KISUMU, Kenya — The Government has taken a major step to expand access to housing finance for low-income and informal sector workers by committing KSh603.1 million (€4 million) to the newly established Kenya Mortgage Guarantee Trust (KMGT).
The announcement was made by Treasury and Economic Planning Cabinet Secretary John Mbadi during the 4th Kenya Affordable Housing Conference (KAHC) in Kisumu, where policymakers, lenders, developers, and international experts gathered under the theme “Revolutionizing Housing Finance: Innovation Meets Sustainability.”
Targeting the ‘Unbanked’ in Housing Finance
The KMGT is designed as a risk-sharing facility that will provide partial credit guarantees to lenders, enabling them to issue home loans to borrowers without predictable income streams — a segment often locked out of the mortgage market.
“By providing partial risk cover, KMGT will empower lenders to extend credit to informal sector workers and small business owners,” Mbadi said. “We must go beyond traditional budgetary allocations and embrace innovative financing tools to deepen market liquidity and make housing truly inclusive.”
KMRC’s Expanding Role
This move builds on the success of the Kenya Mortgage Refinance Company (KMRC), which — with Treasury’s backing — has mobilized $300 million (KSh38.7 billion) in concessional funding from the World Bank and African Development Bank.
The funds have been blended with proceeds from domestic bond issuances to offer single-digit interest rate mortgages to Kenyan households.
Since inception, KMRC has refinanced over 4,600 home loans across 39 counties, valued at KSh21.7 billion. Women account for 48.3% of the beneficiaries, signalling progress in gender-inclusive housing finance.
KMRC CEO Johnstone Oltetia said the blended finance model is already proving successful.
“By combining concessional loans with capital raised through bonds, we’ve enabled financial institutions to lend at affordable rates,” he said, adding that the Treasury’s latest support strengthens this progress.
New Fiscal Commitments
Mbadi also announced KSh120.2 billion in the FY2025/26 budget for housing and settlement, alongside policy incentives in the Finance Act 2025 — including an annual tax relief of KSh360,000 for incremental home construction loans, reflecting the way many Kenyans build their homes in stages.
He cited Kenya’s 4.3% annual urbanization rate and the fact that only 2% of households hold mortgages, with the majority renting in informal settlements, as urgent reasons to expand affordable housing finance.
Capital Markets and Global Partnerships
The Treasury has pledged to work with private sector players, development partners, and capital market stakeholders to mobilise more long-term housing finance.
A notable example is KMRC’s KSh1.4 billion bond issued in 2022 under its KSh10.5 billion Medium-Term Note Programme — a model the government says should be replicated to achieve scale.
“Our journey to inclusive and sustainable housing must be anchored on bold vision, innovative financing, and targeted guarantees that bridge gaps in traditional lending,” Mbadi said, pledging to attract more concessional funds from development partners.
The conference drew participants from Tanzania, Uganda, India, Pakistan, and Malaysia, reflecting growing global interest in Kenya’s affordable housing model.
