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Major financial boost for low income housing

By FRANCIS AYIEKO

Low-income Kenyans planning to build dream homes incrementally through small short-term loans will benefit from fresh efforts by two international organisations to expand housing microfinance services in the country.

Habitat for Humanity International has partnered with The MasterCard Foundation to help build the capacity of three local financial institutions, which will be expected to come up with new innovative housing microfinance products for the poor.

The three will be selected from shortlisted financial institutions after tendering. Announcing the launch of the partnership in Nairobi last week, Habitat said Kenya was among three African countries in which the programme will be undertaken in the next five years up to 2017.

The partnership began in Ghana in October last year, and was launched in Uganda last April. The entire programme in the three countries will cost $6.5 million (Sh559 million), with Kenya expected to get about $3.5 million (Sh301 million).

Spending

The money will entirely be spent on helping the financial institutions develop the envisaged housing microfinance products.

Last week, Habitat’s Housing Microfinance Project Manager Christopher Musoke said Habitat and MasterCard would work with three financial institutions in Kenya to develop housing microfinance products, with the former providing expertise (technical support) while the latter would provide the money ($6.5 million) to develop the products.

“Our solution will require the client to find financing and build incrementally, at their own pace,” said Musoke, noting that the beneficiaries would be those living between $5 dollars (Sh430) and $10 (Sh860) a day. “We are not targeting people who can buy houses. We are targeting those who want to build incrementally,” he said. “The demand is there, but there are no appropriate products to meet the demand.”

Musoke said it would take the financial institutions about one year to develop and roll out the products, targeting at least 2,000 households, both in urban and rural areas.

The loan products rolled out will belong entirely to the banks that developed them, and will be lent for a period not exceeding 36 months.

This, though, is not entirely a new idea in the country. Currently, there are many financial organisations, including Saccos, providing short-term loans for those who want to build in phases. A good example is Select Africa, which provides housing microfinance as well as home improvement loans.

But Musoke said the products to be developed must be replicable and address the needs for borrower education and housing support services.