A research submitted in partial fulfillment for the award of Bachelor of Arts in Real Estate

UNIVERSITY OF NAIROBI AN EVALUATION OF PUBLIC PRIVATE PARTNERSHIP AS A POSSIBLE SOLUTION TO THE PROVISION OF AFFORDABLE HOUSING IN KENYA BY MUIRURI DANIEL KUNG U B04/0356/2009 A research submitted in partial fulfillment for the award of Bachelor of Arts in Real Estate MAY, 2013

DECLARATION Declaration by student I, MUIRURI DANIEL KUNG U, declare that this project is my original work and has not been presented for any degree in any other University or Institution.. Muiruri Daniel Kung u. Date Supervisor s Declaration This project paper has been submitted for examination with my approval as a University Supervisor... Prof. Paul M. Syagga.. Date ii

ACKNOWLEDGEMENT Thanks to almighty God for giving me strength each day. I wish to express my gratitude for the invaluable guidance I received from my supervisor, Prof. Paul M Syagga. I appreciate the constructive criticisms, comments and suggestions. To all in the Department of Real Estate and Construction Management I say thank you. To Muchoki David you have been a supportive classmate both academically and socially from form one up to this moment, I say God bless you. To my classmates, Gichohi, Mungai, and Mutwiri just to name a few, I say thank you. To my best friend Beth thanks for being there for me, for your understanding and encouragement. To Grace Muiruri and Catherine Mutava, I say thank you for your guidance during that tough time. To all respondents I say thank you for your time and patience. iii

DEDICATION I dedicate this research project to my wonderful family, Mr. and Mrs. Francis Muiruri, my brothers and sisters. I attribute my success to you all. I am proud to be part of the amazing family. Be Blessed.. iv

ABSTRACT Everyone shares the right to a decent standard of living. Essential to the achievement of this standard and therefore to the fulfillment of human life beyond simple survival is access to adequate housing. Housing fulfills physical needs by providing security and shelter from weather and climate. It fulfills psychological needs by providing a sense of personal space and privacy. The study presents the findings of an evaluation of public private partnership as a mechanism of facilitating the provision of quality affordable housing in Kenya. The objectives of the study were to establish the major challenges facing the provision of affordable housing in Kenya; to determine the applicability of public private partnership in the Kenya housing sector; and to evaluate the probable challenges of public private partnership in housing and urban development and propose the possible solution. The methodology for conducting the study involved literature review, data collection and analysis of the results using Ms excel. The process of data collection involved obtaining primary data from the respondents by conducting questionnaire surveys to the public and the private sector. Ministry of Housing and National Housing Corporation were taken to represent the public sector while Housing Finance Company of Kenya and Private developers were taken to represent the private sector. The sampled respondents included 45 officials and developers; 10 from the Ministry of Housing; 10 from National Housing Corporation; 10 from HFCK; and 15 developers. The study found out that Kenya as country had not met the housing needs for its middle and low income earners. This was attributed to the various challenges facing the provision of affordable housing. The study found out that the main challenges affecting the private sector in the provision of affordable housing to include; availability of land, inadequate housing related infrastructures, land use planning and management, strict mortgage terms and inadequate incentives by the government to the private sector to invest in affordable housing. The challenges affecting the public sector included, financial resources, building materials cost& research, institutional capacity and construction technology. The study found that public private partnership would address the challenges faced by each of the sector; the study also found that Kenya possessed a good environment for PPPs implementation through the evaluation of success factor for PPPs. The study found that public private partnership would v

be an appropriate mechanism for affordable housing provision as 81% of the respondent indicated so. The probable challenges that would affect the implementation of PPPs in the Kenyan housing sector were found out to be; governance challenge, sustainable development, differing goals, capacity challenge and the financing challenge. The study recommends the approaches that would used to address the challenges facing the provision of affordable housing and also recommends the solution to the probable challenges that would hinder the implementation of PPPs in the Kenya housing sector. vi

TABLE OF CONTENTS PAGE DECLARATION....ii ACKNOWLEDGEMENTS.........iii DEDICATION........... iv ABSTRACT.... v TABLE OF CONTENTS......vii LIST OF FIGURES.......xi LIST OF TABLES.........xii LIST OF MAPS xii LIST OF ABBREVIATIONS.......... xiii 1.0: CHAPTER ONE: INTRODUCTION.........1 1.1: Study Background........1 1.2: Problem statement 2 1.3: Study Objectives......4 1.3.1: General Objective.....4 1.3.2: Specific Objective.....4 1.4: Research Questions......4 1.5: Hypothesis of the Study..........5 1.6: Justification of the Study.........5 1.7: Research Scope........5 1.8: Organization of the Study........ 6 2.0: CHAPTER TWO: LITRATURE REVIEW... 7 2.1: Introduction......7 2.2: Provision of Housing: Key Stakeholders.....7 2.2.1: Public Sector.........7 vii

2.2.2: Private sector (Commercial)............8 2.2.3: The popular (Third) Sector.... 8 2.3: Challenges in the provision of affordable housing in Kenya.....9 2.3.1: Land...........10 2.3.2: Land use Planning and Management..........10 2.3.3: Infrastructure.......10 2.3.4: Financial Resources for Housing 11 2.3.5: Estate Management and Maintenance.....11 2.3.6: Regulatory Framework........12 2.3.7: Building Materials and Research...12 2.3.8: Inadequate Capacity..........12 2.3.9: Conclusion..........13 2.4: Public Private Partnership (PPP).......13 2.4.1: The elusive definition of public private partnerships.....13 2.4.2: Benefits of public private partnership.....14 2.4.3: Different types of PPPs....... 15 2.4.4: Public Private Partnership in Kenya......20 2.4.5: Public Private Partnership in affordable housing......21 2.4.6: The opportunities of PPP in affordable housing....... 22 2.4.7: Implications drawn from the experience of other countries.......23 2.4.8: Challenges of PPPs in housing and urban development........ 25 2.5: Key legal provisions of the study....... 27 2.6: Conclusion and Conceptual framework....29 3.0: CHAPTER THREE: RESEARCH METHODOLOGY...... 33 3.1: Introduction........33 viii

3.2: Description of Study Area....33 3.2.1: Location...... 33 3.2.2: Growth and Development...34 3.2.3: Population Growth...34 3.3: Research Design............35 3.4: Population and Sample..........35 3.4.1: Population of relevance... 35 3.4.2: Sampling and sample size...36 3.5: Data collection and research instruments.......37 3.5.1: Interviews...........38 3.5.2: Questionnaires.............38 3.6: Questionnaires pre-testing...39 3.7: Data analysis and presentation.......39 3.8: Ethical issues..........39 4.0: DATA PRESENTATION, ANALYSIS & INTERPRETATION OF FINDINGS...40 4.1: Introduction.......40 4.2: The Response Rate........40 4.3: Challenges facing the provision of affordable housing in Kenya......42 4.4: Public Private Partnership in provision of Affordable Housing in Kenya.... 48 4.5 Challenges of PPPs in the housing Sector......57 4.6: Summary......58 4.7: Hypothesis Testing...59 5.0: SUMMARY OF THE FINDINGS, CONCLUSION & RECOMMENDATION..60 5.1: Introduction....60 5.2: Summary of the findings........60 ix

5.3: Conclusion.........62 5.4: Recommendations.........63 5.4.1: challenges facing provision of affordable housing........63 5.4.2: Applicability of PPPs in the Kenya housing sector.......65 5.4.3: Probable challenges of PPPs in the Kenyan housing sector... 65 5.5: Suggestion for further research..........66 REFERENCES........67 APPENDIX 1: Letter of introduction to the respondents.....73 APPENDIX 2: Questionnaires to stakeholders in the Public Sector....74 APPENDIX 3: Questionnaires to stakeholders in the Private Sector... 78 x

LIST OF FIGURES Figure 2.1:- Figure 2.2:- Figure 4.1:- Figure 4.2:- Figure 4.3:- Figure 4.4:- Figure 4.5:- Figure 4.6:- Figure 4.7:- Figure 4.8:- Figure 4.9:- Showing the way forward to address affordable housing problem...31 Showing the conceptual framework......32 Showing the response rate....41 Showing years of experience....42 Attainment of the housing needs for Kenyans......43 Challenges facing the public sector in the provision of affordable housing...44 Challenges facing the private sector in the provision of affordable housing...46 Response on the need to promote alternative housing strategies..48 Familiarity with PPPs....49 Private sector involvement in affordable housing.....50 Public sectors challenges solvable by a partnership...52 Figure 4.10:- Private sector challenges solvable by a partnership...54 Figure 4.11:- Appropriateness of PPPs as a delivery mechanism for affordable housing..56 Figure 4.12:- Probable challenges of PPPs in the Kenyan housing sector......57 xi

LIST OF TABLES Table 3.1:- Table 3.2:- Table 4.1:- Table 4.2:- Table 4.3:- Table 4.4:- Table 4.5:- Table 4.6:- Table 4.7:- Table 4.8:- Table 4.9:- Population trends for Kenya and Nairobi...... 34 Sampling frame......37 Showing the response rate.....40 Years of experience on housing issues......41 Attainment of housing needs for Kenya....42 Challenges facing the public sector in the provision of affordable housing.43 Challenges facing the private sector in the provision of affordable housing...45 Response rate on the need to promote alternative housing strategies...47 Private sector involvement in affordable housing....49 Public sector challenges solvable by a partnership 51 Private sector challenges solvable by a partnership...53 Table 4.10:- The success factors of PPPs in the Kenyan context...55 Table 4.11:- Appropriateness of PPPs as a delivery mechanism for affordable housing..56 Table 4.12:- Probable challenges of PPPs in the Kenyan housing sector......57 LIST OF MAPS Map 3.1:- a map showing the location of Nairobi 33 xii

