Efforts to provide affordable housing Monday received a shot in the arm after Nairobi-based Pan-African financier Shelter Afrique injected Sh200 million into the establishment of the Kenya Mortgage Refinance Corporation (KMRC).
The firm’s chief executive Andrew Chimphondah said the funds would enable Kenyans buy houses in urban areas through an affordable long-term mortgage facility.
“We are encouraged by the formation of the (Kenya) Mortgage Refinance Company that will cushion commercial and microfinance banks as well as savings and credit societies (saccos) engaged in long-term mortgage financing and at a lower cost,” he said.
The financier, owned by 44 African governments and the African Development Bank, joins other investors, among them the Kenya government, that pledged Sh1.5 billion, the World Bank (Sh15 billion) and over 20 commercial banks that are founders of KMRC.
KMRC will be a wholesale company that eases liquidity issues for commercial banks and saccos that disburse affordable home loans to low-income earners. This means KMRC will buy all mortgages from local lenders thereby replenishing their loan kitty.
Mr Chimphondah said the new strategy will stimulate housing demand where developers will be assured of buyers, especially low-income earners against the current setup where there are only 24,000 active mortgages.
He said Kenya’s provision of free land to developers as well as funding for off-site infrastructural development such as roads, electricity connection, sewer and street lighting made the public-private partnership offers attractive.
“Cost of land constitutes about 40 percent of the total cost of a housing unit and provision of free land means a discount of equal margins on the units already,” said Mr Chimphondah adding that through such initiatives it was possible to develop housing units costing as low as Sh1.5 million.
The fund’s injection comes a week after the World Bank approved Sh25 billion ($250 million) to help Kenya set up KMRC.