The government has suspended the controversial diversion of the housing levy funds previously used to build markets across the country, following a key meeting between President William Ruto and COTU Secretary-General Francis Atwoli.

The workers’ union, which had earlier denied being consulted on the levy’s expanded mandate, now says it has reached an agreement with the government.

Under the deal, funds already spent on market construction will be refunded into the levy, and priority in housing allocation will be given to salaried Kenyans - the very contributors to the fund.

Just 11 days ago, Atwoli had raised the alarm over the government’s plan to expand the housing levy’s mandate, proposing to use the funds not only for housing but also for building markets, police stations, primary schools, and social halls.

"But if let’s say the plot is small and cannot afford schools inside, the next immediate primary school which is around, it will be expanded by the money for the purposes of service delivery to children of the people living in those particular houses,” Atwoli said.

In a move that could puncture and slowly grind to a halt President Ruto’s ambitious plan to construct 400 markets under the economic stimulus program, the meeting also resulted in an agreement to establish a special committee under the Affordable Housing Board.

This committee, comprising representatives from both national and county governments, will oversee the recovery and reallocation of funds from markets already built or under construction back into the affordable housing fund.

"This can only be done within the project infrastructure, but not outside the project infrastructure. For example, if an affordable estate has been built, there will be infrastructure including markets, schools and so on,” Atwoli added.

In the commitment with the workers’ union, the government has also agreed to give first priority in the allocation of the affordable housing units to salaried Kenyans who are contributors to the levy.

The deal is further sweetened by a downward review of the mandatory 10% deposit of a housing unit’s purchase price, down to 5%.

"Every worker who is contributing and has a payslip will be eligible to have a house. Because those houses will continue to be built in urban areas, everywhere, and they should not be discriminatory,” Atwoli noted.