Kenya’s affordable housing has received a major boost following the World Bank’s approval of $250 million loan for the project.
The World Bank’s gesture was to ensure that the housing project was successful to create access to houses.
The loan is also to provide a silver lining for the government’s affordable housing project, which has been rocked by controversy due to poor public buy-in.
Kenya Affordable Housing Finance Project (KAHFP) would support the establishment and operationalisation of the Kenya Mortgage Refinance Corporation (KMRC), the bank said.
KMRC is largely private sector-owned and non-deposit taking financial institution supervised by the Central Bank of Kenya (CBK).
The private sector owns 80 per cent of KMRC while the remaining 20 per cent is for the National Treasury.
Besides the World Bank investments, about 20 banks and savings and credit cooperative societies (saccos) have contributed capital so far.
KMRC intends to drive the affordability of mortgages by providing more long-term funding to financial institutions, an incentive to enable them offer long tenure loans to homebuyers.
“The project will also assist the Ministry of Lands and Physical Planning to improve property registration and address structural constraints in the land management system in Kenya,” the World Bank said in a statement.
The project will be implemented through KMRC, the National Treasury and the Lands ministry.
“We believe Kenya’s vibrant private sector offers an excellent opportunity to crowd in privately-held skills and resources towards achieving the country’s Big Four affordable housing goals and in alignment with the World Bank Group’s Maximizing Finance for Development agenda,” said Felipe Jaramillo, World Bank’s Kenya Country Director.
The lender did not, however, reveal the process for Kenyans to access the funds, the terms, or interest rates.
Currently, commercial banks in Kenya hold only about 26,000 mortgage loans of an individual value of $100,000.