The government’s plan to accelerate its affordable housing agenda has suffered a setback in court after a judge quashed a law that allows members of retirement schemes to use a portion of their savings to purchase residential houses. 

The court also stopped implementation or enforcement of the amendments introduced to the Retirement Benefits Act No. 3 of 1997, which allowed the retirement benefits industry to help fill the housing gap.

Justice Anthony Ndung’u found that the amendment to the law was achieved through an irregular and flawed parliamentary process because MPs failed to allow public participation in the enactment process.

The amendment was introduced through the Tax Laws Amendment Act 2020, which came into effect on April 25, 2020, and the objective was to cure the large housing gap.

The government’s aim in amending the law was to boost home ownership and lift the sluggish property market by enabling members of retirement schemes to purchase and own homes using their savings.

To bring the amended law into force, former Treasury Cabinet Secretary Ukur Yatani published the Retirement Benefits (Mortgage Loans) (Amendment) Regulations, 2020 showing the rules and limits for accessing pension savings for home purchase. The regulations were published on September 14, 2020.

Pensioners were allowed to use up to Sh7 million or a maximum of 40 percent of their retirement savings to buy a home from an institution and real estate investors.

An institution was defined in the regulations to include banks, mortgage or financial institutions, building societies, microfinance institutions, the National Housing Corporation, institutions approved by the Retirement Benefits Authority or any other entity offering a residential house for sale. 

Homes constructed or financed by the government, saccos, insurers and entities running tenant purchase arrangements were also among those that could be purchased using retirement money.

But while ruling in a case filed by Busia Senator Okiya Omtatah challenging the legality of the amendments, Justice Ndung’u found that the changes were premised on a flawed process adopted by Parliament. At the time the suit was filed in May 2020, Mr Omtatah was a human rights activist.

The suit was also supported by the Association of Retirement Benefits Scheme and the Association of Pension Trustees and Administrators, who argued that the amendments were not sustainable considering the status of current retirement schemes.

Justice Ndung’u found that the amendments did not go through what the law requires for enacting legislation, including public participation, and was introduced in Parliament through the Committee of the Whole House, barring stakeholders from publicly participating.

“The amendment of Section 38 (1A) of the Retirement Benefits Act (1997) was an amendment impacting heavily the utilization of funds in pension schemes. It thus would call for a robust process of stakeholder engagement and public participation,” said the judge.

“The introduction of the amendment at the committee stage denied the players in the industry, stakeholders and members of pension schemes the opportunity to contribute to the content of the envisaged law.”

The judge said the amendment was flawed because Parliament failed to involve members of the public during the enactment as required by Article 118 (1) of the Constitution. 

That provision requires Parliament and its committees to conduct their business and sittings in an open manner and facilitate public participation.

Justice Ndung’u of the Judicial Review Division of the High Court said Parliament fell afoul of the constitutional provision by failing to allow public views.

“My humble view on the matter is that the court would be abdicating its constitutional role if it was to watch with inaction as Parliament conducts its constitutional mandate of lawmaking without having due regard to constitutional ethos and statute as well as its own set procedures under the Standing Orders,” said the judge.

“Such derogation must be amenable to judicial review or a declaration of unconstitutionality as the case may be.”

However good-intentioned Parliament may be in making laws, he said, if the process is legally flawed, courts must step in and defend the rule of law.

The judge barred the National Assembly, the National Treasury Cabinet Secretary, the Attorney-General and others from implementing or enforcing the law and the regulations. 

As major roads and bypasses in Mombasa and its environs are nearing completion, the future of the Kenya Ferry Services (KFS) is looking bleak as it will lose millions of shillings it collects from hundreds of motorists using ferries daily. 

The Dongo Kundu bypass will allow motorists to avoid the Likoni ferry crossing, saving them money and time.  The KFS is expected to start losing money next year when the multibillion-shilling bypass connecting Mombasa and Kwale counties is completed.

The 17km highway, also known as the Mombasa Southern Bypass, connects motorists from the western Mombasa mainland to the southern section without having to enter the island or crossing the Likoni channel. It is expected to ease movement of goods and services and boost the economy of the Coast region. 

More than 6,000 vehicles and over 300,000 pedestrians use the Likoni channel daily. Motorists pay between Sh120 and Sh12,000. To curb corruption, the KFS introduced payments via mobile phone in 2020.

The KFS collects more than Sh21 million annually from motorists. Most goods imported from Tanzania, especially timber and foodstuffs, pass through the channel, but once the bypass is completed transporters are expected to start using the new road network.

The Dongo Kundu bypass will also come as a relief to tourists heading from Moi International Airport, as they will be able to avoid delays at the Likoni channel.

The bypass will also allow efficient and easy access to and from Mombasa because motorists will want to avoid city centre traffic.

The mega infrastructure project, under the Mombasa Port Area Road Development, is a game changer for North and South Coast counties.

Besides the development of new trading centres along the corridor, the projects will also revitalise tourism on the South Coast, where visitors are expected to spend less than 25 minutes on the road between Diani and Moi International Airport and the Mombasa SGR rail terminus. 

It is also expected to improve the movement of goods between Tanzania and Kenya, especially with the establishment of the Dongo Kundu economic zone.

Mombasa Port Area Road Development projects include the Sh11.5 billion Miritini-Mwache-Kipevu link road, which is complete.

The Sh24.2 billion Mwache-Tsunza-Mteza road will connect Mombasa and Kwale counties.

The road will be interlinked with three bridges – the 1.4km Mteza, the longest in East and Central Africa, Mwache and Tsunza.

The road starts at the Mwache interchange and terminates at Dongo Kundu, in the Mwangala area, on the southern mainland of Mombasa County.

“It is important, particularly for Diani, which has been an award-winning beach,” said Dr Sam Ikwaye, the executive officer of the Kenya Association of Hotel Keepers and Caterers (KAHC). 

“It’s also significant for trade. Trade precedes tourism, so the highway will boost the sectors and potential of the South Coast and South of Mombasa which will be intense and significant for this region.”

Kwale, he said, will become the region’s second business hub because connectivity will be easier.

“Roads will open up Kwale for business. The ferry has been a big headache. In the past, we have had cancellations of programmes, meetings and tourists going to the airport because of the ferry challenges while crossing, so it is timely,” he added.

Kenya Transporters Association (KTA) chairman Newton Wang’oo said Dongo Kundu will open up the South Coast.

“It will open up the South Coast easily because using the ferry was challenging and the ferry fees for trucks was a headache. But with Dongo Kundu, it will be easier to avoid town and transport goods from the two counties easily without the [problems] of the ferry in the Likoni channel,” Mr Wang’oo said. 

Dr Ikwaye urged the Kenya Ports Authority, which is in charge of the ferries, to diversify the vessels and use them for excursions to attract tourists.

“Water transport should now be utilised. Mombasa is an island, let's market it globally and regionally to attract more tourists,” he said. By Winnie Atieno, NMG