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Billow Kerrow, Mandera.
Monday, March 23, 2009
Last week’s Sunday Nation lead article, ‘‘Kenya’s new property kings,’’ was the usual Somali-bashing, and cast the enterprising community wholly as foreigners raiding the country with questionable ill-gotten wealth.
Although different sources the writers relied on attributed the high real estate prices to other important factors, the writers focused on Somalis whom they portrayed not only as villains but dangerous too to the country’s security.
Nothing could be further from the truth. A simple research by the writers would have informed them of the reasons for the escalating prices in the sector.
In 2003, the Narc Government announced that Nairobi alone requires at least 150,000 new houses annually to cope with the demand.
This figure was increased to 200,000 in the 2008/9 budget speech. From 2003 to 2007, our economy grew from -0.2 per cent to 7 per cent, resulting in not only improved purchasing power but also increased demand for houses, particularly by the rising middle-income group.
At the same time, interest rates dropped to single digit level, enabling many Kenyans to opt for the cheap mortgage rates to buy homes.
Kenyans in the diaspora were also encouraged by the changing political and economic situation to invest billions of shillings in the country. Indeed, Housing Finance and other mortgage houses targeted the diaspora in the expanded investments in the sector.
Therefore, between 2005 and end of 2007, demand for property was at its peak, and the prices sky-rocketed. After the post-election crisis, the situation has changed dramatically.
Demand is very low due to high inflation, rising mortgage rates, political uncertainties and the collapsed economy. The writers, however, blame this on inflows from piracy proceeds, money laundering and drug trafficking, basing their findings on ‘‘international security investigations’’.
Money laundering has been practised by a number of Kenyan banks for many years and is not a new phenomenon. In fact, it was higher in the 1990s and early 2000s than it is in recent years.
A report by the Central Bank about four years ago suggests that up to 22 banks in the country may be involved in various forms of money laundering. Neither is drug trafficking new to our country.
We cannot, therefore, blame the boom in the sector on these factors. Piracy along Somalia’s borders hit the world headlines in the latter half of 2008, just as the bloom in the property sector began to gloom.
It could not, therefore, have financed the constructions when they were at their peak between 2005-2007.
The changing skyline of Eastleigh is as a result of hard work, not crime proceeds.
Mr Kerrow is a former MP for Mandera Central.