The cut lowers the programme’s total budget from Ksh13.3 billion to Ksh12.5 billion, raising concerns over the timely completion of ongoing projects.
Speaking before Parliament on Wednesday, Principal Secretary for the State Department for Housing, Charles Hinga, warned that the funding shortfall could disrupt active projects and hamper the delivery of housing units to Kenyans.
Currently, the government has 1,700 active housing projects, with officers working up to three shifts to meet deadlines.
Hinga explained that while the shortfall had been anticipated, 80 per cent of the allocated budget had already been utilised.
Attempts to access funds invested in Treasury Bills were denied by the National Treasury. On staffing, Hinga confirmed that requests for additional personnel remain unapproved, leaving the Department overstretched.
The Parliamentary Committee, chaired by Vice Chairperson Mugambi Rindikiri, pledged to engage Treasury Cabinet Secretary John Mbadi to explore solutions.
The funding issues coincide with a report by Auditor General Nancy Gathungu showing that 6,390 companies have failed to remit the mandatory 1.5 per cent Housing Levy, highlighting widespread non-compliance due to legal loopholes.
Despite collecting Ksh73.19 billion by June 2025, the Fund has delivered only 3,611 housing units against an annual target of 200,000, with Ksh45.48 billion tied up in Treasury Bills.
Further setbacks came in February when the World Bank reduced planned commercial financing from Ksh116.12 billion to Ksh46.45 billion, affecting the government’s ability to mobilise resources for the housing agenda.
The development casts uncertainty on the pace and effectiveness of Ruto’s housing programme, a cornerstone of his government’s agenda to provide decent and affordable housing for Kenyans.