WORLD BANK APPROVES $250M LOAN TO KENYA FOR AFFORDABLE HOUSING
The World Bank has approved a Ksh25 billion ($250 million) loan to Kenya for affordable housing loan for Kenyans who are unable to access affordable housing finance.
The loan is expected to provide a silver lining for the government’s affordable housing project, which has been rocked by controversy due to poor public buy-in.
The lender said on Wednesday that the Kenya Affordable Housing Finance Project (KAHFP) will support the establishment and operationalisation of the Kenya Mortgage Refinance Corporation (KMRC), a largely private sector-owned and non-deposit taking financial institution supervised by the Central Bank of Kenya (CBK).
The private sector own 80% of KMRC while the remaining 20% 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.
“Urban housing currently remains unaffordable for most Kenyans due to cost of financing, the short loan tenures and the high cost of properties,” the World Bank boss added.
The KAHFP support will target households classified by the government as falling within the mortgage gap and low-cost categories representing 95% of the formally employed population.
“The World Bank has supported many mortgage refinance companies in emerging markets, and Kenya has the right pre-conditions for KMRC to be successful, such as supportive macroeconomic conditions, well-developed capital markets and financial institutions active in housing finance,” said Caroline Cerruti, World Bank’s Senior Finance Specialist and Task Team Leader for the Project
KAHFP is expected to increase access to finance by tripling the proportion of urban households with access to a mortgage.
Investment in affordable housing will have a strong economic multiplier effect, given the number of linked sectors, and could support 132,000 new jobs.
“Better housing conditions are also linked to improved health and education outcomes,” the lender noted.https://worldbank.einnews.com/article/483952183?lcf=nu57LUaS699NQvhIi3H-XQ%3D%3D
