Ethiopia’s 1.5M homes vs Kenya’s Affordable Housing: Who is getting value for money?

Ethiopia’s ambitious plan to construct 1.5 million homes over the next five years is raising fresh questions about the cost, efficiency and affordability of Kenya’s flagship Affordable Housing Programme, which has mobilised billions of shillings from workers and employers.

The comparison comes at a time when governments across Africa are under pressure to address growing housing shortages, rising construction costs and the inability of millions of low-income households to access decent homes.

While Ethiopia is positioning its latest housing initiative as a major expansion of supply through government investment, private developers and public-private partnerships, Kenya has adopted a financing model largely anchored on a compulsory housing levy, complemented by government funding and private investment.

But the two programmes face a common test: whether the money and resources committed will translate into completed homes that ordinary citizens can afford.

Ethiopian Prime Minister Abiy Ahmed announced in July 2026 that his government was targeting at least 1.5 million new houses over five years, following what he described as the construction of 1.2 million homes across the country over the preceding seven years.

According to the Ethiopian Broadcasting Corporation, the new programme will involve government agencies, private investors and public-private partnerships, with the administration also looking to introduce modern construction technologies, including 3D construction methods.

The government says it is developing long-term financing arrangements that will allow low- and middle-income households to save towards homeownership, while providing rental alternatives for people unable to purchase houses.

The announcement represents an ambitious attempt to expand housing supply beyond major urban centres, with the government indicating that the programme will also cover rural communities.

However, the 1.5 million figure remains a target rather than an independently verified delivery record. Ethiopia has yet to provide a publicly detailed breakdown of the new programme’s projected cost, financing commitments, construction timetable and expected price per housing unit.

In Kenya, President William Ruto’s Affordable Housing Programme has become one of the government’s biggest public investment initiatives, supported by deductions from workers’ salaries and matching contributions from employers.

Under the Affordable Housing Act, 2024, employees contribute 1.5 per cent of their gross monthly salaries, with employers required to make a corresponding contribution.

The programme is also supported by government resources, private developers, public-private partnerships and housing finance arrangements.

The World Bank’s February 2026 project appraisal document indicates that the housing levy had mobilised more than Ksh130 billion by the time of its assessment.

The programme targets 250,000 housing units annually, with an ambition of delivering one million homes by 2027.

However, the scale of the financing has not always matched the pace of completed construction.

Data from the Controller of Budget’s National Government Budget Implementation Review Report for the 2025/26 financial year shows that the Affordable Housing sub-programme spent Ksh122.18 billion against a revised allocation of Ksh124 billion, representing a budget absorption rate of approximately 99 per cent.

Despite the high expenditure, only 1,836 affordable housing units were completed and handed over during the financial year.

Another 1,380 units were substantially complete but were awaiting handover.

The programme achieved 24.5 per cent completion of works against an annual target of 52 per cent for projects covering 217,654 housing units.

This left a shortfall of 27.5 percentage points, raising questions about the relationship between the money being spent and the physical progress being achieved.

The figures do not necessarily mean that the entire Ksh122.18 billion was spent on the 1,836 completed homes alone. The expenditure also supports ongoing projects, infrastructure and other implementation activities.

Nevertheless, they illustrate the challenge facing Kenya: converting substantial financial commitments into completed and occupied housing units.

Although Ethiopia’s latest 1.5 million-home initiative is still at the planning and implementation stage, the country has experience with large-scale government-led housing schemes.

Its Integrated Housing Development Programme (IHDP), launched in 2006, sought to provide low-cost condominium housing, particularly in urban areas.

A World Bank study titled Unlocking Ethiopia’s Urban Land and Housing Markets examined the programme’s performance and found that it had produced approximately 383,000 housing units at the time covered by the research.

The study estimated that the average total government cost of delivering one unit, including land, infrastructure, construction, administration and other expenses, was 647,007 Ethiopian birr, equivalent to approximately US$23,292(Ksh 3,029,124.60) under the report’s historical exchange-rate assumptions.

It also found that the government recovered only about 35 per cent of the cost of producing an average unit through sales.

The researchers estimated that subsidies for the 383,000 homes amounted to approximately 150 billion birr, or US$5.3 billion(Ksh 689.27 billion).

More importantly, the World Bank identified a major affordability problem.

Even the cheapest studio apartments under the programme were beyond the reach of the bottom 40 per cent of households in the cities examined.

The findings suggest that constructing large numbers of houses does not automatically guarantee that the poorest households can afford them.

A separate assessment by the Centre for Affordable Housing Finance in Africa estimated Ethiopia’s annual housing need at approximately 471,000 units up to 2025, illustrating the scale of the country’s accumulated housing shortage.

These findings are relevant to Ethiopia’s new initiative because they demonstrate the importance of balancing construction targets with sustainable financing and the purchasing power of intended beneficiaries.

However, the historical IHDP findings should not be treated as the financial performance of the new 1.5 million-home programme, which has a different financing framework.

Kenya’s housing programme has also been designed around different income groups.

The World Bank’s 2026 appraisal document identifies three broad categories: social housing for households earning below Ksh20,000 monthly, affordable housing for those earning between Ksh20,000 and Ksh149,999, and affordable middle-class housing for higher-income households.

The programme uses different delivery mechanisms, including tenant-purchase arrangements, mortgage refinancing and partnerships with private developers.

However, the World Bank notes that housing affordability remains a major constraint.

Its assessment estimates that Kenya has a housing deficit exceeding two million units, while formal housing supply remains below 50,000 units annually against demand of more than 250,000 units.

The report also indicates that approximately 75 per cent of formal workers earn below Ksh50,000 monthly, placing conventional mortgage products beyond the reach of many households.

This raises an important question about whether the housing units being constructed are affordable to the people who need them most.

Affordable prices on paper are not necessarily affordable in practice if a household cannot meet the required deposit, monthly instalments or other associated costs.

The government has attempted to address this challenge through tenant-purchase arrangements and long-term financing.

A direct verdict on which country is getting better value for money would be premature because the two programmes are at different stages and their financing structures are not identical.

Ethiopia’s 1.5 million-home target covers a five-year period and combines public financing with private investment and partnerships.

Kenya’s programme has a compulsory revenue collection mechanism, established project pipelines and publicly reported expenditure and construction figures.

On financial accountability, Kenya has an advantage in the availability of regular budget implementation reports and independent audits. However, the latest delivery figures show that high budget absorption has not translated into comparable progress in completed houses.

Ethiopia, meanwhile, has set an ambitious target and says it has expanded construction capacity, but the new programme needs more transparent information on its financing, unit costs, construction milestones and beneficiary selection to allow an independent assessment of its value.

The comparison also highlights a fundamental lesson from Ethiopia’s earlier housing programme: the success of a housing initiative should not be measured by the number of buildings constructed alone, but by whether intended beneficiaries can afford to occupy and retain them.

For Kenya, the challenge is to demonstrate that the billions collected through the housing levy are producing homes at a pace and price that justify the compulsory contributions.

For Ethiopia, the challenge is to avoid repeating the affordability and subsidy problems identified in its previous housing scheme as it embarks on an even larger construction drive.

Ultimately, the country that delivers the greatest value will not necessarily be the one that announces the largest housing target or collects the most money.

It will be the one that delivers quality, serviced homes at a sustainable cost, makes them accessible to low-income households and demonstrates that public and private resources are being used efficiently.

Rono is a digital journalist with a proven track record in newsroom leadership and content creation. Currently a Digital Writer for People Daily Digital, Emmanuel’s career is rooted in a lifelong passion for storytelling. Let’s talk here: [email protected] or [email protected]