Delays in permit issuance bite construction industry

Tuesday, September 17th, 2019 00:00 |
Kenya National Bureau of Statistics.

Delay in issuance of permits could cripple the construction sector while at the same time hurt Kenya’s ease of doing business ranking.

According to stakeholders, frequent disruptions to the e-Construction portal has led to delays in issuance of permits.

At a briefing, jointly held by the Architectural Association of Kenya (AAK) and the Kenya Properties Development Association (KPDA), stakeholders were concerned that in addition to lowering Kenya’s rank, the delays have huge financial impact to the public and private sector.

Nairobi AAK president Mugure Njendu disclosed that the city was losing Sh91 million per month or Sh1.1 billion annually in revenue due to the delays.

Njendu said the system started experiencing hitches and eventually collapsed in May this year, when the contract between Nairobi City County and the service provider -Jambo-Pay ended. 

“The county has not processed permits for the last two months. As a result, builders are unable  to proceed with their projects,” he said.

Nairobi is the lead contributor to Kenya’s gross domestic product at 21.7 per cent according to data from the Kenya National Bureau of Statistics (KNBS) Gross County Product Report 2019, with the Development approvals being the second highest collector of revenue for the county. 

In the KPDA report on building approvals for June 2019, revenue collection for development approvals stood at of Sh53.9 million.

In his submissions, AAK vice president Wilson Mugambi said the frequent downtime of the portal has had a significant impact in the ease of doing business in the country.

“In the developed world, for example, the average days it takes to get the permit is between 14 to 21 days, but in Kenya applicants have to wait for between three months and two years.

In some counties, the issuance of an invoice after submission of application takes up to 45 days,” said Mugambi. 

Mugambi said this has caused financial burden to developers, who rely on bank financing for their construction projects.

A Knight Frank Kenya Market update report for the first half of 2019 shows that the value of building plans approved in Nairobi decreased to Sh48.5 billion, a 19.2 per cent drop from Sh60.1 billion in a comparable period in 2018. 

“The collective financial impact this has in the public and private sector cannot be overemphasised. Normalising of operations of the system will benefit the building Industry and the county government,” said Njendu, adding that it is imperative the system is regularised to avoid further decline. 

In his remarks, KPDA director Gikonyo Gitonga said the portal should be redesigned into a one-stop shop to integrate all agencies involved.

“A one-stop shop complete with QR codes in place of the manual stamps presently being used would ensure zero to minimal human interaction with the system, thereby enhancing its efficiency and promoting adherence to building and planning standards in the urban areas,” said Gikonyo.

The E-construction permit system is a key factor considered by the World Bank Group (WB) in ranking economies on the Ease of Doing Business report.

To determine the efficiency of a construction permitting system, WB evaluates the number of procedures in the system, time it takes to get a permit and the cost therein as well as the quality control measures that include project inspections.

The construction e-permitting system was a solution developed jointly between the county government of Nairobi, the International Finance Corporation (IFC/and the AAK, with the objective of enhancing efficiency and accountability in the processing of construction permits in the city. 

Since 2011, four counties have been able to automate the construction permitting procedures. They are Nairobi, Mombasa, Kisumu and Kiambu.

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