PPP, mortgage support key in bridging housing deficit

Andrew Chimphondah
Shelter Afrique Chief Executive Andrew Chimphondah. FILE PHOTO | NMG 

Kenya’s 4.2 percent rate of urbanisation is hurting provision of houses, resulting in the proliferation of slums, pan African housing financier Shelter Afrique has said in a new report.

Given that this rate is well above the Africa average of 3.5 percent, Shelter Afrique Chief Executive Andrew Chimphondah said public-private sector partnerships (PPP) in development of mass housing units are essential if Kenya is to plug its urban housing deficit.

“Kenya is short of two million units housing with the same growing at an annual demand rate of 200,000 new units where realtors produce about 50,000 units annually. This means about 60 percent of urban dwellers lack access to decent housing and live in slums, a trend, if not addressed, will worsen,” he said.

Shelter Afrique said the government’s intervention in providing land for the projects as well as the establishment of the Kenya Mortgage Refinance Company (KRMC) provides Kenyan banks and saccos viable mortgage market options.

“KRMC provides long-term lending to commercial banks, microfinance banks and Saccos which allows them to extend mortgage loans to eligible Kenyans over a longer period and at a lower cost,” he observed.


Mr Chimphondah said Kenya’s Affordable Housing Programme opens a new path to home ownership, which will define private sector participation in the provision of housing units targeting low-income earner as opposed to the current trend where most realtors target high-end clientele.

“That is important because it enhances affordability and boosts uptake of housing thus Shelter Afrique’s decision to invest Sh200 million in KRMC. This will stimulate demand for affordable housing,” he said.

The 74.5 percent of Kenyans earn Sh49,999 and below dictate that the affordable housing units should not be rented at more than a third of this amount.

“This means that an affordable housing unit would need to have a monthly rental price of Sh15,000 ($146) and below, assuming a maximum of 30 percent of household gross income is spent on housing,” said Mr Chimphondah.

Under the Big Four agenda, Kenya is eyeing provision of 500,000 affordable housing units by 2022.