration a long-term feature on workers' payslips.

According to disclosures by the Housing Committee of the National Assembly, the State Department for Housing intends to raise the funds through a process known as securitisation.

Under this arrangement, future Housing Levy collections would be used to repay investors who purchase government-backed bonds.

The proposal is aimed at addressing a Ksh118.3 billion funding shortfall in the affordable housing programme.

The government estimates that it will require Ksh228.3 billion to finance housing projects in the 2026/27 financial year, but has only secured Ksh110 billion through budget allocations.

To bridge the gap, the State Department plans to raise Ksh150 billion, including Ksh100 billion through securitisation and Ksh50 billion from the sale of completed housing units.

Even as the government aims to raise funds to meet its goal of building 200,000 houses annually, the plan could have long-term implications for workers.

Since future levy collections would be committed to servicing the bond, scrapping the Housing Levy before investors are repaid could become difficult.

The move mirrors similar government financing strategies that have used levies to back long-term borrowing. Previous securitisation programmes have involved the Sports Fund, which is currently being used to finance the construction of Talanta Stadium ahead of AFCON 2027.

The Road Maintenance Levy Fund has also been earmarked for securitisation to raise money for paying pending bills owed to road contractors.

Here is a quick recap of the top news stories for the week:

• EPRA has introduced a new fuel pricing formula that calculates imported petroleum costs using average global prices from the previous month rather than current market rates. Under the model, fuel cargo delivered in May will be priced using April averages, while June shipments will use May averages. Analysts say this could limit the benefits of recent global fuel price declines for Kenyan motorists during the June fuel price review. Meanwhile, the government had promised to reduce Diesel prices by Ksh10 in the June review.

• PayPal has frozen funds in some Kenyan accounts and permanently restricted others over failure to verify employment and residential details. Users receiving payments from abroad are being asked to provide documents such as work contracts, bank statements and proof of address. Non-compliant accounts may have funds held for up to 180 days. The stricter checks are part of PayPal’s anti-money-laundering and anti-fraud measures. 

• The government has withdrawn plans to increase electricity tariffs from July 1 after Kenya Power pulled its application for new power prices. There were fears of public backlash following recent protests linked to higher fuel costs. Energy CS Opiyo Wandayi said the decision followed consultations aimed at protecting households, businesses and industries from higher electricity bills. Kenyans will continue paying current rates. 

• Kenya Railways plans to electrify Nairobi's commuter rail network under a transport upgrade programme supported by the World Bank. The project includes the development of the Nairobi Central Station–Thika line and the acquisition of new electric and diesel-electric trains. Other upgrades include expanding rail capacity, building access roads, establishing maintenance workshops, and setting up facilities to manufacture railway spare parts. 

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That’s a wrap for this week’s Money Weekly!

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