This archive report was first published on 14 January 2020.
President Uhuru Kenyatta's Big 4 Agenda includes affordable housing, with a target of building half a million housing units by 2022. However, the current financial situation is strained, with looming strikes by lecturers, teachers, doctors, and pilots demanding their fair share of the national budget.
One option is to get another international loan to pay off old ones, but economists warn that this would be 'filling one hole by digging another bigger one.' The government previously tried to raise capital by introducing a housing levy on salaried employees, but the messaging was poorly executed.
Before giving up on the ambitious project, the government could try Real Estate Tokenisation, a concept that translates an asset into a cryptographically protected digital asset. This approach has been experimented with in Kenya, with the M-Akiba investment product allowing citizens to buy and sell government treasury bonds using their mobile phones.
By using a mobile interface and mobile money, citizens can log in and pay for digital assets, earning returns of about 10 percent per annum without the complications of meeting stock brokers or going to the Nairobi Securities Exchange. This concept can be tweaked and repurposed to finance the affordable housing project.
Using a Blockchain-based system, the government can enhance transparency and accountability by issuing cryptographically signed digital tokens for each housing project. For example, if Bungoma County has been allocated 1,000 housing units at a cost of Sh2 million each, the government can issue 2 million tokens, each valued at Sh1,000.
Wanjiku can then buy one or several of these 'securitised' digital tokens based on her financial capacity and without being coerced. When the houses are complete and rented out, Wanjiku can earn her fraction of the rent according to her investment. She can also trade off her shares on a digital market as and when she wants.
By tokenising the system, the government can harness untapped financial resources and make funding available for the affordable housing project.
Mr. Walubengo is a lecturer at Multimedia University of Kenya, Faculty of Computing and IT.
