NAIROBI, Jan. 30 (Xinhua) -- The building industry in Kenya is set for a faster growth this year after the government scrapped two crucial levies that were prohibitive to developers.
The government in last June's budget estimates removed the National Environment Management Authority (NEMA) and National Construction Authority (NCA) charges set at between 0.1 percent and 0.5 percent of construction costs.
This, however, was to take effect from Jan. 1, with the NCA confirming in a statement Monday that it is no longer collecting the levies.
"The NCA has been imposing a construction levy of 0.5 percent of the value of any contract which exceeds 48,076 U.S. dollars upon registration of the project. To facilitate ease of doing business and spur growth of construction sector, the government has set aside payment of construction levy with effect from Jan. 1," said the NCA Director Daniel Manduku.
However, all developers, government agencies and individuals intending to undertake any project are required to register them and acquire approvals.
Analysts noted that the move will spur development by reducing costs and increase compliance especially from non-institutional developers.
"The real estate and construction industry will remain vibrant in 2017 driven by sustained demand for housing, growth and expansion of companies and small businesses, implementation of government directives to reduce construction costs and infrastructural development that will spur economic growth," said Cytonn, a Nairobi-based investment firm.
Latest data from the Kenya National Bureau of Statistics indicated that Nairobi County leads in construction. The country government clears building plans valued at up to 2.8 billion dollars each year.
According to Cytonn, besides removal of the levies, others things that would further boost the sector include embracing of e-commerce in real estate to drive sales.
"E-commerce will enable a deeper market reach as prospective buyers/renters can easily get information from their homes or work places," said Cytonn, adding that there is also expansion of the road network in different parts of Nairobi opening up the city for developers.
Antony Kuyo, a real estate consultant, noted that some developers used to evade the levies by Nema and NCA.
"Those levies were the reason for the haphazard construction of houses because people avoided seeking approval to escape the charges. It is a good thing that they have been abolished, therefore we expect a robust real estate sector this year," he said.