World Bank approves $250mn loan to ensure low, irregular income Kenyans can get mortgages

World Bank has agreed to lend a gigantic amount of USD 250 million loans to rapidly urbanizing Kenya. The international financial institution has approved the International Bank for Reconstruction and Development loan to boost access to affordable housing finance for Kenyans who are unable to access long-term housing finance.

The plan for this loan to ensure the Kenyan banks lend the people on low or irregular incomes, and support the Kenyan government’s plan to build 500,000 affordable homes in the next five years. The Kenya Affordable Housing Finance Project will support the establishment and operationalization of the Kenya Mortgage Refinance Corporation a largely private sector-owned and non-deposit taking financial institution under the supervision of the Central Bank of Kenya.

Kenya Mortgage Refinance Corporation’s goal is to drive affordability of mortgages by providing more long-term funding to financial institutions, an incentive to enable them to offer long tenure loans to homebuyers. The project will also assist the Ministry of Lands and Physical Planning to improve property registration and address structural constraints in the land management system in Kenya.

“We believe that Kenya’s vibrant private sector offers an excellent opportunity to crowd in privately held skills and resources towards achieving the country’s Big 4 affordable housing goals and in alignment with the World Bank Group’s Maximizing Finance for Development agenda,” Felipe Jaramillo, World Bank Kenya Country Director said. “Urban housing currently remains unaffordable for most Kenyans due to the cost of financing, the short loan tenures and the high cost of properties,” Jaramillo added.

World Bank Senior Finance Specialist and Task Team Leader for the Project, Caroline Cerruti said that the plan should work because of Kenya’s supportive’ macroeconomic conditions and mature capital markets. “The project will endeavour to boost shared prosperity for all Kenyans by addressing rapid urbanization which often manifests itself through the development of slums,” Cerruti added.

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