A parliamentary committee has called for urgent legal changes to place billions of shillings collected through the housing levy under the supervision of the Office of the Controller of Budget, warning that the current legal framework leaves the fund without independent oversight and weakens accountability.
The National Assembly Constitutional Implementation Oversight Committee (CIOC), in a report presented to the House, says changes to the Public Finance Management (PFM) Act are necessary to ensure that all special funds and levies are subjected to oversight by the Controller of Budget. The committee says the amendments would strengthen accountability in the management of public funds.
The report captures submissions by Controller of Budget Dr Margaret Nyakang’o, who told the committee that the law does not allow her office to monitor the housing levy because of how it is classified.
“The controller of budget clarified that the Housing Levy falls outside the CoB's oversight mandate due to its classification as a levy rather than a budgeted fund,” the CIOC report reads as it pushed for the law change.
The Office of the Controller of Budget is mandated to oversee the implementation of national and county government budgets by authorising withdrawals from public funds. It also prepares statutory reports, publicises its findings and investigates the use of public money either on its own initiative or following complaints from members of the public.
However, the committee says the office cannot fully carry out its constitutional role because of legal limitations.
“The CoB's oversight mandate is severely undermined by legislative limitations and lack of enforcement mechanisms,” reads the CIOC report, adding that, “the Housing Levy's exclusion from oversight creates significant accountability gaps.”
The committee has also urged the National Treasury to implement the integrated payment system between the Office of the Controller of Budget and the Central Bank of Kenya. The proposed system would enable authorities to monitor the movement of public funds from approval to expenditure and improve accountability.
Housing and Urban Development Principal Secretary Charles Hinga had earlier told the National Assembly's Housing, Urban Planning and Public Works Committee that the housing levy raises between Sh5 billion and Sh6 billion every month through deductions from workers.
He said the government is investing the money in Treasury bills and Treasury bonds while waiting to finance affordable housing projects. This is despite reports by the Controller of Budget showing that the delivery of housing units has fallen behind the planned timelines.
The committee is also recommending amendments to the Controller of Budget Act to give the office powers to enforce its recommendations, remove legal restrictions that prevent it from reporting on economic developments and introduce penalties for violations.
President William Ruto launched the Affordable Housing Programme with a target of delivering at least 200,000 housing units every year to reduce the housing shortage and create employment opportunities for low- and middle-income earners.
To support the programme, Parliament enacted the Affordable Housing Act, which took effect on March 19, 2024. The law introduced a mandatory housing levy to finance the construction of affordable houses under the government's Bottom-Up Economic Transformation Agenda (BETA).
The levy requires employees to contribute 1.5 per cent of their gross monthly income as a pre-tax deduction, with employers making an equal contribution.
In her August 2025 National Government Budget Implementation and Review Report for the 2024/25 financial year, Dr Nyakang’o said the affordable housing programme remained behind schedule despite the continued collection of the levy.
While appearing before the Constitutional Implementation Oversight Committee, she said legal and operational barriers within the Controller of Budget Act continue to limit the effectiveness of her office.
Among the challenges she highlighted were restrictions preventing the office from reporting on economic developments and fiscal forecasts, as well as the absence of powers to compel the implementation of its recommendations.
“For the avoidance of doubt, the reports submitted to parliament shall not include reports on recent economic developments and outlook, including revenue, grants and loans forecasts and receipts,” reads section 9 (4) of the CoB Act.