Affordable Housing Will Remain An Illusion Unless We Fix Capital Markets

President Uhuru Kenyatta hopes to provide Kenyans with at least 500,000 affordable housing units by the time he leaves office in the year 2022. Well, time is flying and the Son of Jomo has less than two years to make this agenda a reality.

Will President Uhuru Kenyatta and his government manage to deliver the 500,000 units before 2022? As lawyers and amicus curiae say, “it is not humanely possible” considering the remaining time. Mr. Edwin Dande, the CEO at Cytonn thinks the initiative might remain an illusion.

The reason why the vast majority of Nairobi Metropolitan residents live in substandard housing, without reliable power, without reliable water and comprehensive lifestyle amenities is mainly due to lack of capital to put up large-scale developments.

According to Mr. Dande, the country needs to fix capital markets if it wants to achieve the dream of giving Kenyans affordable housing units. He says, there is a need to change the perception where people rely on banks alone as financial sources for projects.

” The reason the president’s housing agenda has not taken off is due to a lack of development capital,” said Mr. Dande during the handover of the second phase of Cyton’s 5-billion-shilling project, The Alma. 68 units were handed over to owners.

Kenya has a housing deficit of 2,000,000 houses. The deficit has been growing at 200,000 annually. This has led to the mushrooming of informal settlements in major urban areas in Kenya as people seek affordable ways to have a roof over their heads.

“There is a compelling demand for housing. Kenya Mortgage Refinance Company, KMRC, is working on financing uptake. We need to figure out how to finance the development side,” he added.

According to data from the World Bank, in well-functioning economies, businesses rely on banks for just 40 percent of their funding with a larger percentage, 60 percent, coming from capital markets.

In Kenya, businesses rely on banks for 99 percent of their funding, with less than 1 percent coming from capital markets.

“The solution is not more regulation of banks, no. It is to stimulate capital markets as a complementary alternative to banking markets. However, more often we stifle rather than stimulate capital markets,” says Mr. Dande.