Housing finance in Kenya has evolved a good deal over time. With mortgages accounting for just 3.15% GDP, it is expected that an alternative would be needed to carter for many Kenyans who were locked out by mortgages.

SACCOs stepped up to the challenge and are now estimated to provide the better part of housing finance in the country. They have achieved this by being innovative and responsive to market conditions and client needs where banks maintained strict rules.

FSD Kenya reports that 45.9% of housing and land purchases are now financed by SACCOs while the World Bank estimates that up to 90% of the country’s housing finance is now supplied by SACCOs and housing cooperative networks.

Part of this discrepancy is attributed to the fact that SACCOs lack of disclosure on their debt information and the fact that some of the personal loans by members end up in land or home purchases.

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Although there is an estimated shortage of 2 million units and 61% of the urban population living in slums, the statistics may have been worse without the SACCO revolution which has become a centerpiece of affordable housing finance in the housing starved country.

According to a survey by Centre for Affordable Housing Finance, Kenya had 175 licensed and regulated deposit-taking SACCOs as of December 2016 with nearly 3.5 million members and combined total assets of KSh. 393 billion (US$ 3.8 billion).

In the survey, the SACCOs advanced KSh. 282.7 billion worth of loans and maintained KSh. 67.6 billion capital reserves during the same year even as total assets and membership grew 13% and 9% respectively.

In addition, SACCOs have been recording double digits growth from every year despite the stack of legal, regulatory, and operational challenges the sector faces. According to CAHF, expansion of the sector can be attributed to the country’s growing economy and consumer appetite for credit, yet there is still a significant untapped market to be covered by the sector.

The survey found that the SACCO model is unique because loans are secured by the members’ deposits, and oftentimes by guarantees from other members too without requiring any other collateral(s).

This ease of credit access was the key selling point that has seen most members buying into the SACCOs idea, second only to mobile banking accounts. Furthermore, SACCOs have been known to pay more interest on savings than banks.

SACCOs have also made access to cash easy since approximately 63% of deposit-taking SACCOs, and certainly all the larger ones, are now connected to an ATM network. The Cooperative Bank of Kenya for instance provides an ATM service and a mobile banking platform to 108 SACCOs (SASRA, 2017

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Additionally, the availability of SACCOs all over the country, in urban more than in rural has made them as good as banks. Currently, central Kenya is the most serviced region with 25% of the population belongs to a SACCO.

Recognizing the housing crisis facing many of their members, most SACCOs have been offering an alternative, more accessible, path to homeownership over the past decade and many members now enjoy home ownership as well as property investments thanks to SACCOs.

In addition to offering cheaper financing options, SACCOs have also provided a marketplace for sellers and buyers to exchange property.

Some Housing Cooperatives have even developed their own housing projects specifically for their members. For instance, the National Cooperative Housing Union (NACHU) has been able to complete 14 affordable housing estates comprising 1,573 units. Others who have been involved in similar initiatives include the Stima SACCO and Stima Investment Cooperative.

The government has in the past lauded the efforts of SACCOs in plugging the housing gap and there have been suggestions to make SACCOs major partners in the delivery of the affordable housing projects.

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