VENTURES AFRICA – Nairobi- based Pan African Housing Finance Institution, Shelter-Afrique, has extended $500,000 loan to a Kenyan housing microfinance institution, Makao Mashinani, in a pilot project geared towards raising the market supply of affordable houses for low income earners.
Makao Mashinani is a local housing microfinance company, that seeks to provide innovative housing finance solutions to the currently under served low income market segment.
According to Shelter-Afrique Managing Director, Alassane Ba, the loan facility will be used by Makao Mashinani to scale up social housing finance for low-income population living in slums and informal settlements in Kenya.
This is the first time Shelter-Afrique is financing low cost social housing projects in Kenya as it seeks to boost social development. Makao Mashinani Ltd will lend the funds to an estimated 2,000 low income earners wishing to construct low cost houses.
Shelter-Afrique now joins other financial institutions which are shifting to the low-end market as high interest rates and skyrocketing property prices slowdown business in the high–end and luxury property markets. Other players eying this market include financier Housing Finance who signed a partnership with Jamii Bora Makao, a low income housing company managed by Urbanis Africa and Rafiki DTM a subsidiary of Chase Bank, which recently unveiled a low cost mortgage product. They are each offering borrowers mortgage of between Ksh. 1 million ($12,000) and Ksh. 5 million ($6,000).
Kenya has an annual demand of 250,000 housing units and supply of only 60,000.
“Given that 90% of Kenyans cannot afford developer-built housing in its current form, we are delighted that Shelter-Afrique has opted to supporting institutions that reach low-income populations through self-built and incremental building solutions, such as Makao Mashinani,” said Makao Mashinani Director Jane Weru.
Shelter-Afrique is expected to disburse similar loans in coming months as it expands its market reach to cover social housing suppliers and micro housing finance providers.
“Housing remains a basic human need and the facility to Makao Mashinani fits well into Shelter-Afrique’s strategy of supporting and partnering with likeminded institutions looking for creative ways to finance lower end housing segment. We shall continue supporting such social projects as part of our overall goal to boost housing supply particularly for low income earners who also deserve to live in dignified houses,”said Ba.
Ba said Kenya provides the necessary enabling environment for a successful pilot of Shelter Afrique social housing programme, owing to its strong property development industry, housing finance system and commitment of the national government.
Shelter-Afrique has disbursed $70 million within the last three years to support housing development projects in Kenya making it one of the leading housing development finance institutions in the country.
Esatablished in 1984, Shelter Afrique is jointly owned by the African Development Bank, Africa Re-Insurance and 44 African Governments. The institution is planning to approve financing worth $1 billion for new housing projects in the next four years.