LIST OF ABBREVIATIONS PPP: - PPPs: - UN: - UNCHS: - NHC: - CBOs: - NGOs: - HFCK: - NACHU: - PFI: - Public Private partnership Public Private Partnerships United Nations United Nation Centre for Human Settlement National Housing Corporation Community Based Organizations Non- Governmental Organizations Housing Finance Company of Kenya National Cooperative Housing Union Private Finance Initiative xiii

1.0: CHAPTER ONE: INTRODUCTION 1.1: Study Background Housing has a central importance to quality of life with considerable economic, social, cultural and personal significance. Though a country s national prosperity is usually measured in economic terms, increasing wealth is of diminished value unless all can share its benefits and if the growing wealth is not used to redress growing social deficiencies, one of which is housing (Erguden, 2001). Housing plays a huge role in revitalizing economic growth in any country, with shelter being among key indicators of development (Ireri, 2010). Affordability of housing is determined by the relationship between housing costs and household incomes. Affordable housing is a term used to describe dwelling units whose total housing costs are deemed "affordable" to those that have a median income. A median income refers to the average pay scale level of the majority people in a population which is often low. Although the term affordable housing is often applied to rental housing that is within the financial means of those in the lower income ranges of a geographical area, the concept is applicable to both tenant and the buyer in all income ranges (Bonyo, 2010). Low-income housing is aimed at individuals without enough income to provide adequate housing for themselves and/or their families. These families are usually unable to purchase a home because they fail to qualify for a mortgage. Most families choose to rent based on their income and family situation; unfortunately, there may not be enough rental housing or enough good-quality rental housing for low-income families (Hassanali, 2009). The Universal Declaration of Human Rights gives one of the basic human rights as the right to a decent standard of living, central to which is the access to adequate housing (United Nations, The Human Rights - article25, 1948). Housing as a basic human right demands that urban dwellers should have access to decent housing, defined as one that provides a foundation for, rather than being a barrier to, good physical and mental health, personal development and the fulfillment of life objectives (Seedhouse, 1986). The focus of this research is housing for low income households or what is commonly known as affordable housing. 1

Following the promulgation of a new constitution in 2010, the right to housing is now a constitutional right provided for in Kenya s expansive Bill of Rights. However the Kenyan housing sector is characterized by inadequacy of affordable and decent housing, low-level of urban home ownership, extensive and inappropriate dwelling units, including slums and squatter settlements. According to a UN Habitat survey it is estimated that out of a total 150,000 housing units required annually in urban areas, only 23 percent of this demand is being met. The shortfall is more acute among low income households whose present demand is about 48 percent of total new houses required in Kenya. Moreover, 50 percent of the existing structures in urban areas are in need of repair/rehabilitation or redevelopment. The governments worldwide have sought to increase the involvement of the private sector in the delivery of public services. These initiatives have taken many forms, such as the outright privatization of previously state-owned industries, contracting out of services, such as refuse collection or cleaning to private firms and the use of private finance in the provision of social infrastructure (Desai and Brooks, 1997). It has been generally recognized that a public private partnership programs offers a long-term, sustainable approach to improving social infrastructures, enhancing the value of public assets and making better use of tax payer s money. It is against such a background, that this research endeavors to identify an alternative strategy in the provision of affordable housing in Kenya, and in this case public private partnership. 1.2: Problem Statement Excessive levels of urbanization in relation to economic growth have resulted in high levels of urban poverty and rapid expansion of unplanned urban settlements and slums, which are characterized by lack of basic infrastructures and services, overcrowding and substandard housing condition (UNCHS, 2008). This rapid growth in urban population is overwhelming efforts to provide adequate housing, thereby, widening the gap between the demand and supply of housing, especially for low income sectors (Sivam & Young, 2001). For three decades now, governments all around the world have tried to address the problem of providing adequate and affordable housing with an enhanced recognition of the need for new approaches to deliver more affordable housing. (Ong & Lenard, 2002) 2

Kenya is one of the many countries facing housing challenges, with slums growing at an unprecedented rate as more and more people move to Kenya s cities and towns in search of employment and other opportunities that urban areas offer. The government and local authorities are faced with the serious challenge of guiding the physical growth of urban areas and providing adequate services for the growing urban population. (French institute for research in Africa 2008).According to UNCHS (2009), Kenya s urban population is at present 40 percent of the total population. More than 70 percent of these urbanites live in slums, with limited access to water and sanitation, housing, and secure tenure. They have poor environmental conditions and experience high crime rates. If the gap continues to grow between the supply and demand of urban services such as housing, the negative consequences of urbanization can become irreversible. Although accurate statistics and data remain a major challenge, in 2009/2010, Kenya s housing development sector experienced high growth. In most major urban centres, there has been a construction boom particularly in the middle and up-market sectors for which the private sector has been the main engine of growth. The value of construction, mainly of residential premises, invested over the period 2004-2009 stood at Kshs 9.0 billion. If the government introduces the right incentives to encourage greater private sector investment, it is anticipated that a total of 4.3 million housing units will be produced in the period 2008-2030 (Haki Jamii Assessment of the Realization of the Right to Housing in Kenya 2009-2010) On its part, the state has largely focused on providing housing for its employees and setting up the policy and legal infrastructure for private market players. In partnership with development agencies such as the World Bank, the state has also been involved in slum upgrading aimed at providing better housing for those living in informal settlements. There is however, no comprehensive policy or legislative framework to deal with the root cause of the slums. Despite impressive efforts being made by government through the Ministry of Housing; (the Appropriate Building Technology Programme, Slum Upgrading, Civil Servants Housing Scheme, Housing Infrastructure, and Government Estate Management) housing still remains a major challenge in Kenya as millions of people are still inadequately housed. 3

Given the current demographic trends, Kenya will be a predominantly urban country by 2030 and more than half of our nation s population is likely to be residing in urban areas at that time. The 2030 vision for housing and urbanization is an adequately and decently housed nation in a sustainable environment. There is an acute need, therefore, for an effective capacity for regional and urban development planning starting with adequate housing for those now living in slums. (Kenya, Vision 2030). In order to realize the housing agenda as propagated by the Constitution of Kenya 2010 and Vision 2030 there has been recognition of a need to promote alternative options to address the various housing needs of the Kenya population, including the promotion of affordable housing to provide integrated and sustainable human settlement. It is with such a concern that the study intends to evaluate the use of public private partnership (PPP) in the provision of affordable housing in Kenya. 1.3: Study Objectives 1.3.1: General Objective The aim of this research is to evaluate the use of PPP in facilitating the provision of quality affordable housing in Kenya. 1.3.2: Specific Objectives Specifically the study seeks: To evaluate the challenges facing provision of affordable housing in Kenya. To find out the applicability of public private partnerships in provision of affordable housing in Kenya. To evaluate the possible challenges of PPPs in housing and how to resolve them. 1.4: Research Questions What are the challenges facing provision of affordable housing in Kenya? Are PPPs applicable in provision of affordable housing in Kenya? What are the challenges and possible solutions for PPPs in housing? 4

1.5: Hypothesis of the Study Lack of public private partnership in the housing sector has led to the widening gap between the supply and demand of affordable housing in Kenya. 1.6: Justification of the Study In the Kenyan context, no empirically based research that focused on the Kenyan instances of PPP in affordable housing was found. To fill this knowledge gap, this study is an opportunity to generate research that assesses the Kenyan housing problem. It is therefore the opportune time to ask whether this option can be utilized to the full extent possible in the Kenyan housing sector and what if any changes are needed to unlock the potential which lies within. Public Private Partnerships have been covered in various depths elsewhere therefore, there is a need to document what is happening in the housing sector in Kenya, and find out the perceptions of stakeholders to gain insights into the perspectives regarding the suitability and attractiveness of the PPP framework. Much has been contended in this matter, but gaps exist as to what had been empirically ascertained, hence, the need to investigate this. An opportunity, therefore, exists to explore the suitability of the PPP in affordable housing. The research is therefore motivated by the fact that, PPP as a method of delivery for affordable housing has not been empirically tested in Kenya. It is therefore hoped that the outcome of this research project will be useful to decision makers in both the public and private sectors in making sound decisions on housing issues. 1.7: Research Scope The scope of this research will be to evaluate the challenges in provision of affordable housing and the extent to which public private partnership can be used to solve the identified challenges and also give the necessary action to be adopted. While PPP have been extensively researched globally the literature has mainly focused on the implementation of PPP in economic infrastructure and there has been insufficient attention given to housing (Armitage 2007). In addition housing policies, national political and institutional framework, and PPP definition vary in different countries, hence the need for the study in a Kenyan context. The scope of this research is therefore limited to the Kenya housing sector. 5

1.9: Organization of the Study This study will be organized onto five chapters Chapter 1 of the research forms a general introduction of the study and will contain the preliminary items forming the background of the study, statement of the problem, study objectives, research questions, scope and justification of the study. Chapter 2 will provide a review of the books, articles and researches related to the subject of the research as theoretical and practical foundations for the research. The theories and concepts in the literature review becomes the basis for identifying and understanding Public Private Partnerships in general and also in the housing sector. Chapter 3 will explore the methodological guide for the conduct of the study particularly the data to be gathered, the data gathering method, data analysis approaches, and ethical concerns such as credibility and reliability of the research. Chapter 4 will contain data presentation and analysis directed towards answering the problems identified in the research. Chapter 5 will contain the conclusions and recommendations of the researcher based on the data presented and analyzed. 6

