Affordable Housing boosted by Ksh. 25 billion World Bank loan

0
670
Affordable Housing-Kenya

The Affordable Housing pillar of President Uhuru Kenyatta’s Big Four Agenda has received a big boost after the World Bank on Wednesday approved a Ksh. 25 billion (US$ 250million) loan to support the initiative.

The grant falls under the World Bank’s Kenya Affordable Housing Finance Project (KAHFP) and it will be used to finance the establishment of the Kenya Mortgage Refinance Corporation (KMRC) which will be tasked with driving affordability of mortgages by providing more long-term funding to financial institutions which will enable them to offer long tenure loans to homebuyers.

“We believe that Kenya’s vibrant private sector offers an excellent opportunity to crowd in privately held skills and resources towards achieving the country’s Big 4 affordable housing goals and in alignment with the World Bank Group’s Maximizing Finance for Development agenda,” said Felipe Jaramillo the Country Director of World Bank Kenya in an official statement.

Urban housing currently remains unaffordable for most Kenyans due to cost of financing, the short loan tenures and the high cost of properties,” Mr. Jaramillo added.

According to data from the World Bank, commercial banks in Kenya hold only about 26,000 mortgage loans of an individual value of Ksh. 11,000,000 (US$110,000). The data similarly states that Kenyans largely access loans from Savings and Credit Cooperatives (SACCOs) that are estimated to provide almost 90 per cent of Kenya’s total housing finance. While SACCOs’ interest rates remain low at 12 per cent, they remain highly constrained by the short-term nature of their deposits liabilities and short loan tenures of not more than five years.

The KAHFP support will target households that are classified by the Government of Kenya to fall within the mortgage gap and low-cost categories and represent 95 per cent of the formally employed population.

ALSO READ: World Bank launches Africa’s human capital plan

LEAVE A REPLY

Please enter your comment!
Please enter your name here