Counties are losing millions as a result of persistent downtime of the E-construction permit system, which has slowed down the process of giving construction permits.
The system has not been working in several months depriving counties revenue from the construction, which is one of the leading source of revenue for some counties.
For instance, Nairobi City County has not processed permit for the last two months, ostensibly due to a technical challenge hence leading to a stall in several proposed constructions in the city.
Nairobi leads in the contribution of Kenya’s GDP by contributing 21.7 percent of the national GDP according to KNBS’ Gross County Product report 2019 with the development approvals being the second highest collector of revenue for the County.
In the Kenya Private Developers Association (KPDA) and Nairobi City County Government (NCCG) report on building approvals for June 2019, revenue collection for development approvals was Ksh53,857,328.
Nairobi’s hitch on the system started in May 2019, and eventually collapsed when the contract between the Nairobi City County and the service provider – Jambo-Pay ended.
In a statement to newsrooms, the Architectural Association of Kenya (AAK) and KPDA said the construction industry needs a one stop shop for processing all construction permits and synergies to reduce time for processing and maximise revenue collection for counties.
“The Associations are aware that that the electronic construction permit system in other counties have not been functioning efficiently. Therefore, delays in issuance of building permits and development approvals. Most applicants usually have to wait for between 3 months to 2 years. In some counties, the issuance of an invoice after submission of application takes up to 45days,” the two bodies said.
“This has caused financial burden to developers who rely on bank financing for their construction projects and negatively affects the ease of doing business in Kenya,” added Arch. Mugure Njendu, President, The Architectural Association of Kenya.
The Knight Frank Kenya Market Update report for the first half of 2019 indicates that the value of building plans approved in Nairobi County decreased to Ksh48.54 billion in the first quarter of 2019, a 19.2 percent drop from Ksh60.11 billion in a comparable period in 2018.
The 2018 World Bank report on the ease of doing business in Kenya based on the parameter of acquisition of building permits and development approvals ranked Kenya at position 124 below its peers such as Rwanda (112), Botswana (59) and Namibia (107).
The poor ranking was attributed to the long processes and lengthy periods needed to acquire a development permit in Kenya with some applications taking up to 156 days.
In response to the growing concerns on how the long periods it takes to obtain building permits and development approvals, the World Bank, through the Kenya Investment Climate Program initiated a project that would see the major urban counties in Kenya install and maintain automated development control systems.
In 2015, through a joint partnership with the International Finance Corporation (IFC), Nairobi City County launched the pilot automation program that culminated in the launch of Nairobi’s e-Development Permit Management System (e-DPMS) on November 26, 2016.
The automated construction permit system was expected to reduce the time needed to review applications and improve the business environment in Nairobi City County.
The Nairobi Integrated Urban Development Masterplan (NIUPLAN) for the City of Nairobi 2014-2030 developed by University of Nairobi and Japan International Co-operationAgency (JICA) but has never been formally published, hence lack of proper zoning guidelines in the city.
“As such, plot ratios, building lines, plot coverage and set-backs are measured arbitrarily which acts as a tool for rent seeking county officials,” says a joint statement from AAK and KPDA.
Similar experiences, albeit on a lower scale, have been recorded in Kisumu, Kiambu and Mombasa.
“We therefore call on the Nairobi City County Government and other county governments, to urgently reform and reorganize the manner in which construction permits are processed in this country and make full use of the robust technology that is now available to ensure that we build an efficient and transparent construction permitting system,” concluded the statement.