2.0: CHAPTER TWO: LITERATURE REVIEW 2.1: Introduction The chapter begins with provision of housing, focusing on stakeholders especially those involved in the housing provision, this section will categorize various stakeholders involved in the housing provision. The chapter reviews literature on challenges associated with the provision of affordable housing and public private partnership in affordable housing by providing an overview of some of the different public private partnership arrangements that have been used successfully in the developed countries for affordable housing. 2.2: Provision of housing: Key stakeholders Stakeholders can be defined as people or organizations that are concerned about, affected by, have a vested interest in, or are involved in some way with the issue at hand. The stakeholders involved in the provision of housing can be categorized as follows; 2.2.1: Public sector The public sector refers to institutions and responsibilities of the government at local levels, regional level and central level. At all levels the government is responsible for the provision of shelter for its people and look into the needs of different income groups equally despite the limited funds. (Smith1971). In Kenya Housing is financed and supplied through a number of channels, funding for the development of housing comes from national appropriations or external assistance, and it is generally channeled through the NHC. Local authorities take over projects developed by the NHC, both site-and-service schemes and rental complexes, and also control the building standards used in their areas. The government, through the Commissioner of Lands handles the alienation of public land for housing projects, controls the sub-division and titling of private land, the registration of titles and deeds, and is in charge of valuation for fiscal purposes. Responsibility for land use, control and town planning is shared between the Commissioner of Lands and Physical Planners at the local and central levels. (Wekesa 2000) 7

2.2.2: Private sector (commercial) Commercial private sector includes the firms and individuals active in different aspects of shelter process but always organized to generate profit on the investment of their resources. This sector is formed for the purpose of maximizing returns. They include varying sizes and scales ranging from large developers, housing finance institutions, commercial banks, insurance, and employers, to developers operating on a very small scale, building a few houses or providing services to a small number of houses. (Mitullah, 2003) This sector finds it hard to provide low income housing since it would be very hard if not impossible to maximize profit while providing housing units affordable to the poor. This perspective can be changed if the public sector offered attractive incentives to this sector for a partnership. (Otiso, 2003). 2.2.3: The popular (Third) Sector This sector incorporates different sub-sectors which includes; Community based organization (CBOS): these are organizations formed by members of the community. CBOs are grassroots groups whose broad goals are self-development. Their strength lies in their ability to mobilize members cohesively, tackle local problems, and seek common solutions. CBOs relate closely with members at the grassroots level and are therefore better placed to understand their aspirations and interests. They are, however, constrained by their weak resource base and limited exposure. (Koth 1995). In Kenya, CBOs are key players in the field of human settlement alongside the government, local authorities, the private sector, NGOs, co-operatives, religious organizations, donors, professional bodies and other CBOs (youth groups, women, groups and neighborhood associations). All CBOs in Kenya are registered and regulated by the Ministry of Culture and Social Services, and their operations are restricted at Divisional or District levels. Unlike NGOs, they are not allowed to work across provincial administrative boundaries. Registration forms are available from the Provincial Director of Social Services. The Chief/District Officer and Social Development Officer of the intended area of operation must endorse the application for registration. The application together with the endorsements and the CBO constitution as approved by members are then submitted to the Provincial Social Development Officer for registration. 8

Non- governmental organization (NGOS): these are organizations formed and their main aim is to support and mediate on behalf of the CBOS. In the field of housing, NGOs cater for the needs of the low income group which are not or not sufficiently met by the government or the private (commercial) sector. Their efforts are usually directed towards covering the basic needs of the poor. It has already been acknowledged that the NGO/Community Sector is making a significant contribution to the promotion, production and improvement of shelter in various regions of the developing world. NGOs operate on the principle that all people have a right to control their own destiny, with a preference for shelter solutions based on their own community or neighborhoods. In cities around the world, low-income groups and the communities or neighborhoods organizations that they form undertake most additions to the shelter stock. In many countries, NGOs play the role of originators, enablers and implementers of new ideas and models when working with community-based organizations and helping such organizations development efforts. (Nkatha, 2007). 2.3: Challenges in the Provision of Affordable Housing in Kenya The main constraint to the delivery of housing can be categorized as financial, social and institutional framework (Yetgin & Lepkova, 2007). Financial factors include poor economy in the country high cost of infrastructure, low levels of investments, difficulty in accessing finance and escalating cost of building materials. These factors make it difficult to provide housing to the poor. Social factors include population explosion, rapid- rural to urban migration and high poverty levels. Institutional frameworks such as the housing policies in place have failed to facilitate a conclusive environment for investment in affordable housing. The prices of land in urban areas have been soaring in recent years. The rapid influx of people to the urban areas has created great demand for land causing prices in residential areas to increase rapidly. The need for production of housing and services gives emphasis to the need for improvement of construction techniques and materials in order to lower construction costs and increase speed and efficiency. 9

In order to identify the key challenges in the provision of affordable housing in Kenya the study will consider the key aspects involved in the provision of affordable housing, as discussed below. 2.3.1: Land In urban areas land is highly valued and is mostly in the hands of the central government and the local authorities. The only other landowners are speculators seeking to make a quick buck. This makes land inaccessible to the majority who need it most but cannot afford its premium price. (Nabutola 2004). The high demand for land by competing interest groups i.e. Government, private sector, residential groups and individuals has pushed prices up. Public land is almost exhausted in urban areas while most of the available land is unplanned and has no basic infrastructure. Insecurity of tenure and the slow procedure of issuing title deeds for land converted from agricultural to residential use have been major handicaps. 2.3.2: Land Use Planning and Management Land is a scarce and valuable resource. Land and land related matters including use, development and control are sensitive issues with deep socio-economic and political impacts. Land holds a special and enviable position of an invaluable economic asset associated with an intricate chain of interests. Thus, a number of people having recognized the special economic value in land engaged in public land grabbing for speculative purposes. Lack of a comprehensive land use planning and management policy has led to development of substandard settlements with inadequate infrastructure, services and open spaces. Land supply/ delivery mechanism for housing development is characterized by formal and informal sub-divisions undertaken by both the public and private sectors. Formal subdivisions follow a long process whereby provision of services is mandatory before registration and necessary transfers can be effected. On the other hand informal subdivisions often fall short of planning requirements set by the approving authorities hence cannot be registered. (National Housing Policy 2004) 2.3.3: Infrastructure The opening of new land for housing development or the upgrading of existing informal settlements require installation and maintenance of infrastructure such as such as water, 10

sewerage, roads, electricity, social services and security. (Smith 2006). Infrastructural facilities therefore form a major and vital component of shelter provision. Accessibility to adequate urban basic services will greatly improve people's economic capacities, health and the quality of life in general. Lack of trunk infrastructure is a serious constraint to the low income sector housing development. (Bonyo, 2010) 2.3.4: Financial Resources for Housing Limited access to finance is a major limiting factor in housing development. The sources of funds for shelter are few and the lending institutions have not really reached some target groups. Qualifying terms for mortgages are still too stringent despite the fact that housing is still in short supply. Inappropriate fiscal policies on real estate financing, inability to finance house loans to groups, low affordability due to poverty, high interest rates on mortgages, absence of graduated payments of mortgages and lack of access to the large deposits of retirement benefit funds have hindered the development of the housing sector. (Renaud, 1997). The financial set up in the housing market in Kenya as indeed elsewhere is such that those offering funding seek to make a profit and declare dividends for the shareholders because that is what they are in business for. The money market is expensive due to relatively higher risks that raise interest rates. The exception is the central government and the local authorities who have obligation to provide decent housing for all their citizens. Unfortunately for a variety of reasons the revenue collected through taxes and service charges is not sufficient to cover housing needs as there are other priorities. Other strategies have to be devised to address the large and growing gap between what is needed and what is offered. (Nabutola 2004) 2.3.5: Estate Management and Maintenance Lack of proper management and maintenance reduces quality of housing stock and adversely affects the built environment including infrastructural facilities and other services. The physical conditions of housing for civil servants and that provided by local authorities have greatly deteriorated over the years due to lack of maintenance. (National Housing Policy 2004) 11

