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