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United Kingdom pledges Sh5.2b deal for housing

By Steve Umidha
Wednesday, July 28th, 2021 00:00 | 2 mins read
Housing project. Photo/Courtesy

Kenya is set to receive Sh5.2 billion from the United Kingdom towards the development of affordable green housing projects in the country.

Richard Abel, the managing Director of UKCI said Tuesday the funding — which would come in tranches — is part of the UK government’s support of President Uhuru Kenyatta’s vision of providing 100,000 affordable housing to Kenyans.

“The investment we have made represents an inspiring opportunity to model how sustainable building designs can help fight the effects of climate change.

The need for affordable housing in Kenya is greater than ever with urban populations increasing by more than 4 per cent in the last five years,” he said.

This pledge adds to the Sh8 billion Kenya received in January from the UK to fund the construction of an affordable housing scheme under the Big4 Agenda.

Of this amount, the UK Climate Investments (UKCI) has committed Sh 4.4 billion while FSD Africa Investments (FSDAi), the investment arm of the UK Government’s flagship financial sector development agency in Africa will channel Sh740 million towards the project.

Green technology

The fund targets to deliver about 10,000 homes using modern green technologies and will complement housing units to provide affordable ownership and rental opportunities with 100 per cent ownership averaging Sh 4.5 million and rentals ranging from Sh15,000 to Sh50,000 per month.

The investments from UKCI and FSDAi, is expected to deepen and strengthen the UK Government’s commitment to supporting a greener post Covid-19 recovery in Kenya.

Despite a huge gap with only 50,000 new homes built each year against a target of 250,000 housing units, industry estimates show that affordable housing in Kenya is still a mirage.

As a result, tenants have been forced to grapple with exaggerated and over priced housing units from developers eager to cash in on the existing demand while at the same time contributing to the city’s growing informal settlements.

Today, nearly half of Nairobi’s population live in slums where construction standards are poor and unsustainable, and access to essential services is limited.

Coupled with the challenges brought by the Coronavirus pandemic, it is estimated that about 40 per cent of Kenya’s population live below the international poverty line and access to affordable housing continues to be a significant issue, especially in urban areas.

It is hoped that the development of green affordable housing will focus on increased availability to the low to middle income population whose family income is below $1500 a month.

Unaffordable credit

Anne-Marie Chidzero, Chief Investment Officer of FSD Africa Investments said: “We are confident that our investment in the fund and our support for the open access platform will address some of the critical factors that prevent financial markets from playing a bigger role in affordable housing in Kenya.”

According to Housing and Urban Development Principal Secretary Charles Hinga, the cost of land, unaffordable credit and financing rates, lengthy property registration and transfer times and the cost of construction and construction materials are some of the main reasons that have made it difficult for the project to fully thrive.

The Park Road project by the State for instance– which is under the affordable housing project and whose construction started in April 2019 remains the first low-cost housing development to be completed by the national government – five years later since President Uhuru Kenyatta first announced his Big Four Agenda.

Steve Umidha