2.3.6: Regulatory Framework The current building by-laws and planning regulations have tended to favour high-income earners by specifying very high standards. The outdated building code regulations and zoning laws make housing expensive and encourage non-adherence to regulations. The Grade II bylaws, which were meant to be friendly to low income earners have not been adopted by many local authorities. (Homeless International 2000) 2.3.7: Building Materials and Research The building materials and construction industry constitutes one of the most important sectors in Kenya s economy. Some of the materials which are produced in some large-scale industries end up being costly due to high costs of production arising from high electricity cost. Kenya is endowed with abundant natural resources that can meet the demand for basic materials using available surplus labour in peri-urban and rural areas. There are extensive deposits of limestone, gypsum, clay, coral, forest and agricultural fiber and wastes that can increase the supply of building materials and substitute current imports. A well-developed local building materials industry can provide such benefits as improved skills, greater income generation and stimulation of other sectors. The existence of inappropriate standards and By-laws has greatly reduced the range of approved materials and building technologies. There has not been extensive research on alternative locally available building materials by our research institutions. Attempts to review standards for low income housing in Kenya were made in the 1980s and early 1990s but without much success. It was not until 1993 that flexible standards, which allowed the use of inexpensive building materials and techniques applicable to low-cost housing, were published. They were gazetted in July 1995, and have since come to be known as Code 95. Most local authorities have not however, adopted these standards. (Homeless International 2000) 2.3.8: Capacity Challenge Limited institutional capacity in both Central Government Ministries and Local Authorities and inadequate co-ordination of actors often lead to duplication of efforts. The Minister of Housing cannot direct any action in the housing sector because he has no legal powers. The 12

present Housing Act Cap 117 covers only operations of the National Housing Corporation. The new Housing Act covers the operations of other housing agencies and organizations. This is intended to strengthen the role of the Ministry in facilitating stakeholders to increase their housing production capacities. 2.3.9: Conclusion As seen above availability of land and land management issues, infrastructure, finances, research on appropriate building technology, regulatory framework, lack of capacity in the housing institutions and rapid urbanization are the main challenges in the low income housing sector. The government has not succeeded significantly in getting private financial intermediaries involved in making mortgage loans for its projects. Local authorities have been inflexible in lowering building standards, even on donor financed projects, private developers are generally unable to use the lower standards applicable to government projects and, despite some recent innovations. 2.4: Public Private Partnership (PPP) 2.4.1: The elusive definition of public private partnerships The literature around public private partnerships (PPP) indicates that PPP are notoriously difficult to define (Evans & Bowman, 2005; Hodge, 2005; Jefferies & McGeorge, 2008). Bettignies & Ross, (2004) point to the fact that PPP have been defined differently by several academics, public agencies and international organizations, with the result that a universal definition which can be considered elusive. In Canada, the Canadian council for public private partnerships (2003) defines PPP as a cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards. In the United Kingdom (UK), HM Treasury defines PPP as a way to bring public and private sectors together in long term partnership for mutual benefit. In Kenya, the Public private partnership bill 2012 defines PPP as the participation of the private sector in the financing, construction, development, operation, or maintenance of infrastructure or development projects of the Government through concession or other contractual arrangements. 13

In conclusion, the central element represented in these definitions is cooperation; sharing of responsibilities, decision-making power and authority, sharing of risks and rewards/mutual benefit, pursuing shared or compatible objectives and joint investment. Achieving value for money, especially from the taxpayer s perspective, is reflected as an element of PPP. PPP have emerged as an important model governments use to close infrastructure gaps as it offers several benefits to governments trying to address infrastructure shortages or improve the efficiency of their organizations. The key drivers of involving the private sector were (and are still) to address public sector budget deficits and to search for greater efficiency, creativity, satisfying growing demands and the expectation of new and upgrading of existing ageing infrastructure (Grimsey & Lewis, 2004). 2.4.2: Benefits of Public Private Partnership Generally, PPP procurement can provide a wide variety of net benefits for a government. Chief amongst these is the possibility of more and better project being built and services being provided (Jefferies & McGeorge, 2008). A detailed analysis of potential benefits from PPP is discussed below a) Financial benefit Proponents of PPP often point to the financial benefits of partnerships. They argue that PPP have greater potential in delivering high quality services at lower costs than those available through public investment and government provision of the same services. The lower costs result from the fact that public funding is used to leverage private involvement, which is then being matched and bettered by private investment; the higher quality is achieved by bringing together the strengths from both the public and private sectors (Hemming, 2006). b) Efficiency gains Mackintosh, (1992) has suggested that partnering can also raise effectiveness in the development process in that it leads to the pooling of expertise, resources and skills in a collaborative fashion rather than a purely competitive one, bringing together the strengths of diverse backgrounds for the public good. This is particularly true for large infrastructure projects as the synergies that can be obtained lead to comprehensive solutions and benefits 14

that would not be achieved with one partner working alone. Therefore, PPP create an enhanced partnership between the public sector and the private sector (Erridge & Greer, 2002) c) Better risk management Another frequently cited advantage in the PPP literature is that the public sector and private sector can share risks at different stages (Platten & Deng, 2006). These studies found that partnerships achieve better value for money because it becomes possible to allocate particular risk to the partner best able to manage that risk. The opportunity for efficient risk allocation is dependent largely on the type of project delivery option chosen. Generally speaking, the private sector tends to take a more robust approach towards identifying and pricing risks than the public sector. This suggests that both the private and public sectors need to have a better understanding of these risks. A fair and an equitable allocation of various risks are vital to PPP success and enable the project to generate better outcomes. 2.4.3: Different Types of PPP PPP are normally classified in a continuum that reflects the degree of private sector involvement. At one extreme is the public provision, where the public sector is fully responsible for all aspects of delivering public services; while at the other extreme, is the private provision, where the private sector assumes all those responsibilities. As the PPP move from the end of the purely public provision to the other, the degree of private involvement increases. These PPPs also vary in terms of finance sources and ownership of properties. (Sohail 2000) The Canadian Council of Public Private Partnership identifies the following types of PPP arrangements or models; O&M: Operation and maintenance A public partner (federal, state, or local government agency or authority) contracts with a private partner to provide and/or maintain a specific service. Under the private operation and maintenance option, the public partner retains ownership and overall management of the public facility or system. 15

Operations, Maintenance& Management A public partner (federal, state, or local government agency or authority) contracts with a private partner to operate, maintain, and manage a facility or system proving a service. Under this contract option, the public partner retains ownership of the public facility or system, but the private party may invest its own capital in the facility or system. Any private investment is carefully calculated in relation to its contributions to operational efficiencies and savings over the term of the contract. Generally, the longer the contract term, the greater the opportunity for increased private investment because there is more time available in which to recoup any investment and earn a reasonable return. Many local governments use this contractual partnership to provide wastewater treatment services. Design-Build A DB is when the private partner provides both design and construction of a project to the public agency. This type of partnership can reduce time, save money, provide stronger guarantees and allocate additional project risk to the private sector. It also reduces conflict by having a single entity responsible to the public owner for the design and construction. The public sector partner owns the assets and has the responsibility for the operation and maintenance. Design-Build-Maintain A DBM is similar to a DB except the maintenance of the facility for some period of time becomes the responsibility of the private sector partner. The benefits are similar to the DB with maintenance risk being allocated to the private sector partner and the guarantee expanded to include maintenance. The public sector partner owns and operates the assets. Design-Build-Operate A single contract is awarded for the design, construction, and operation of a capital improvement. Title to the facility remains with the public sector unless the project is a design/build/operate/ transfer or design/build/own/operate project. The DBO method of contracting is contrary to the separated and sequential approach ordinarily used in the United States by both the public and private sectors. This method involves one contract for design 16

with an architect or engineer, followed by a different contract with a builder for project construction, followed by the owner's taking over the project and operating it. Design-Build-Operate-Maintain The design-build-operate-maintain (DBOM) model is an integrated partnership that combines the design and construction responsibilities of design-build procurements with operations and maintenance. These project components are procured from the private section in a single contract with financing secured by the public sector. The public agency maintains ownership and retains a significant level of oversight of the operations through terms defined in the contract. Design-Build-Finance-Operate-Maintain With the Design-Build-Finance-Operate-Maintain (DBFOM) approach, the responsibilities for designing, building, financing, operating and maintaining are bundled together and transferred to private sector partners. There is a great deal of variety in DBFOM arrangements in the United States, and especially the degree to which financial responsibilities are actually transferred to the private sector. One commonality that cuts across all DBFOM projects is that they are either partly or wholly financed by debt leveraging revenue streams dedicated to the project. Direct user fees (tolls) are the most common revenue source. However, others ranging from lease payments to shadow tolls and vehicle registration fees. Future revenues are leveraged to issue bonds or other debt that provide funds for capital and project development costs. They are also often supplemented by public sector grants in the form of money or contributions in kind, such as right-of-way. In certain cases, private partners may be required to make equity investments as well. Value for money can be attained through life-cycle costing. Design-Build-Finance-Operate-Maintain-Transfer The Design-Build-Finance-Operate-Maintain-Transfer (DBFOMT) partnership model is the same as a DBFOM except that the private sector owns the asset until the end of the contract when the ownership is transferred to the public sector. While common abroad, DBFOMT is not often used in the United States today. 17

Build-Operate-Transfer The private partner builds a facility to the specifications agreed to by the public agency, operates the facility for a specified time period under a contract or franchise agreement with the agency, and then transfers the facility to the agency at the end of the specified period of time. In most cases, the private partner will also provide some, or all, of the financing for the facility, so the length of the contract or franchise must be sufficient to enable the private partner to realize a reasonable return on its investment through user charges. At the end of the franchise period, the public partner can assume operating responsibility for the facility, contract the operations to the original franchise holder, or award a new contract or franchise to a new private partner. The BTO model is similar to the BOT model except that the transfer to the public owner takes place at the time that construction is completed, rather than at the end of the franchise period. Build-Own-Operate The contractor constructs and operates a facility without transferring ownership to the public sector. Legal title to the facility remains in the private sector, and there is no obligation for the public sector to purchase the facility or take title. A BOO transaction may qualify for taxexempt status as a service contract if all Internal Revenue Code requirements are satisfied. Buy-Build-Operate A BBO is a form of asset sale that includes a rehabilitation or expansion of an existing facility. The government sells the asset to the private sector entity, which then makes the improvements necessary to operate the facility in a profitable manner. Developer-Finance The private party finances the construction or expansion of a public facility in exchange for the right to build residential housing, commercial stores, and/or industrial facilities at the site. The private developer contributes capital and may operate the facility under the oversight of the government. The developer gains the right to use the facility and may receive future income from user fees. While developers may in rare cases build a facility, more typically they are charged a fee or required to purchase capacity in an existing facility. This payment is 18

used to expand or upgrade the facility. Developer financing arrangements are often called capacity credits, impact fees, or extractions. Developer financing may be voluntary or involuntary depending on the specific local circumstances. LDO or BDO: Lease-Develop-Operator Build-Develop-Operate Under these partnerships arrangements, the private party leases or buys an existing facility from a public agency; invests its own capital to renovate, modernize, and/or expand the facility; and then operates it under a contract with the public agency. A number of different types of municipal transit facilities have been leased and developed under LDO and BDO arrangements. Lease/Purchase A lease/purchase is an installment-purchase contract. Under this model, the private sector finances and builds a new facility, which it then leases to a public agency. The public agency makes scheduled lease payments to the private party. The public agency accrues equity in the facility with each payment. At the end of the lease term, the public agency owns the facility or purchases it at the cost of any remaining unpaid balance in the lease. Under this arrangement, the facility may be operated by either the public agency or the private developer during the term of the lease. Lease/purchase arrangements have been used by the General Services Administration for building federal office buildings and by a number of states to build prisons and other correctional facilities. Sale/Leaseback This is a financial arrangement in which the owner of a facility sells it to another entity, and subsequently leases it back from the new owner. Both public and private entities may enter into sale/leaseback arrangements for a variety of reasons. An innovative application of the sale/leaseback technique is the sale of a public facility to a public or private holding company for the purposes of limiting governmental liability under certain statues. Under this arrangement, the government that sold the facility leases it back and continues to operate it. 19

