World Bank Approves Ksh.25 Billion to Enhance Access to Affordable Housing Finance for Kenyans

By Vera Shawiza / May 2, 2019




The World Bank has approved 25 billion shillings loan to enhance access to affordable housing finance for Kenyans who are unable to access long-term housing finance.

The loan, according to the World Bank, will enable the country to set up the Kenya Mortgage Refinance Corporation (KMRC), to be owned by the State, commercial banks and financial co-operatives.

The Kenya Affordable Housing Finance Project (KAHFP) will support the establishment and operationalization of KMRC a largely private sector-owned and non-deposit taking financial institution under the supervision of the Central Bank of Kenya.

KMRC’s goal is to drive affordability of mortgages by providing more long-term funding to financial institutions, an incentive to enable 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.

“We believe that Kenya’s vibrant private sector offers an excellent opportunity to crowd in privately held skills and resources towards achieving the country’s Big 4 affordable housing goals and in alignment with the World Bank Group’s Maximizing Finance for Development agenda,” said Felipe Jaramillo, World Bank Kenya Country Director. 

Felipe Jaramillo further noted that urban housing remains unaffordable for most Kenyans due to the cost of financing, the short loan tenures and the high cost of properties.

Currently, commercial banks in Kenya hold only about 26,000 mortgage loans of the individual value of 11 million shillings ($110,000). The interest rate cap of 2016 coupled with an overall Non-Performing Loan (NPL) ratio of 12 percent led banks to tighten their credit standards and offer variable rate loans locking out the middle to low-income would-be homeowners.

Kenyans largely access loans from Savings and Credit Cooperatives (SACCOs) that are estimated to provide almost 90 percent of Kenya’s total housing finance. While SACCOs’ interest rates remain low at 12 percent they remain highly constrained by the short-term nature of their deposits liabilities and short loan tenures of not more than five years.

The KAHFP support will target households that are classified by the Government of Kenya to fall within the mortgage gap and low-cost categories and represent 95 percent of the formally employed population.

“The project will endeavor to boost shared prosperity for all Kenyans by addressing rapid urbanization which often manifests itself through the development of slums,” said Caroline Cerruti, World Bank 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 having access to a mortgage. The project will promote inclusive finance through KMRC serving SACCOs and microfinance banks which target borrowers on low and irregular incomes. Investment into 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 project will be implemented through KMRC, the National Treasury and the Ministry of Lands and Physical Planning.



About Vera Shawiza

Vera Shawiza is Soko Directory’s in-house journalist. Her zealous nature ensures that sufficient and relevant content is generated for the Soko Directory website and sourcing information from clients is easy as smooth sailing.Vera can be reached at: (020) 528 0222 or Email: [email protected]

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