Auditor-General Exposes KRA Gaps in Affordable Housing Levy Collection

Auditor-General Nancy Gathungu has flagged serious weaknesses in the collection of the Affordable Housing Levy. She told the National Assembly Departmental Committee on Finance and National Planning that the Kenya Revenue Authority failed to register all eligible taxpayers on the dedicated platform.

The appearance came on Tuesday as lawmakers reviewed the Finance Bill, 2026. Gathungu outlined how the gaps created loopholes that undermined revenue collection for one of the government’s flagship programmes.

The Affordable Housing Levy is deducted from employees’ salaries and matched by employers. It was introduced to finance the Affordable Housing Programme and related infrastructure under the Bottom-Up Economic Transformation Agenda. Shortfalls in collection directly affect the pace at which new units can be delivered.

Gathungu warned that ongoing revenue shortfalls raise questions about the reliability of budget projections for the 2026/27 financial year. She urged Parliament to address inefficiencies in tax administration before placing additional burdens on citizens.

The audit formed part of a wider review of KRA operations. It highlighted revenue leakages, large outstanding tax debts and compliance failures across several areas. Other issues included the issuance of Tax Compliance Certificates to taxpayers with pending obligations and the use of expired Gazette Notices for imports.

Members of the committee voiced concern that agencies should first plug existing leaks before seeking new revenue measures. The committee plans to summon KRA officials for further engagement as the Finance Bill process continues.

For Kenya’s construction sector the findings carry practical weight. The Affordable Housing Programme, often referred to as Boma Yangu, relies on steady levy inflows to support ongoing projects and new developments. Delays in funding can slow contractor payments, affect material procurement and stretch project timelines on sites across the country.

Contractors and suppliers working on these schemes have long highlighted the need for predictable cash flows. Revenue shortfalls at source can ripple through the supply chain, from cement and steel suppliers to small-scale artisans on housing estates.

The programme also ties into broader infrastructure goals. Affordable housing developments often include associated roads, drainage and utilities. Weak collection mechanisms therefore touch multiple layers of the built environment.

Gathungu’s presentation comes at a time when the government is pushing to expand housing delivery while managing tight fiscal space. Lawmakers on the committee stressed the importance of accountability in how collected funds are managed and disbursed to contractors.

The Auditor-General’s office continues to monitor implementation of the levy. Parliament is expected to push for corrective measures at KRA to ensure the platform captures all eligible contributors without creating new compliance burdens.

Stakeholders in the construction industry have called for clearer reporting on how levy proceeds translate into completed units and supporting infrastructure. Transparent tracking would help contractors plan workloads and manage expectations on project pipelines.

The gaps identified by Gathungu add to existing debates around the sustainability of the housing levy model. As the Finance Bill debates intensify, the focus remains on strengthening collection systems so that the programme can deliver on its core promise without repeated shortfalls.