State’s affordable housing plan has received a major boost after key international financiers offered additional Sh30 billion as part of the seed capital.
Treasury secretary Henry Rotich said the Kenya Mortgage Refinance Company (KMRC), the entity that the State seeks to form by end of this month with a Sh1.5 billion seed capital to oversee the project, will receive an additional $150 (Sh15 billion) from the World Bank.
And yesterday, the African Development Bank (AfDB) group’s executive director for the East African region, Dr Caleb Nyamajeje, said the institution’s board had reached a decision to invest up to Sh15 billion in the project.
“I can confirm that the AfDB will be chipping in with a contribution of between $100 million and $150 million since Kenya is one of our best performing economies in terms of utilising our resources,” he said.
The affordable housing plan aims to build 500,000 “decent” homes for low-income earners in the next five years.
Once incorporated by end of this month, the company will finance banks and saccos, enabling them disburse affordable home loans to low-income earners beyond the amount guaranteed by payslips or savings.
The government, World Bank, AfDB and a number of local banks will be the initial principal shareholders of the KMRC. The agency will advance money to mortgage firms and institutions financing housing on a wholesale basis for on-lending to members or account holders to buy or build homes.
The scheme will specifically target those whose incomes cannot currently allow them to take home loans from financial institutions.
“We realised that the main hindrance to access mortgage has been lack of long term finance as most of the banks’ deposits are held in current accounts,” said Mr Rotich.
“We are therefore incorporating KMRC to provide the much needed long term credit.”
The government says creation of the agency will enable banks and saccos to issue 50,000 additional mortgages in five years.
Kenya’s total mortgage loans book stood at 24,085 in December 2016, having grown by a paltry 6,000 in the past five years.