Tax-Exempt Lease A public partner finances capital assets or facilities by borrowing funds from a private investor or financial institution. The private partner generally acquires title to the asset, but then transfers it to the public partner either at the beginning or end of the lease term. The portion of the lease payment used to pay interest on the capital investment is tax exempt under state and federal laws. 2.4.4: Public Private Partnership in Kenya While urban areas across the globe are characterized by their own set of complex issues, the financial challenges are notably the same; at all levels of economic development, there is a far greater financing need for urban development projects than can be provided by the traditional public purse alone. Recognizing this, governments around the world are turning to PPPs as one possible financing option for large scale investments in the provision of affordable housing and other basic infrastructure assets. (Turner 2009) Like many other developing countries, Kenya faces significant financing gaps in infrastructure and utilities to attain country s vision 2030. Kenya Vision 2030 has identified the private sector as key towards reducing the infrastructure deficit and to deliver high quality service to the Kenyan citizens. The PPP arrangements, therefore, offer an opportunity for Kenya to attract enhanced private sector participation in financing, building and operating infrastructure services and facilities in order to close this huge funding gap. The scope of PPPs are expected to cover both economic infrastructure including power generation, ports, airports, railway, roads, water supply, irrigation, amongst others, as well as social infrastructure which will include housing, medical facilities, education facilities, prisons and solid waste management. The types of PPP arrangements will include long term management contracts, leases, concessions, Build-Operate-and-Transfer (BOT), Build-Own-Operate (BOO), Rehabilitate-Operate-and-Transfer (ROT), amongst other arrangements approved by the government. However the debate on PPP is currently on going with PPP bill yet to be signed into a law. Once approved the PPP Law is expected to further strengthen the legal framework and consolidate all issues relating to PPPs into one Law. The PPP Law is expected to: 20

provide the legal capacity to Government bodies to enter into PPP contracts; create certainty and investor confidence; address legal gaps, remove conflicts and overlaps in law; clarify roles and responsibilities of various bodies and institutions that may have an input to the PPP process; establish legal institutions to prepare and approve PPP projects; reduce negative impacts on risk profile of PPP projects; provide a framework for PPP project cycle; provide a clear approval process for PPPs; provide for a Procurement process for both solicited and unsolicited; and finally, establish a Project Facilitation Fund to provide for project preparation funds, viability gap funds and any government subsidies. 2.4.5: Public Private Partnership in Affordable Housing The market cannot effectively deliver housing for all Kenyans and that, in order to provide adequate and affordable housing for the lowest income group, some form of public support is necessary. However, in the context of declining government funding for low income housing in Kenya, relying solely on government programs and subsidies to deliver and manage housing for low-income households is unsustainable, therefore public-private partnerships (PPPs) has to be considered as one of the possible financing solution to address the problems that plague the low income housing sector. Governments that have multiple, successful partnerships recognize that each sector carries with it different challenges across each phase of the PPP life cycle (Deloitte Research, 2006). PPP policies, approaches, and political strategies must, therefore, be tailored to the unique characteristics of each individual sector. With increasing concerns about housing affordability, for low-income and moderate income households, we need to think outside our current primary models of housing assistance, that is central government provision of state houses and the accommodation supplement. Partnerships between organizations from the public, private and non-profit sectors provide new models for delivering affordable housing. International experience in this area is highlighted, and the lessons and implications, and key components of these successful partnerships are identified. 21

Why consider partnerships for the provision of affordable housing? Partnerships for funding affordable housing may be used both for the creation of the fixed asset (bringing together land, capital, and expertise) and for ongoing management and maintenance. Partnerships may result in the achievement of complementary goals by using innovative funding and tenure mechanisms, maximizing the effectiveness of limited resources, learning from partner organizations, leveraging investment, and minimizing risks by sharing. Whilst contributions to partnership ventures may be greater than in normal business transactions, the benefits may be greater and more diverse. (Deloitte Research, 2006) For a community organization or a local council that seeks to increase the provision of affordable housing, partnership with a private sector organization can increase the resources, finance and expertise available for the project, enable the project to reach a wider pool of target households, and reach potential supporters and additional partners. The case for private sector businesses to get involved is less clear, not least because of the diversity of these organizations; including landowners, developers, construction companies, suppliers of building materials, professional services, housing management and real estate companies, financial institutions, employers etc. Some of the reasons why businesses can benefit from involvement include generating financial returns and a competitive edge from innovative projects; accessing funding sources that would otherwise not be obtainable; enhancing company reputation by demonstrating social responsibility and / or commitment to a community; and opportunities for staff development and positive effects on staff recruitment and retention. (Deng, 2003) 2.4.6: The Opportunities of PPP in Affordable Housing PPP in housing are still emerging in developing countries and the extent of their use has depended, amongst other things, on the economic strength, prevalent political environment and housing tradition of a particular city (Sengupta, 2006). Internationally, there has been a shift from governments being the direct provider of urban housing, given the limited scale of production achieved and apparent financial constraints of governments (Keivani & Werna, 2001). These constraints resulted in gross incapacity of governments to deliver, mainly 22

because the whole approach lacked a sound economic base due to the level of subsidies involved and failure to recover costs (Sengupta, 2006). The emergence of PPP is rooted in the enabling approach, where focus shifted the direct provision of housing by governments, to a focus on governments providing an enabling environment for low income housing provision by other parties. The primary objective of the enabling approach has been to improve the efficiency of the housing sector by the public sector concentrating on eliminating constraints on both the supply and demand sides. The World Bank (1993) and the UNCHS (1992) have suggested that, in operational terms, enablement will often take the form of partnership arrangements that bring together government policy makers, government agencies, community based organizations, NGOs, private builders, and/or households( Moskalyk, 2008) Researchers have also explored the possibility of increasing the supply of low income housing by stimulating private sector involvement in affordable and low income housing projects (Susilawati & Armitage, 2004; Brown, Orr & Luo, 2006 and Scanlon & Whitehead, 2007). However, literature specific to PPP in housing in developing countries, is relatively limited. The potential value of social housing PPP is the increase in the availability of finance for housing, and thereby increasing the supply of housing from present levels. According to research by Canadian Mortgage and Housing Corporation (CMHC) 1999, PPP affords efficiency gains; lower costs, quicker completion and higher service levels due to a number of factors; namely,: performance based contracts, risk transfer to private-sector providers, integration of the various phases of a project, and the requirement that the private partners finance most of the costs of the project. PPP accelerate project development and save time in delivering the project (Iacobacci, 2010). PPP can also lead to increased competition and, therefore, efficiency in the housing market. 2.4.7: Implications Drawn From the Experience of Other Countries The path to successful PPP projects is complex and time consuming, and involves significant expenditure. No example has fully satisfied every success criteria. In general, the success in terms of the right quantity of high quality, sustainable housing cannot rely solely on the 23

adoption of PPP strategies. The design of PPP contracts involves a number of key decisions in areas such as affordability, risk transfer and value for money (PPP Manual, 2004). A careful consideration of the value for money drivers is likely to enhance the possibility of PPP solution becoming a viable alternative to traditional methods of service provision. It is realistic to suggest that the potential for success is influenced by the economic, political and cultural circumstances of the specific country in question However, there are key strategies that can be learnt from experiences of advanced economies that have contributed to the growth and viability of public private partnership in affordable housing. International experience with affordable housing PPP shows that there are a myriad of models that can be used effectively to meet housing challenges. The key elements of the successful models in the developed countries have been taken as the major components of a sustainable model for delivering affordable housing against which Kenya can be evaluated. The section below gives a clear outline of the same; a) Partnership structure The partnering arrangement would include the public sector, the private for profit and state developmental finance institutions. b) Funding framework The funding should thus comprise a mix of subsidies, loan finance and grants, private equity, commercial debt finance loans from private sector finance institutions and other state development finance institutions at subordinated low interest or zero interest loans. c) Targeted market The international literature on low income housing provision has given priority to partnerships that entail the construction of mixed income housing estates. The idea is that the latter would subsidize the former (Susilawati and Armitage, 2004). The profit from the higher end product subsidizes the low income housing which demonstrate the dual roles of the associations. It is, therefore, recommended that the mixed housing developments provide wider housing options to clients over their life cycle. 24

