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Bamburi eyes low-income earners with housing loans

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A truck leaves the Bamburi Cement factory. Bamburi is seeking to grow sales among low-income households through a World Bank financing agreement that will see consumers access cheaper construction loans tied to purchase of the firm’s products. Photo/FILE

Bamburi Cement is seeking to grow sales among low-income households through a World Bank financing agreement that will see consumers access cheaper construction loans tied to purchase of the firm’s products.

The project, set to begin in the fourth quarter, has been crafted by Bamburi’s parent firm Lafarge and the World Bank’s private sector lending arm, International Finance Corporation.

“The loans will range between $1,500 (Sh130,500) and $2,000 (Sh175,000) per every 20 square metres,” said Francois Perrot of Lafarge’s affordable housing project.

He said the partners are yet to decide on the interest rate, adding that “it will definitely be below market rates.”

Britt Gwinner, IFC’s housing finance programme manager for sub-Saharan Africa, said the institution will advance “tens of millions of dollars” to local micro-finance firms who will be the final lenders.

“We are committed to this project. There is no limit in our financing; it could be in tens of millions of dollars,” he told the Business Daily. Several micro-financiers that have been identified to roll out the project include Rafiki Microfinance Bank, KWFT Bank and Faulu Kenya.

Bamburi will design plans, prepare bill of quantities and offer technical assistance in the construction of homes targeting low-income earners who will use part of the IFC-backed loans to buy cement from the company.

Kenya is the fourth nation where Lafarge has introduced the project after Nigeria, Zambia and Morocco, betting on the initiative to boost earnings of its local subsidiary.

READ: Lafarge to merge African units in effort to rival Dangote Cement

Lafarge says the project covered more than 120,000 people in 15 countries last year and is expected to rope in 19 million more over the next six years.

“While contributing considerable social benefits, this is not an exercise in philanthropy: five projects were already profitable in 2013,” Lafarge said in a statement.

Besides building new homes, the project aims to finance renovation and extension of existing properties. Low-income earners in towns and rural areas have found it prohibitive to put up decent homes owing to expensive mortgages and personal loans whose interest stands at more than 15 per cent.