It is estimated that, to address the biting housing shortage over the next five years, Kenya requires a staggering Sh2.3 trillion.
Mortgage penetration in Kenya remains low, currently standing at 4.3 per cent of gross domestic product compared to developed nations.
Developers are facing two key challenges of runaway land prices, especially in Nairobi and its environs, and strict access to financing.
Home financing could be the panacea to the perennial problem of affordable housing in the country.
And, going by the enthusiasm with which financial institutions have embraced a company established to spearhead home financing, there could be light at the end of the tunnel for many Kenyan families hoping to have a home of their own.
Banks, pension schemes, fund managers and other financial institutions have traditionally been cagey about doing business with the State, unless investing in government securities.
However, the zeal with which they are lining up to subscribe to shareholding in the newly-established Kenya Mortgage Refinancing Company (KMRC) has raised hopes that a solution to the country’s perennial housing problem could be in the offing.
FINANCIAL OBLIGATION
With housing being part of President Uhuru’s Big 4 Agenda, in which the government aims to provide at least 500,000 affordable new houses by 2022, the jigsaw puzzle of closing the financing gap for majority of Kenyans is falling in place.
It is estimated that, to address the biting housing shortage over the next five years, Kenya requires a staggering Sh2.3 trillion.
With the current budgetary allocation of Sh6 billion, it is obvious that delivering on the housing agenda would be impossible without exploring new strategies, something that has forced the government to bring other stakeholders on board through KMRC.KMRC is not operational yet with the National Treasury in the process of hiring a consultant to advice on issues like raising initial capital, preparing an offering memorandum, securing shareholders’ contributions and preparing shareholders’ agreement. SHAREHOLDERS But with the Treasury allocating Sh1.5 billion seed money and an additional Sh16 billion from the World Bank, who have said interested institutions can invest a minimum of Sh10 million, a number of financial institutions have committed to be part of the new entity.Co-operative Bank is among banks that plan to take up shareholding in KMRC, with the bank’s board approving an investment of Sh200 million in share capital.“National Treasury has kicked-off the initiative of KMRC to source for long-term financing to fund the provision of affordable […]
