The Kenyan government’s affordable housing project had run into trouble riddled by controversy and poor public buy-in. To support the government initiative, the World Bank has approved $250 million loan housing loan for Kenyans who are unable to access housing finance. However, the information on the process for Kenyans to access the funds, the terms, or interest rates etc are yet to come.
The Kenya Affordable Housing Finance Project (KAHFP) will support the setting up of the Kenya Mortgage Refinance Corporation (KMRC), a largely private sector-owned institution monitored by the Central Bank of Kenya (CBK).The major share of KMRC, approximately 80 percent is owned by the private sector and the remaining 20 percent by National Treasury. Apart from the World Bank, the capital contribution has come from about 20 banks and savings and credit cooperative societies (SACCOs).With the funding support acquired, KMRC plans to provide more long-term funding to financial institutions, enabling them to 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 statement clarified. The project to be jointly implemented by KMRC, the National Treasury and the Lands ministry is expected to support the country in achieving the country’s Big Four affordable housing goals in alignment with the World Bank Group’s” Maximizing Finance for Development agenda. According to the World Bank, housing loans became inaccessible for middle to low-income applicants when banks tightened their credit standards due to the 2016 interest rate cap, coupled with high Non-Performing Loan (NPL) ratio. High cost of financing, short loan tenures and the high cost of properties were major challenges for home buyers.
