Sector consultancy
Kenya is urbanising quickly and its municipal institutions are still young. Counties charter municipalities and prepare spatial plans, the national government funds urban infrastructure through KUSP2 and housing through a statutory levy, and the Affordable Housing Regulations, 2025 now govern who gets a home. Decisions turn on plans, data and credible participation.
The policy environment
World Bank programme documents put Kenya's urban population at about 31 per cent of the total in 2019, growing at around 4.3 per cent a year, with urban areas generating more than half of national output. The Fourth Schedule of the Constitution of Kenya, 2010 assigns housing policy and the general principles of land planning to the national government, and county planning and development, including housing, to counties. The Urban Areas and Cities Act, 2011, as amended in 2019, sets the classification of cities, municipalities, towns and market centres and the boards that manage them: the President confers city status on a resolution of the Senate, while counties confer municipal status by charter. By 2023 county governments had chartered 97 municipalities.
Planning law runs on two tracks. The Physical and Land Use Planning Act, 2019 requires a national physical and land use development plan, county plans prepared every ten years and local plans for cities, municipalities and towns, and it makes development permission a county decision that is deemed granted if a county fails to respond within 60 days. The County Governments Act, 2012 adds integrated development, sectoral and spatial plans that form the basis for county budgets, while urban boards prepare integrated development plans under the Urban Areas and Cities Act. The National Urban Development Policy of 2016 seeks well-governed, competitive and sustainable urban areas, and the Second Kenya Urban Programme (KenUP2), running from 2022 to 2026, is the national programme frame for urban investment.
Housing finance changed with the Affordable Housing Act, 2024, which imposes a levy of 1.5 per cent on gross salary or other gross income, collected by the Kenya Revenue Authority into an Affordable Housing Fund managed by the Affordable Housing Board. The Act defines social, affordable and affordable middle-class housing by monthly income and requires every county to establish a County Rural and Urban Affordable Housing Committee. The Affordable Housing Regulations, 2025, in force since 9 July 2025, set eligibility, allocation, tenant purchase terms, interest rates by income band and resale rules, while Boma Yangu serves as the registration, savings and application platform. Infrastructure for secondary towns flows through the Second Kenya Urban Support Program (KUSP2), and informal settlement upgrading through the Second Kenya Informal Settlements Improvement Project (KISIP2).
Where the pressure is
Reviewed October 2026. Each pressure traces to a law, a policy or a ruling set out below.
The Affordable Housing Regulations, 2025 set income pools, deposit assistance, interest rates and repossession rules, and the Board carries the burden of allocating fairly and transparently. Employers, financiers and counties need evidence on demand, affordability and repayment capacity in each pool before committing land, off-take finance or institutional housing schemes.
World Bank programme documents from 2023 record 97 county-chartered municipalities but urban boards established in only 69. Counties must decide which functions, staff and revenues to delegate to boards, because KUSP2 grants depend on functioning urban institutions.
KUSP2 urban development grants flow only to boards that meet minimum conditions and performance standards. Integrated development plans, budgets, procurement and safeguards systems must stand up to independent assessment.
Under the Physical and Land Use Planning Act, 2019, development applications are deemed approved if a county does not respond within 60 days, and development must conform to approved county plans. Counties without current spatial and local plans lose control of growth and expose decisions to appeal.
The World Bank's KUSP2 appraisal records informal settlements as severely underserved, yet KUSP2 excludes their upgrading, leaving it to KISIP2 and county programmes. Counties and partners must sequence tenure regularisation, basic services and affordable housing without displacing residents.
KenUP2 runs to 2026, while KUSP2 financing continues to 2028. The State Department and counties need evidence on what the current phase has delivered to shape the next national urban programme.
Laws, plans and institutions
The Acts and regulations that create obligations, the policies and programmes that set direction, and the institutions that hold the mandate.
Who does what
How the Fourth Schedule of the Constitution of Kenya, 2010 divides the sector between the national government and the 47 county governments.
What we offer
Our practices combine to answer the questions this sector raises. Every assignment is scoped to the institution.
Demand projections for water, sanitation, solid waste, transport and social services in municipalities and growth areas, built from census, utility and spatial data. The outputs feed integrated development plans under the Urban Areas and Cities Act, 2011 and investment cases for KUSP2 urban development grants.
Technical support to counties and urban boards preparing county spatial plans, local physical and land use development plans and integrated development plans under the Physical and Land Use Planning Act, 2019 and the County Governments Act, 2012. We cover baseline analysis, consultation and the link from plan to budget that KUSP2 minimum conditions test.
Analysis of affordable housing demand, affordability, allocation and financing under the Affordable Housing Act, 2024 and the Affordable Housing Regulations, 2025. We evaluate national and county housing projects for targeting, cost and value for money.
Assessments of urban boards' functions, staffing and finances against the Urban Areas and Cities Act, 2011 and KUSP2 minimum conditions and performance standards. Counties receive a costed action plan to qualify for and sustain performance grants.
Structured public participation for urban plans, informal settlement upgrading and housing schemes, meeting the consultation duties in the Physical and Land Use Planning Act, 2019 and the Affordable Housing Regulations, 2025. The approach draws on Policy Oracle's 2025 urban WASH indicator verification and service monitoring for WaterAid.
Our work in this sector
| Year | Client | Engagement | Practice |
|---|---|---|---|
| 2025 | WaterAid | Urban WASH Indicator Verification and Service Monitoring | WASH M&E |
Key references
Policy environment reviewed October 2026. Laws, regulations and programmes change; consult the official text before relying on any summary here.
Urban Development and Housing
Tell us what you need to decide and by when. We will set it against the law, policy and budget realities of the sector and propose the work.