d) Land acquisition PPP schemes should preferably include local authority and government land at no cost to enhance the financial viability of the project. The contribution of land by local government has proved instrumental in the success of many low cost housing projects. e) Types of projects In addition to being used for new projects, PPP can also be used for existing facilities including inner city, residential refurbishments, conversion of offices to residential units and Greenfield developments for rental accommodation. PFI was considered appropriate for varied types of stock in the case of either refurbishment or new build construction. f) Transfer public stock to HI to build an asset base Transferring title in public housing stock to HI is a key policy lever being used by the United Kingdom, to increase the scale and capacity of housing providers to improve their viability, sustainability and growth prospects. All properties owned by the states are transferred with minimal or no cost. This allows the HI to; g) Undertake some commercial activities; SHI can increase revenues by engaging in some commercial activity that achieves market profits. The proceeds of these activities would subsidize its core social housing market. This strategy would overcome the viability and growth constraints faced by the organization due to limited rental returns. For example, in the United Kingdom, there has been a significant increase in affordable housing providers redeveloping and selling property to increase their surpluses. h) Lower the cost of finance; Lowering the cost of finance via for example, government guarantees, can free up capital and allow the property owner to focus on tenant needs. This option is a more direct avenue for property owners to access funding and negotiate with banks for terms that are more favorable. 2.4.8: Challenges for PPPs in Housing and Urban Development It is well-documented that globally, both the private and public sectors are embracing partnerships for the provision of housing and urban development. However, when applying 25

the PPP approach to the urban sector to try and meet the needs of the rise in population, governments around the world are facing a range of challenges. While the scale and scope of these challenges vary depending on the country s level of understanding and development in using the partnership model, this section provides an overview of some of the most common PPP challenges facing governments today. Differing Goals Ordinarily, the goals of the private sector fundamentally oppose those of the public sector: the former focuses on economic gain while the latter strives to protect the public interest through regulation and minimization of risk. If left unmanaged, these disparate goals of the two sectors can cause friction and mistrust between the partners. (Terry, 1996). Public Acceptability There may be considerable resistance to private sector participation in the provision of urban development, particularly for more traditional public urban services such as affordable housing, water, sanitation and waste management. Oftentimes, these urban services provide basic human needs to the world s poor who would not otherwise receive them. Therefore, if service is undermined due to a drive for profit, or if there is slow responsiveness to a problem, the result may be a strong public resistance to the partnership and a general distaste for private sector involvement in the urban sector overall. (National treasury s PPP manual, 2004). Capacity Challenges at the Local Level With more than half of the world s population living in urban centers, in many cases it will be the local governments who will feel the most pressure to adopt new partnership financing models and prudent urban planning strategies. However, it is to be expected that assuming this new role will be difficult for many localities that lack the basic negotiation, finance, contract and other skills required to manage highly complex urban projects such as PPPs. (Grimsey & Lewis, 2004). This is particularly true for local governments in emerging or fragile states where even the basic laws and regulations required to conduct business with the private sector are entirely absent, severely lacking, or subject to change. 26

Challenges in Governance for Sustainable Development It is now globally recognized that environmental sustainability is an important factor when considering policy options for housing and wider urban regeneration as urban areas show increasing signs of environmental degradation. However, in numerous countries, a great majority of responsibility for the implementation of PPPs in the urban sector rests with the finance and other infrastructure departments or ministries. While these departments are perhaps better equipped to plan and execute PPP projects, they tend not to be well-briefed on important environmental considerations. Consequently, many urban sector PPPs do not integrate key principles of sustainable development into their planning and implementation process. (Deloitte Research, 2006). Financing Challenges for PPPs The global financial crisis has drastically changed the financial landscape for urban PPPs all around the world. On one hand, tighter spending reviews have led many governments to adopt PPP models in order to try and ease the immediate effect on growing deficits. On the other hand, strict credit conditions have made banks and investors increasingly cautious about taking on additional projects, making it more difficult to borrow money. In the current context, many governments are struggling to secure revenue support streams for urban sector PPPs, some of which are considered high risk. (Deloitte Research, 2006). 2.5: Key Legal Provisions of the Study In the Kenyan context the debate on PPP is currently going on with PPP bill yet to be signed into a law, nevertheless there are several pieces of legislation that provide some foundation for PPP arrangements. The Privatization Act 2005: which defines privatization as a transaction that result in a transfer, other than a public entity of; Assets of a public entity including the shares in a state corporation, Operational control of assets of a public entity and Operations previously performed by a public entity. Public Procurement & Disposal (PPDA) Act 2005: which defines public private partnership as an agreement between procuring entity and a private party under which the private party 27

undertakes to perform a public function or provide a service on behalf of a procuring entity, the private party receives a benefit for performing this function, either by way of compensation from a public fund, charges or fees or combination of compensation and charges. The public private partnerships bill, 2012 A Bill for an Act of Parliament to provide for the participation of the private sector in the financing, construction, development, operation, or maintenance of infrastructure or development projects of the Government through concession or other contractual arrangements; the establishment of the institutions to regulate, monitor and supervise the implementation of project agreements on infrastructure or development projects and for connected purposes. Universal Declaration of Human Right: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control." (Article 25(1) Constitution of Kenya: Right to housing is now a constitutional right provided for in Kenya s expansive Bill of rights, article 43 of the new constitution states that every person has the right to accessible and adequate housing and reasonable standards of sanitation. The housing ACT CAP 117 provide for loans and grants of public moneys for the construction of dwellings; to establish a housing fund and a housing board for these purposes; and for connected purposes Draft Housing Bill 2011 the new housing bill aims to radically change the provision of housing in the country. If enacted, the new law will lower the cost of housing and make it more accessible. The bill also provides for the establishment of a national housing authority, and a national housing fund that will oversee and finance the construction of low cost housing units. The National Housing Policy (2004) is intended to arrest the deteriorating housing conditions countrywide and to bridge the shortfall in housing stock arising from demand that 28

far surpasses supply, particularly in urban areas. The shortage in housing is manifested in overcrowding, proliferation of slum and informal settlements especially in peri-urban areas. In the rural areas the shortage manifests itself in the poor quality of the housing fabric and lack of basic services such as clean drinking water. The Kenya vision 2030: The vision for housing and urbanization is an adequately and decently housed nation in a sustainable environment. According to the blue print there will be better development of and access to affordable and adequate housing for the rest of the population, enhanced access to adequate finance for developers and buyers, and targeted key reforms to unlock the potential of the housing sector through private public partnerships. 2.6: Conclusion and Conceptual Framework Vision 2030 is founded on three pillars; economic pillar, social pillar and political pillar. In its Social pillar, the Government is to plan for adequate and affordable housing for its citizens. The blue print guides policy implementers and stakeholders to aim at producing houses to all. True to this policy, the country has currently increased its annual production to between 40,000 and 50,000 units annually according to the Ministry of Housing. However it is important to note that this annual production of the housing units is a global national figure. If one is to go into detail and survey the number of low cost housing for the low income earners, one may notice that the figures are extremely low and perhaps it is precise to say affordable housing is not affordable to all (Suero 2012) With the enactment of National Building Authority Act and subsequent establishment of the National Construction Authority, the landscape of building development is set to change positively. This new law will allow a developer to construct green buildings with unconventional materials like Structured Insulated Panels (SIP) and interlocking bricks. The doors are now opened to more variety of construction materials at very fair prices. These fair prices of materials, should lead to affordable housing. (Housing Finance Publication 2012) By all standards in as far as Africa is concerned, Kenya is among Africa s top ten countries that has a vibrant, progressive and growing housing industry. Statistics are showing there is still more opportunities to invest in the housing industry but investors should tap more in the sector of low cost housing to address the larger housing deficit among the low income 29

earners. The only possible way to attract the private sector in the low cost housing is through a partnership with the government or the public sector. In recognition of the fact that neither the public nor the private sector are able to address this problem individually, current efforts in addressing the housing situation in Kenya should mostly based on collaborative efforts of both the public and the private sectors. Public- Private Partnerships (PPPs) are among the most common forms of such collaborative efforts. 30

Figure 2.1: The way forward to address the affordable housing problem Affordable housing problem Housing stakeholders/providers The public sector Challenges facing the public sector Availability of funds Construction technology Building materials cost and research Lack of capacity in the housing sector Poor management and maintenance of the existing state owned housing The private sector Challenges facing the private sector Availability of land Land use planning and management Infrastructures Prohibitive by laws and regulations Lack of attractive incentives for the private sector Strict mortgage terms and high interest on borrowed fund Formation of a partnership by the identified stakeholders to tackle the challenges identified and hence addresses the problem of affordable housing. Source: Author 2013 31

Fig 2.2 conceptual framework The public sector/government Private sector Provision of land to low cost housing investors at little or no cost Provide guarantee to investors of low cost housing in commercial banks Provision of housing related infrastructure to open up new land for development Provide incentives to investment in low cost housing Give loan interest subsidies, guarantees & tax policies Repealing of the outdated building regulations so as to incorporate modern construction technologies and materials Increasing capacity to housing ministry & Budgetary allocations Ensure rent subsidies in order to enhance affordability Provision of equity finance Provision of construction technology and expertise Building materials research facilitating the provision of sustainable construction materials hence reducing the building materials cost and construction cost Manage construction risk in a better way than the public sector Donor support especially in terms of finances Loan agreements with commercial banks and primary mortgage institution to support the move toward affordable housing Management and maintenance of the newly constructed houses and state owned estates Increase in the supply of affordable housing Source: Author 2013 32

