|Shelter Afrique’s Managing Director, Allasane Ba’ (right) makes a point during the media briefing to announce the Sh1.7 billion loan advanced to the institution by CBA. He’s flanked by CBA Group’s Managing Director, Isaac Awuondo.|
NAIROBI, KENYA: Pan-African Finance institution Shelter Afrique has procured a Sh1.7 billion ($20 million) loan from Commercial Bank of Africa (CBA).
The funds will be used to provide affordable housing in selected member countries across Africa.
The loan is part of the $60 million (Sh5.3 billion) to be raised through a syndicated loan facility, to enable Shelter Afrique, which exclusively supports development of housing and real estate, deliver on its mandate within the continent.
"Kenya has a dynamic mortgage industry, which is growing rapidly and becoming competitive," said Isaac Awuondo, the CBA group managing director.
"Nevertheless, mortgage lending is still accessible to only a minority of the population and this partnership between CBA and Shelter Afrique will play a key role in alleviating some of the structural financing inefficiencies encumbering Africa's real estate growth," he added.
It is argued that the property market in East Africa and Kenya in particular is a response to the demand created by an expanding middle class.
However, affordable housing for a majority of Kenya's population remains a challenge.
In a statement, Shelter Afrique's Managing Director Allasane Ba said most of the population cannot own affordable housing built by formal developers, and as a result, address their housing needs independently and often informally.
"There is need for increased collaborative partnerships to propel the real estate sector by providing affordable housing solutions. Shelter Afrique's core mission is to build homes and in essence build families and nations," he said.
Kenya's urban population is growing at a rate of 4.2 per cent a year, putting pressure on its cities to provide housing for this growth.
Housing shortage is seen as the major contributing factor to the rise in property prices in the country.
CBA and other financial institutions backing Shelter Afrique's housing projects will spur development of affordable housing and make hope for decent housing for all Kenyans a reality.
The country projects to build 200,000 housing units every year to match population growth. But in 2013, just 15,000 housing units were planned in Nairobi.
According to a HassConsult Report, sharp increases in land rates and county government construction fees have increased financial disincentives to housing development. For example, fees for construction permits were raised between 200 and 1,250 times since Nairobi City became a county.