World Bank approves Sh. 25 bn for affordable housing
By Estate Cloud - about 4 years ago - Kenya
The World Bank has approved KSh. 25 Billion loan to Kenya from the International Bank for Reconstruction and Development (IBRD). The loan is meant to enable access to long-term financing of affordable housing by low income earners in the country. The loan will be channeled through the bank’s Kenya Affordable Housing Finance Project (KAHFP), mainly to support the Kenya Mortgage Refinance Company, a lender of last resort established to help banks issue long-term mortgages to Kenyans and supervised by Kenya’s Central Bank. KMRC’s goal is to drive affordability of mortgages by providing long-term funding to financial institutions at much lower rates, thus enabling them to offer long-term mortgages (about 25-years) to home buyers. 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. Kenya has an estimated 200,000 annual housing shortfall, expected to rise to 300,000 by 2020 while the government aim at providing 500,000 houses in five years to plug the deficit. “Urban housing currently remains unaffordable for most Kenyans due to cost of financing, the short loan tenures and the high cost of properties,” Felipe Jaramillo, World Bank Kenya Country Director, said in a statement. “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. The world bank said KAHFP is expected to increase access to finance by tripling the proportion of urban households having access to mortgages by working with financial institutions that target low income segments of borrowers. Kenyan commercial banks currently hold just about 26,000 mortgages of approximately KSh. 11,000,000 in value or about 3.15 percent of GDP, which is way low compared with outstanding mortgages in more advanced economies even though SACCOs also play a big part in home financing for most Kenyans.