3.0: CHAPTER THREE: RESEARCH METHODOLOGY 3.1: Introduction Research methodology refers to a specific plan for studying the research problem and constitutes the blue print for the proposed data collection and analysis (Bryman, 2001). Mugenda and Mugenda (2003) assert that research methodology provides details regarding procedures used in conducting a study. This chapter describes the research methodology and details of methods used in data collection, data measurement and data analysis needed to accomplish the research objectives. 3.2: Description of Study Area 3.2.1: Location Nairobi is the capital city of Kenya. It occupies 684 square kilometers (260 sq miles) and is situated 1661 meters above the sea level. It lies at the southern end of Kenya s agricultural heartland, 1.19 degrees south of the Equator and 36.59 degrees east of meridian. The city is bordered by Kiambu district to the north, Kajiando district to the south and west and Machakos district to the east. Map 3.1: A map showing the location of Nairobi Source; Google Maps 2012 33

3.2.2: Growth and Development Nairobi developed as a center for the Kenya-Uganda railway. The railway builders selected it because of its safety, having favorable climate, topography and fresh water. Nairobi first plan was ready by 1898. The plan provided for railway workshops, offices, residence for the staff and shops. This plan was based on racial zoning. The Europeans who were senior railway officers were housed in the hill while the junior Indian staff were located in the marshy areas. The 1927 settlers plan for Nairobi recognized Africans as a racial entity with legal residence status in Nairobi. Nairobi was then zoned into categories of; Europeans; upper class Africans; middle and low class Asians and Africans. European areas were Upper hill, Lavington, Milimani and Riverside. Asians occupied Westlands, Nairobi west and south B and C. the Africans were located in the Eastlands. 3.2.3: Population Growth Like many other cities in developing countries, Nairobi has experienced very rapid population growth in the last 30-40 years. At a population growth rate of 4.7-4.8% annually, the population of Nairobi grew from about 0.8 million in 1979, to 2.1 million in 1999 and 3.1 million in 2009. This is indeed a very high rate of population growth rate compared to an average of 3.4% annually for cities in developing countries and 1.8% for the world urban growth rate. Table 3.1 Population Trends for Kenya and Nairobi YEAR 1969 1979 1989 1999 2009 KENYA 10,942,705 15,327,061 21,445,636 28,689,607 38,610,097 NAIROBI 509,286 827,775 1,324,570 2,143,254 3,138,369 Source: various population census reports, 1969, 1979, 1989, 1999, 2009 The city population is projected to hit 5 million people in 2020 and 6 million people in 2025, as shown below 34

YEAR 2000 2010 2020 2025 POPULATION 2,233,000 3,363,000 4,881,000 5,871,000 Source: www.unhabitat.org Nairobi was selected as the study area a result of the housing need manifested in it. Due to the increase in population as shown above provision of adequate affordable housing by the state has been out the question. This is manifested by mushrooming slums and illegal settlement. The demand for affordable decent housing is high in this region than anywhere else in the country. Most of the organizations dealing with housing matters are located in this area therefore making the suitable for such a study. 3.3: Research design Zikmund (2003) defines a research design as a master plan specifying the methods and procedures for collecting and analyzing data. According to Bryman (2001), after a researcher has identified a research problem and has reviewed the relevant literature, the next step involves developing a research design for conducting the research. The choice of research design is largely determined by the purpose of the research, the method of analysis and the type of research being undertaken (Dattalo, 2008). According to Yin (2003) the design comprises descriptive research, case study, survey, exploratory, historical research, casual comparative / experimental research, correlational and observational research. The study used both survey and descriptive designs. The survey technique was important in gathering information from various stakeholders by use of questionnaires and /or interviews. Descriptive research was used in this research as it assisted in describing the nature of PPP in housing therefore identifying key elements of the partnership against which Kenya can be evaluated. 3.4: Population and sample 3.4.1: Population of relevance Mugenda and Mugenda (2003) refer to a population as an entire group of individuals, events or objects having common observable characteristics. Population is the total collection of elements about which a researcher wishes to make some inferences (Cooper & Schindler, 35

2006). According to Mugenda & Mugenda (2003) target population is that population to which a researcher wants to generalize the findings of a study. The population for this study consisted of two distinctive groups of populations, which are representatives of major role players in the delivery and management of existing and/or future housing. These key groups are the public sector and the private sector. The two distinctive groups were identified as the populations from which the samples were extracted for the administration of questionnaires and interviews. 3.4.2: Sampling and Sample Size Sampling is focused on gathering qualitative data from the distinct groups identified above, and samples were selected using non-probability judgment sampling. Zikmund (2003) described this type of non-probability sampling as: that, which is employed to serve a specific purpose, when the researchers use their judgment to select the sample based on appropriate sample characteristics. In this case, judgment was based on the respondents knowledge and experience in housing matters, roles and responsibilities in housing delivery. The individuals targeted, were carefully selected as being knowledgeable individuals both directly and indirectly involved in the housing industry. The respondents, as a bare minimum had to be in a managerial position and be in possession of some experience and expertise in housing issues, experience on conducting housing research, or followed closely the development of major sectors of housing. In the institutions identified in the sampling frame selection was done according to the departments. Developers were sampled from the register of the supported developers by the HFCK. While this type of sampling can afford the guarantee of meeting specific objectives, the disadvantage is that, based on the researcher s beliefs, bias might be introduced which can make the sample unrepresentative (Zikmund, 2003). The sample size is based on achieving a reasonable sample that the researcher can have access to. 36

Table 3.2: Sampling Frame NO SECTOR SUB GROUP NO OF RESPODENTS 1 Public sector Ministry of housing 10 National housing corporation 10 2 Private sector Housing finance company of Kenya 10 Private developers/investors 15 According to Arleck & Settle (1995), the minimum sample size that allows normal distribution to be used rather than t distribution is thirty (30) cases. A normal distribution forms a more reliable sample than heavily skewed distribution. In this study the researcher choose 45 to be the sample size in order to allow for uniform distribution of respondent among the four sub groups identified. The number of private developers was purposively chosen be 15, which was higher than the other sub groups in order to cover a wide area as developers are geographically distributed. 3.5: Data Collection and Research Instrument Zikmund (2003) defines data collection tools as the instruments used to collect information in research or the methods employed to correct data. The main data collection tools for research include; questionnaires, interviews, observation techniques, conference method, Delphi technique and use of focus group discussion. The choice of the method to use is influenced by the nature of the problem and the availability of time and money. The researcher collected information relating to public private partnership in the low cost housing with an aim of finding out the applicability of a partnership by the different stakeholders in the said sector. This was done having in mind the challenges facing the provision of affordable housing and also the challenges which can arise as a result of such 37

partnerships and the probable solutions. The methodological approach for this research consisted of an in-depth qualitative and quantitative data collection. Creswell and Clark (2007) point that mixed methods provide a more comprehensive approach to examining a research problem than either one of the qualitative or quantitative methods. According to Mugenda and Mugenda (2003), data can either be primary data or secondary data. Primary data refers to data collected directly from the original sources such as respondents in a study, findings obtained through a census, field survey or focus group discussion. Secondary data refers to that data acquired indirectly from library, reports and publications. Both primary and secondary data were used in this study. 3.5.1: Interviews An interview is an oral administration of a questionnaire or an interview schedule (Mugenda & Mugenda, 2003). Interview are often used to gather detailed, qualitative descriptions of how populations operate, perceive themselves or are perceived by others and are done on personal one-to-one basis. To obtain maximum cooperation from the respondents, the researcher must establish a friendly relationship (Miller & Salkind, 2002). Interviews were used as one of the sources of collecting primary data. The questions were directed at the challenges facing the delivery of affordable housing in Kenya, the applicability of PPP as delivery mechanism for affordable housing, having in mind the critical success factors of PPP in housing and also the challenges of adopting PPP in housing and how to address them. The interviews used in this study were unstructured as their main was just to clarify on the major information needed. 3.5.2: Questionnaires A questionnaire is a data collection tool, designed by the researcher and whose main purpose is to communicate to the respondent what is intended and to elicit desired response in terms of empirical data from the respondent in order to achieve research objectives. (Mugenda & Mugenda, 2003). It is a mean of eliciting the feelings, beliefs, experience, perceptions, or attitudes of some sample of individuals, (Zikmund, 2003). Questionnaire can be structured (close-ended) to give direct and specific information e.g. yes or no answer, short response or item checking. They can also be structured (open-ended) so as to elicit open response from 38

the respondents allowing for greater depth of response. Questionnaires with both open-ended and closed-ended questions were administered to managers dealing with housing issues in the identified institutions. The open ended questions were used for purposes of harnessing in case where there is need for further clarification. The questionnaires sought to find out; The challenges of delivering affordable housing in Kenya The applicability of PPP in the Kenya housing sector The probable challenges of PPP in the Kenyan housing sector 3.6: Questionnaire Pre-testing Pretesting is trying out of the questionnaire in the field to a selected sample which is similar to the actual sample which the researcher plans to use in the study. Pretesting helps identify and change confusing, awkward, or offensive questions and techniques thereby enhancing the validity of the research instruments. The questionnaires were pretested to receive comments and suggestions. 3.7: Data Analysis and Presentation Data analysis involved both qualitative and quantitative methods depending on the nature of the data. The analysis of the data was in the form of descriptive statistics such as mode, frequency distribution tables and percentages. The data was presented in form of graphic representations i.e. charts, bars graphs and tables. Descriptive data was provided in form of explanatory notes. 3.8: Ethical Issues Mugenda & Mugenda ( 2003) argues that ethics are rules of conduct or set of principles that are used in conformity to the conduct of a given profession or group. Researchers must be people of integrity who will not undertake research for personal gain or a research that will have negative effects on the others (Zikmund, 2003). The researcher will protect the respondents identity by keeping the information given confidential and not disclosing the names of respondents where appropriate or expressly required. 39

