It is said that the world will throw stones at you. Do not throw them back, collect them and build an empire. Kenya as a community is currently being pelted from many fronts but some of the major long-term predicaments, we currently face are climate change and inadequate housing.
The fact that the government went to great lengths to host the first ever African Climate Summit in Nairobi in September last year, vis-à-vis the government’s efforts to make affordable housing accessible to Kenyans shows how these two issues are top on the current government’s agenda.
This presents Kenyans with an opportunity to address this two-pronged problem in one-fell-swoop. This is through the construction of green, resilient and affordable homes at scale. By increasing our investment in green housing, we will be killing two birds with one stone by solving the inadequate housing problem while mitigating the effects of climate change.
Despite the government’s efforts to achieve these goals, it goes without saying that the private sector has an equally important role to play when it comes to addressing these two challenges. The role of the banking sector in this case is even more pronounced because it has the muscle to jump-start the initiative.
While public policy will play a crucial role, the financing gap cannot be met without significant participation by the banking sector.
In Kenya, we are lucky that we have banks which understand that green, affordable housing is both possible and profitable.
Green and affordable housing finance by local banks should aim to support development of robust and self-sustaining housing finance ecosystems by streamlining lending by local financial institutions into value chain for green affordable homes.
While announcing its partnership with IHS Kenya Limited for Affordable Housing in November, Stanbic Bank revamped its commitment to provision of affordable housing which is one of the key development priorities of the Kenyan government under the development agenda.
This underlines Kenya’s need for sustainable investment in government by local banks. This is through the provision of financing in support of the green and blue economy initiatives, financing or refinancing of certified greenfield construction, renovation, or operation of buildings to make them sustainable.
Local banks should be at the forefront of financing green affordable housing projects by offering clients a unique opportunity to access single-digit fixed interest rates for extended periods like 25 years, providing them the means to acquire environmentally friendly and quality housing and ultimately contribute to sustainable and inclusive economic growth in the country.
By supporting green housing, local banks will not only ensure that Kenyans have access to decent affordable housing, but they will also be playing their part in protecting our environment for future generations.
As local banks take up their role in supporting the fight against climate change, they should undertake thorough assessments to identify climate-related risks and opportunities, and commit to building resilience, reducing their environmental footprint, while also contributing to the transition to a low-carbon economy in sectors like the construction industry.
By supporting and promoting investment in energy infrastructure, clean energy technology, and the construction of green buildings, local banks could reduce the impact customer operations have on the environment and assist in the reduction of carbon emissions within their customer base.
In many African countries, a lack of access to finance constrains both the supply of green homes from developers and demand from households, particularly those with low or informal incomes. Local banks should therefore invest more in green housing to help resolve the issue of lack of end-user finance.
By supporting sustainable practices in the construction industry, banks will also be providing a solution to their clients by helping them save money. Helping clients gain access to green and sustainable houses will expose them to decreased operating costs, enhanced occupant efficiency and savings on tenant utility bills.
Moreover, it enhances the client’s return on assets and profits due to their savings in operating costs. Lastly properties that are green built require lower maintenance costs as they are built from sustainable components which in turn adds value to the property.
Through their resource allocation capabilities, local banks and other financial institutions are now an indispensable cog in the war against climate change.
Acting as a bridge between the financial industry and environmental conservation, banks can guide our local construction industry to tap from the vast pool of green financing, spurring them to adopt eco-friendly practices as an important starting point in business creation or development.
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