Urbanisation rate a hurdle to an affordable housing plan

Monday, December 23rd, 2019 10:00 |
Chief Executive Officer Andrew Chimphondah.

Kenya is urbanising at a rate higher than the continental average, putting pressure on access to housing and social amenities, pan-African housing development financier Shelter Afrique says.

Chief Executive Officer Andrew Chimphondah says  Kenya’s urbanisation rate of 4.2 per cent is way above the continent’s average of 3.5 per cent and has left a significant number of Kenyans living in slums. 

“Our research has shown that Kenya has an estimated two million units housing backlog with an annual demand of 200,000 new units versus the 50,000 currently being constructed.

The result has been that  60 per cent of urban households are living in slum settings, a situation that could worsen with the increasing urbanisation rate,” he said.

Chimphondah, however, lauded the Kenya government on its commitment to increasing affordable housing supply, one of her Big four Agenda, which promises to provide 500 000 affordable housing units by 2022; and through its slum upgrading programme. 

 “As the rate of urbanisation increases, so does the demand for decent housing and this partly explains why many Kenyans are living in slum settings.

We are, however, encouraged by the initiatives already put in place by the government of Kenya to address the issue,” he said. 

The CEO said housing affordability continues to be a key challenge in the country given the current high cost of funding and unavailability of financing, amid rising property prices.  

According to the Kenya National Bureau of Statistics, 74.5 per cent of the Kenyan population earn Sh49,999 (US$487) a month or below in the formal sector. 

“This means an affordable housing unit would need to have a monthly rental price of Sh15, 000 (US$146) and below, assuming a maximum of 30 per cent of household gross income is spent on housing,” Chimphondah explained.  

He said Shelter Afrique was encouraged by the formation of the Kenya Mortgage Refinance Company (KRMC), which will provide long term lending to commercial banks, microfinance banks and Saccos to allow them to extend mortgage loans to eligible mwananchi over longer periods and at a lower cost.

“Thus Shelter Afrique’s decision to invest US$2m  (Sh 200 million) in KRMC to stimulate the demand for affordable housing,” he said.  

Shelter Afrique is a partnership of 44 African governments, the African Development Bank (AfDB) and the Africa Reinsurance Company. 

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