4.0: DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 4.1: Introduction This chapter presents the findings of the study that was carried out to evaluate the use of public private partnership in facilitating the provision of quality affordable housing in Kenya. The objectives of the study included; evaluating the challenges facing the provision of affordable housing in Kenya; to determine the applicability of PPP in affordable housing provision in Kenya and to determine the challenges of PPPs in the housing sector. The findings of the study will be evaluated by the use of the literature review which forms the benchmark for evaluation in this study. A sample size of 45 respondents was selected purposively as shown in the sampling frame (Table 3.3). Two sets of questionnaires i.e. one to the public sector and the other to the private sector were used as the main instruments of data collection for the study. In this chapter, the data obtained from the research instruments are examined, analyzed and interpreted in line with the purpose and objectives of the study. 4.2: The Response Rate Questionnaires were administered to the officials in the ministry of housing and national housing commission to represent the public sector. Questionnaires were also administered to officials in the housing finance company of Kenya and private developers to represent the private sector. The response rate is indicated in the Table 4.1below. Table 4.1: The response rate Category Questionnaires Questionnaires Response rate sent returned (%) Public sector 20 20 100 Private sector 25 22 88 Average response 93.33 rate Source Field survey 2013 40

Fig 4.1: The response rate 6% 94% Yes No Source Field survey 2013 Mugenda & Mugenda (2003) asserts that in questionnaire administration, a response rate of 50% is adequate for analysis and reporting. Therefore the general response rate of 93.33% is very good and sufficient for data analysis, reporting and drawing conclusions. In a bid to improve the response rate, the respondents were first approached through telephone calls by the researcher. The questionnaire was then hand delivered to those who agreed to participate in the study. The people interviewed had various level of experiences in housing matters as indicated in the Table 4.2. Table 4.2: Years of Experience on Housing Issues Years of experience Frequency Percentage (%) Less than 5 5 11.9 5-10 23 54.8 Over 10 14 33.3 Total 42 100 Source; Field survey 2013 41

Fig 4.2: Years of experience in housing issues 33% 12% 55% Less than 5 5 to 10 over 10 Source; Field survey 2013 According to the field survey analyzed above the majority of the respondents had an experience of 5-10 years followed by those with over ten years experience hence the data collected was regarded to be from a reliable source. 4.3: Challenges Facing the Provision of Affordable Housing in Kenya In order to introduce housing issues it was important to know the views of the respondents in terms of the Kenya housing needs. In connection to that the respondents from both the public and the private sector were asked to indicate whether Kenya has been able to meet the housing need for its population in the low income bracket. Table 4.3 presents the analysis Table 4.3 Attainment of housing needs for middle and low income bracket. Frequency Percentage% No response 4 9.5 No 38 90.5 Total 42 100 Source; Field survey, 2013 42

Fig 4.3 Attainment of housing needs for middle and low income bracket. 10% No response No 90% Source; Field survey, 2013 As seen above 90% of the respondents involved in this study indicated that Kenya has not met the housing need for its people especially those in the low income bracket, and attributed that to the various challenges facing the provision of affordable housing in Kenya. This was clearly seen in the literature review which identified the proliferation of informal settlements and slums in most major urban areas which is as a result of lack of adequate affordable housing. The Challenges were listed in the questionnaire for both the public and the private sector for them to tick the major challenges facing each of the sectors. Table 4.4 indicates the summary of the challenges encountered in the provision of affordable housing by the public sector. Table 4.4: Challenges facing the public sector in provision of affordable housing Challenge Frequency Percentage% Financial resources 18 90 Construction technology 13 65 Building materials cost and 16 80 research Institutional capacity 15 75 Rigid regulatory framework 8 40 Source; Field survey 2013 43

Fig 4.4: Challenges facing the public sector in provision of affordable housing 100% 90% 80% 90% 80% 75% 70% 65% 60% 50% 40% 40% 30% 20% 10% 0% Financial resources construction technology Building materials cost and research institutional capacity Rigid regulatory framework Source; Field survey, 2013 Table 4.4 indicates that the major challenges encountered by the public sector on the provision of affordable housing are financial resources for housing, building materials cost and research, institutional capacity and construction technology. As seen in the literature, in Kenya housing finance is still under-developed; the lending institutions available have not been able to meet the housing needs of middle and low income earners. The housing finance sector is faced with the challenges of a complicated three-tier market that is served by an elaborate financial system. At the top of the hierarchy are households that can afford housing of high quality. In the middle category fall the middleincome groups, which are predominantly composed of wage and salaried workers as well as the self-employed. This category is not adequately catered for in the provision of housing and as a result they are relegated to housing targeted for low-income earners. The third category which forms the majority of households is the low-income earners. They are the most affected by the housing problems arising from inadequate housing and the displacement brought about by insufficient housing facilities for the middle-income earners. 44

Due to the high production cost the available materials are expensive increasing the general cost of construction, according to the survey done there has also been inadequate research on cost effective and sustainable building materials, this is due failure of government support on housing based research. This was in accordance with the literature which highlighted that there has been lack of support by the governments in building materials research in less developed countries. The housing sector lacks the required institutional capacity in terms of budgetary allocation by the government, ability to fully embrace the draft National Housing Policy and also the problem of autonomy where by critical housing decision are made by the central government and other ministries. In this study more than 60% of the respondents in the public sector did not identify regulatory framework as a challenge since most of the laws are being repealed. This was against the literature which had identified rigid regulatory framework as a major challenge facing the provision of affordable housing. For the last few years Kenya has greatly improved it s legal and institutional in its major sectors housing being involved, with an aim of creating a conducive environment for the entire stakeholders to contribute in economic growth. The challenges facing the private sector in the provision of affordable housing are summarized in the Table 4.5. Table 4.5: Challenges facing private sector in the provision of affordable housing Challenges Frequency Percentage% Availability of land 20 92 Land use planning and 18 82 management Inadequate infrastructure 19 86 Rigid regulatory framework 13 59 Inadequate incentives for 15 68 the private sector Strict mortgage terms and 17 85 high interest on borrowed fund Source; Field survey, 2013 45

Fig 4.5: Challenges facing private sector in the provision of affordable housing 100% 90% 80% 70% 60% 92% 82% 86% 59% 68% 85% 50% 40% 30% 20% 10% 0% Availability of land Land use planning and management inadequate infrastructure Rigid regulatory framework inadequate incentives for the private sector strict mortgage terms Source; Field survey, 2013 The main challenges facing the private sector as shown in table 4.5 above are; availability of land for construction, inadequate infrastructures, strict mortgage terms, land use planning and management, inadequate incentives to the private sector to invest in affordable housing and finally the rigid regulatory frame work. From the survey 92% of those in the private sector identified land as the major hindrance to the national dream of housing,as seen earlier in the literature part of this study land particularly in the urban areas is highly valued and is mostly in the hands of the central government and the local authorities. The only other landowners are speculators seeking to make a windfall gain. This makes land inaccessible to the private sector. Insecurity of land tenure is also another major challenge as far as land is concerned, lack of a secure land tenure as seen from the literature is a major cause of increase in informal settlement Kenya lack a comprehensive land use planning and management policy causing development of substandard settlements with inadequate infrastructure, services and open spaces, transactions on land are lengthy and expensive posing a big challenge to the private sector. 46

Housing related infrastructure such as such as water, sewerage, roads, electricity, social services and security emerged also as a major challenge to the provision of affordable housing with a rating of approximately 86%. Kenya has invested a lot on infrastructure for the last five years but there still remains a huge gap which needs to be filled. Infrastructures are important to housing affordability as they open up new areas for development increasing the private sector investment in housing. 85% of the respondents identified strict mortgage terms as a challenge facing the private sector initiatives to housing. From the literature it was seen that qualifying terms for mortgages are still too stringent despite the fact that housing is still in short supply, high interest rates are charged on borrowed funds and the collateral is required inform of land or landed property which are not available to low and middle income earners. 68% of the respondents indicated that lack of incentives from the government to encourage the private sector to investment in affordable housing was also another challenge. Literature showed that for the private sector to invest in affordable housing subsidies and incentive must be provided to them by the government in order to cover the gap imposed by what the market is offering, therefore making lack of incentive a challenge to the private sector in provision of affordable housing. Other challenges identified by the respondents in both private and public sectors includes corruption in the government institutions, population pressure, rapid urbanization, inadequate budgetary allocation to the housing sector and rural to urban migration. 98% of the respondents indicated that there is the need to adopt alternative option and strategy in order to address the various housing needs of the Kenyan population as illustrated below. Table 4.6: Response on the need to promote alternative housing strategies Frequency Percentage% Yes 41 97.62 No 1 2.38 Total 42 100 Source; Field survey 2013 47

Fig 4.6: Response on the need to promote alternative housing strategies 2% 98% YES NO Source; Field survey 2013 The literature clearly showed that governments around the world have been changing their mode of housing provision from direct intervention to the enabling approach whereby there is creation of an enabling environment for housing provision by different stakeholder and more encouraging public private partnerships in provision of affordable housing. This was consistent with what the respondents indicated by showing the need to move from the current approach of affordable housing provision to new strategies. 4.4: Public Private Partnership in Provision of Affordable Housing in Kenya In order to introduce the concept of public private partnership a question on the familiarity with PPPs was asked to the respondents both in the public and the private sector and the Figure 4.7 shows the response. 48