llenges in the Uptake of Pension Backed Home Loans for Public Sector Employees in Kenya
Muchira, Michael M
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Housing has become the defining issue in any government because it is at the heart of current world economic crisis. The provision of affordable housing characterizes economic and political ingenuity. It is of greater political consequences than most other areas of government policies. Kenya recognizes housing as one of its key component in social sector pillar under vision 2030. The Kenyan Constitution (2010) under bills of right provides for the right of every person to accessible and adequate housing. The aim of this study was to assess the challenges affecting the uptake of pension-backed home loans in Kenya with a view to developing a working pension scheme system that caters for the high uptake of home loans in Kenya. The study adopted a mixed approach (questionnaires and interviews); the choice of this approach was informed by the nature of data as the expected data was both numerical and descriptive that justified the choice of the research strategies. The findings of this study revealed that existing pension backed home loan has failed to meet the needs of the public sector employees. As a result, the uptake of the pension backed home loan is quite low (World Bank, 2011), even with allowing of the members to use 60 % for the accumulated benefits as the security, though, it is envisioned to increase with the systems approach provided in this study. Key components of the existing pension backed home loan as a system have been identified in both the literature review and the primary findings and include: housing inputs such as actors, innovative products, interest rates, RBA regulations, availability of land and provision of long-term funds; the process elements such as Construction, execution , planning, financing; external environment (Formal and informal institutions, economic (interest rates), social institutions (create awareness), enabling legal framework) and feedback (Customer expectations, policy interventions) (Ochieng, 2018; Table 4.6). The study has established that in order to address the challenges of low uptake of pension-backed home loan, it is important to create awareness, provide long term funds to meet housing demand, offer incentives to acquire land and improve socio-economic welfare of the members since lack of these came out as the most significant challenges in the low uptake of pension backed home loan study (Table 4.5).The study recommends that the state as the major stakeholder need to transform existing pension backed home loan system to a functional system. This would be in form of input, process elements, external environment, output, and the feedback control. Further reforms in existing statutes that relate to housing provision would be key to boost housing supply and demand. For instance, the regulations could be amended so as to allow the members to assign the 60 % of the savings as the security to buy land in either the rural or urban areas. This has not been explicitly addressed in the current regulations. Further, the review of the Central Bank Act would improve mortgage availability and enhance the capacity of the mortgage market.
University of Nairobi