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Kenya bets on revamped Shelter Afrique to fund affordable housing project
View of the new Mukuru Housing Estate Phase 1, Nairobi on May 27, 2025. The program is part of government's effort to improve housing affordability and reduce socioeconomic disparities.
Photo credit: Wilfred Nyangaresi | Nation Media Group
The government is banking on pan-African financial institution Shelter Afrique to fund the affordable housing project (AHP) amid disclosures that no developer has sought State backing to secure loans from local banks.
The new plan follows a resolution to turn the housing financier into a development bank, a move expected to boost its access to funding in the international markets.
The disclosures were made at the Parliament’s Finance and Planning committee during proceedings to ratify a decision establishing the Shelter Afrique Development Bank (SHAFDB). The Cabinet ratified the decision on February 11.
The search for funding to the AHP is despite the State collecting about Sh6 billion monthly from the Housing Levy that was imposed on formal workers. In the 2024/25 fiscal year, the government collected Sh73.2 billion from the 1.5 percent levy.
The government, however, maintains that it is using the Housing Levy to develop infrastructure such as constructing roads and sewerage services where AHP projects are, rather than funding actual construction of the houses. The committee’s report observed the government’s position that “by ratifying the SHAFDB Agreement, Kenya will enjoy access to financing for affordable housing and urban infrastructure development.”
In a presentation to the committee, the Ministry of Foreign Affairs said the government targets to tap increased funding through SHAFDB to bankroll affordable housing projects.
“The partnership will strengthen intra-African trade in building materials and financial services and support the government's affordable housing agenda,” the Ministry said.
The State Department for Housing yesterday said Kenya wants to take advantage of the fact that it is the biggest shareholder in Shelter Afrique to tap funding for the housing projects.
Housing PS Charles Hinga said the government wants to secure long-term funding through the development bank, since funding to AHP so far has been on a “deal-by-deal basis.”
“All transactions as with any other bank are on a deal-by-deal basis. We are in talks with them on how they can support AHP but it’s still in early days with nothing specific on the table,” Mr Hinga said.
The PS revealed that an initial plan by the government to issue off-take guarantees to developers in the AHP for use in securing financing from local banks remains untapped, with no developer having come forward.
The guarantees were meant to offer comfort to banks that funding developers who get affordable housing contracts would be secured, since the government would buy the houses once completed.
“The guarantees are available on a deal-by-deal basis. We don’t have any application from a developer at the moment,” Mr Hinga said.
The Ministry of Foreign Affairs indicated that Kenya had $21 million (Sh2.7 billion) as its share in Shelter Afrique’s paid-up capital by December 2023.
At least 44 African countries, the African Development Bank (AfDB) and the African Reinsurance Corporation (African-Re) are shareholders at Shelter Afrique.
The company has funded projects valued at $319.5 million (Sh41 billion in current exchange rates) through project finance, lines of credit and equity investments since 1993, the government says.
“Shelter Afrique also advanced Sh540 million and a standby facility of Sh128.3 million to Karibu Homes for affordable housing in Athi River, and entered its first joint venture in Kenya in 2010 through the Everest Park project, featuring 440 housing units,” the Ministry of Foreign Affairs said.
In its 2024 annual report, Shelter Afrique acknowledged that major public housing initiatives such as Kenya’s have been major drivers of expanding housing across the continent.
The company, however, did not directly address any discussions towards funding Kenya’s AHP.
“Kenya’s Affordable Housing Programme, Nigeria’s Renewed Hope Housing Plan, and Morocco’s 250,000-MAD Social Housing initiative stand out for their scale and structure," Shelter Afrique said.
"In 2024, Kenya made notable strides under the AHP, a key pillar of the government’s Bottom-Up Economic Transformation Agenda. Over 42,000 housing units were either completed or under construction across major cities including Nairobi, Mombasa, Nakuru, and Kisumu."
Shelter Afrique has over the years funded projects such as the 76 townhouses by Stima Investment Cooperative in Syokimau (Sh395 million) and Qwetu student residences in Ruaraka and Jogoo Road (Sh800 million).
