World Bank injects Sh560 million to support home loans for hustlers

Kenya has secured €4 million (Sh559.60 million) from the World Bank to support a credit guarantee scheme aimed at facilitating homeownership for households with irregular income.

This initiative is specifically designed to assist the 'hustlers', individuals who mainly work in the informal sector, also known as "jua kali" workers.

The funds will provide seed capital for the newly established Kenya Mortgage Guarantee Trust (KMGT), which will guarantee home loans for this vulnerable group.

The Kenya Mortgage Refinance Company (KMRC) is at the forefront of implementing this scheme, having set up KMGT as a separate entity last year.

According to Johnstone Oltetia, CEO of KMRC, the funding will help sustain the initiative for a period of at least nine years, with potential for longer, assuming there are no loan defaults.

"With 4.0 million euros, we have done some sensitivity analysis...which shows that capital will guarantee loans for nine years because it will be invested and built up," Oltetia explained.

He also revealed that the organization is in discussions with other Development Finance Institutions (DFIs) to secure additional support for the scheme, which is expected to have a significant impact on the housing sector.

KMRC, with 25.3% of its shares owned by the government and the remainder controlled by commercial banks, Saccos, and DFIs, has set June 2024 as the target date for the full operationalization of the guarantee scheme.

This comes at a time when 4,888 houses, funded by the Housing Levy Development Fund, are expected to be completed, with the Affordable Housing Board overseeing the project.

These homes are a mix of social, affordable, and middle-class housing units, catering to various income groups, including those earning less than Sh20,000 per month, those making between Sh20,000 and Sh149,000, and the middle class.