- The World Bank has committed a $375 million (KSh 48.4 billion) concessional loan to Kenya’s affordable housing sector.
- An additional $900 million (KSh 116.3 billion) will be mobilised via a sustainability-linked sovereign loan from commercial lenders.
- The total financing of $1.35 billion (KSh 174 billion) aims to reduce Kenya’s housing deficit of two million units.
In a significant move to address Kenya’s chronic housing shortage, the World Bank has announced a comprehensive finance package totalling $1.35 billion (approximately KSh 174 billion) to support the country’s affordable housing agenda. This deal includes a concessional loan of $375 million (KSh 48.4 billion) alongside an additional $900 million (KSh 116.3 billion) mobilised through a sustainability-linked sovereign loan from commercial lenders.
The combined financing will play a crucial role in closing Kenya’s housing deficit, which stands at an estimated two million units. According to officials, the loan will not only increase access to low-cost mortgages but also help strengthen the country’s mortgage-refinance company, improve affordability, and implement targeted subsidies.
Experts believe the funding will stimulate Kenya’s construction industry, driving demand for building materials and housing finance products, which in turn will create jobs. So far, over 140,000 housing units have been constructed, with another 200,000 in progress across more than 20 counties. President William Ruto has outlined an ambitious target to deliver 1 million housing units in five years, aiming for 200,000 units annually.
As the program unfolds, it is expected to create over 250,000 direct and indirect jobs, with a potential of 1 million jobs generated throughout its lifecycle.
However, experts caution that while the financing is promising, there are significant challenges to overcome. Key risks include ensuring the funds are effectively allocated, preventing cost overruns in housing projects, and maintaining the affordability of the homes being built.
Additionally, the government will need to carefully manage its sovereign debt levels to ensure long-term sustainability as it implements the housing agenda.
The timing of the loan coincides with Kenya’s increasing focus on housing as a pillar for economic growth and social inclusion. If successful, the program could serve as a model for other countries looking to address similar housing challenges.
This initiative is a major step in Kenya’s drive to address housing shortages and make homeownership accessible to more citizens. The World Bank’s involvement reflects confidence in Kenya’s housing sector, but the true test will be in the execution of these plans.
