Affordable Housing PPPs in Kenya: The Land and Structuring Questions Foreign Developers Must Answer First

Kenya’s Affordable Housing Programme is regularly pitched to foreign developers as an open investment opportunity, and the legal framework to support that pitch genuinely exists: the Public Private Partnerships Act, 2021 and the Affordable Housing Act, 2024 together set out how a private partner, foreign or domestic, can deliver housing stock in partnership with government. What gets less attention in the general coverage of this framework is the specific set of land, structuring and track-record questions a foreign developer has to answer before a PPP process becomes a real project rather than a proposal that stalls. This is where we think the practical advice is thin, and where we want to add something to the existing commentary rather than repeat it.

The framework, briefly, and where it actually leads

The PPP Act, 2021 gives a foreign developer two main routes into a housing project: the solicited route, responding to a competitive tender run by a contracting authority, or the privately-initiated proposal route, bringing an unsolicited proposal to the PPP Directorate, which comes with a non-refundable review fee and a formal evaluation process. A separate, narrower track exists for government-to-government or concessional-finance-backed projects, which can bypass ordinary competitive procurement, a route that has mattered in practice: China Railway Engineering Corporation used a government-backed PPP structure to deliver housing across five Kenya Defence Forces sites, a real, closed example of a foreign contractor delivering housing under a PPP model in Kenya, even though it sat outside the Affordable Housing Programme itself.

Inside the Affordable Housing Programme specifically, the track record is less encouraging. The National Housing Corporation’s flagship Stoni Athi project, a planned 2,820-unit development structured as a PPP, failed to attract a qualifying bidder in its first tender round, was re-advertised in mid-2025, and again drew what the Directorate described as a non-responsive result when that second round closed. As of our research, consultations on how to restructure the tender were reported to be ongoing. We say this not to discourage a genuine foreign developer, but because any article that presents the Affordable Housing Programme as a smooth PPP pipeline without mentioning that its centerpiece project has failed twice to close is not giving a foreign investor the full picture they need to price their own bid correctly.

The land question, which is the part most guides skip

Article 65 of the Constitution bars non-citizens from holding freehold land in Kenya and caps non-citizen leasehold interests at 99 years. A company counts as a “citizen” for this purpose only if it is majority-owned by Kenyan citizens; a wholly or majority foreign-owned developer is treated as a non-citizen for land purposes regardless of where it is incorporated. Our guide to non-citizen land ownership and leasehold limits under the Land Act covers the general rule; what matters specifically for an affordable-housing PPP is how that rule interacts with land that government contributes to the project.

In most Affordable Housing Programme structures, the public partner contributes land, often already held on some form of public tenure, as its equity or in-kind contribution to the joint project vehicle. A foreign developer receiving an interest in that project vehicle needs to establish, before signing anything, exactly what tenure the project vehicle itself will hold over that land, whether the developer’s economic interest is structured as an equity stake in a majority-Kenyan-owned vehicle (which can hold land as a “citizen” under the Act) or as a direct leasehold interest capped at 99 years, and what happens to the developer’s position if the underlying land tenure is later challenged or found defective. This is a structuring decision that has to be made at the term-sheet stage, not discovered during due diligence after a bid has already been submitted, and it is the single most common way we see a foreign developer’s expected returns diverge from what they modeled going in.

The joint-venture structuring question that follows from it

Because of the citizenship rule above, most workable structures for a foreign developer involve a joint venture with a Kenyan partner sufficient to make the project vehicle itself majority-Kenyan-owned, if the vehicle is going to hold land directly, or a pure leasehold structure that avoids the citizenship question but caps the developer’s tenure at 99 years and complicates exit and refinancing later in the project’s life. Neither choice is free: a majority-Kenyan-owned vehicle changes control and governance rights over the project company itself, not just over the land, and a foreign developer needs Kenyan counsel to negotiate reserved matters, board composition and exit rights carefully rather than simply accepting a majority-Kenyan cap table as the price of land access. We would flag this as a negotiation point from the first term sheet, not a detail to resolve later.

The housing levy overlay

Separately from the PPP structuring questions, the Affordable Housing Act, 2024 imposes a mandatory housing levy, upheld as constitutional by the High Court in October 2024 after an earlier 2023 version was struck down. The levy funds the Affordable Housing Fund broadly, rather than being tied to any single PPP project, so a foreign developer entering a specific PPP does not pay the levy as a project cost in the way a construction levy might work, but should understand that the Fund receiving levy proceeds may also be a co-financier or off-taker in the specific project structure being negotiated, which is worth confirming project by project rather than assumed from the general framework.