Big slums cut valuation of Nairobi’s real estate wealth

Kibera slums in Nairobi. The slum hosts about 350,000 people, or about a fifth of Nairobi’s population. PHOTO | FILE 

By NEVILLE OTUKI notuki@ke.nationmedia.com

In Summary

• Kibera hosts about 350,000 people, about a fifth of Nairobi’s population.
• Kibera land is owned by the government but managed by slumlords and political elites who control the land and have no interest in developing it.
• Kenya’s economy is robbed of $1 billion (Sh103 billion) in missed capital value for not developing the slum.
• The economic value of Dar’s real estate is estimated at Sh1.2 trillion ($12 billion) ahead of Nairobi’s Sh927 billion ($9 billion) – a Sh273 billion gap.

Cash-hungry slumlords and politicians have blocked modernisation of Nairobi’s Kibera slum, robbing the economy of Sh103 billion, the World Bank says in a report that unmasks Kenya’s lords of poverty.

The data, which is contained in a real estate report that was made public last week, is the clearest revelation of how a clique of faceless investors are minting rent and service charge cash from the predicament of thousands of slum dwellers.

Kenya’s economy is robbed of $1 billion (Sh103 billion) in missed capital value for not developing the slum, the World Bank says adding that the estimate is based on the size of the area and its distance from the city centre.

“Rough calculations based on 1,000 acres of land at four kilometres from the centre suggest that the gains of converting Kibera would reach $1 billion,” the report says.

“The surplus generated by such a transformation could be used to help relocate tenants and potentially buy off the people blocking redevelopment but transformation would require making deals with the slumlords.”

Kibera hosts about 350,000 people, or about a fifth of Nairobi’s population. The slum, which has been billed as Africa’s largest, is mainly made up of shacks – mud-walled structures with corrugated tin roofs – owned by slumlords without title deeds. “Effectively, Kibera land is owned by the government but managed by slumlords and political elites who control the land and have no interest in developing it (because they do not own the land), which would take away their very profitable slum business,” the World Bank says.

Over 90 per cent of the slum dwellers are tenants of the shacks, the average size of which is 12 feet square, costing as low as Sh700 monthly.

The informal settlement has more recently morphed into a cash cow from slum tourism, while several groups have set up non-governmental organisations (NGOs) meant to support its shambolic health and education services.

Ministry of Land officials were yesterday quick to deflect attention from their apparent failure to better manage that section of the Kenyan capital, saying a community land title deed for the slum is ready for issuance.

“We will soon be issuing the title to the community land management committee that is made up of Kibera residents,” said Land secretary Jacob Kaimenyi.

The Community Land Act allows residents to elect between seven and 15 committee members who, with the approval of the people, can convert the communal land to private property.

Prof Kaimenyi reckons that the yet-to-be constituted committee will, thereafter, decide to what economic use the land will be put.

Asked on the safeguards against political interference, Prof Kaimenyi said “The law is very clear on how to go about it.”

Records indicate that original slum dwellers were the Nubian community from the Kenya/Sudan border, but over the years other communities have joined in, making it a cosmopolitan area.

Today, Kibera is best known for overcrowded shacks, poor sanitation, and grinding poverty that successive governments since Independence have done little to change

Now the World Bank says failure to lift the living standards of slum dwellers has diminished the value of Nairobi’s real estate, placing it behind Tanzanian capital Dar- es- Salaam.

The economic value of Dar’s real estate is estimated at Sh1.2 trillion ($12 billion) ahead of Nairobi’s Sh927 billion ($9 billion) – a Sh273 billion gap.

READ: World Bank values Dar’s real estate Sh273bn more than Nairobi

The World Bank says Dar’s standing is helped by the fact that it has a higher proportion of housing stock built with permanent materials than Nairobi.

“Only 61 per cent homes in Nairobi have outer walls with permanent materials (stone, brick, concrete block), compared with over 75 per cent in Dar,” the survey found.

The report highlights an acute shortage of decent residential buildings in Nairobi, adding to a growing chorus on Kenya’s housing deficit of about 200,000 units yearly.

Nairobi is, however, recognised as having the region’s highest replacement value per square kilometre because it is built on a smaller footprint.

“Detailed study of Nairobi indicates that although there are no remaining slum areas within two kilometres of the city centre, beyond that 10–20 per cent of land is occupied by slums. Slums are less tall than formal areas but have a higher proportion of land area covered by buildings (so less space is used for road and other amenities),” the study says.

The Kenyan government inked a deal with the UN-Habitat more than 10 years ago to modernise informal settlements, but little has been achieved.

The deal, dubbed the Kenya Slum Upgrading Programme (Kensup) was inked in 2003 on an ambitious $8.6 billion (Sh885 billion) budget covering 15 years for infrastructure and housing upgrade in Kenya’s three cities.

Nearly 14 years later, only one corner (Soweto East Zone A) of the slum hosts 624 apartments that were completed in 2015, benefitting only a tiny fraction of the dwellers.

“For economic growth to accompany urbanisation, cities like Nairobi need to take steps toward improving the functioning of land markets. That includes clarifying and strengthening land rights and foster co-ordination in land use planning and service provision,” says the report titled “Africa’s Cities: Opening Doors to the World.”