Kenya’s high urbanization rate putting pressure on affordable housing

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Kenya is urbanizing at a rate higher than the continents average thus putting pressure on access to basic shelter and social amenities, pan-African housing development financier Shelter Afrique has said.

Shelter Afrique Chief Executive Officer Andrew Chimphondah during an interview pointed out that Kenya’s urbanization rate of 4.2% was way above the continent average of 3.5%, 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 over 60% of urban households are living in slum settings, a situation that could worsen with the increasing urbanization rate,” Mr. Chimphondah said.

Mr. Chimphondah, however, lauded the Kenya Government on her 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 urbanization 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,” Mr. Chimphondah said.

He 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 percent of the Kenyan population earns KSh49, 999 (US$487) a month or below in the formal sector. 

“This means that an affordable housing unit would need to have a monthly rental price of KSh15, 000 (US$146) and below, assuming a maximum of 30 percent of household gross income is spent on housing,” Mr. 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 a longer period and at a lower cost.

“That is important because it enhances affordability and boosts uptake of housing thus Shelter Afrique’s decision to invest US$2m in KRMC to stimulate the demand for affordable housing,” he said.

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