Lender calls for establishment of housing micro finance to address financing gap

Shelter Afrique CEO Andrew Chmphondah.
Shelter Afrique has urged African governments to establish a housing microfinance fund to improve access to housing finance by the lower end of the market.

Speaking at the Affordable Housing Investment Summit in Nairobi recently, Shelter Afrique’s CEO Andrew Chimphondah said most policies had an exclusive urban focus, and non-consideration of the low-income groups and the rural areas.  Chimpondah (pictured) said the establishment of such a fund would facilitate efficient and inclusive housing market systems and make affordable housing a reality across Africa.

“Access to adequate housing for low-income earners is a critical development issue globally, and more so for Africa. A safe and stable home is the first step to a productive, healthy life, yet owning a home is beyond the reach of the vast majority in Africa. Currently, 90 per cent of Africans cannot afford to buy a house or qualify for a mortgage,” he said.

He said most African countries were facing a housing crisis and that the continent’s housing industry required at least $2.5 billion (Sh250 billion) in new investment annually for any meaningful impact.

Limited access

Chimphondah said that in sub-Saharan Africa, most people have limited access to long-term financing for housing, which is almost invariably limited to commercial banks offering formal, multi-year mortgages.

“For instance, only 2.4 per cent of the Kenyan population can afford typical loan rates. At the end of December 2018, there were only about 26,000 active conventional mortgages in the whole country - the majority of which were granted to urban professionals. In Uganda, which has a population of 42.8 million, the number was just 5,000 in 2018,” he said.

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He said there is an urgent need to expand mortgage finance option, designing appropriate mortgage finance products, and enhancing access to capital markets.

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