Johnstone Oltetia, the Chief Executive Officer of Kenya Mortgage Refinance Company (KMRC), which was set up to help the many would-be homeowners who struggle to secure a mortgage, aims to raise 5 billion shillings ($49.41 million) on the capital markets in the next year or two.
In 2018, the Kenyan government said it would set up KMRC to help it provide affordable houses by making it easier for banks to access long-term finance for home loans. The company will issue mortgage-backed bonds and other instruments, to lend on to banks and financial co-operatives using their mortgage loan contracts with customers as security.
The Kenyan President, Uhuru Kenyatta made providing 500,000 new affordable homes by the end of 2022 one of his top four priorities. The East African country has an estimated 200,000 annual shortfall, which is expected to rise to 300,000 by 2020.
Speaking during KMRC’s launch, Kenyatta revealed “housing mortgage finance in Kenya remains below its potential”. He expects that KMRC will increase the number of mortgages to over 60,000 by 2022 from a current 26,000.
KMRC already has a $250 million loan from the World Bank, and another 90 million euros ($100.51 million) from the African Development Bank (AfDB) to kick off mortgage refinancing.
Oltetia said the mortgage refinancing company will tap financial markets for more funds after it starts drawing down the funding from the World Bank and the AfDB.
The Chief Executive Officer, who was talking to reporters at the official launch, said “maybe the first bond will potentially be an MTM (medium term note) of about 5 billion shillings which will be drawn down over time”.
The Kenyan government introduced a 1.5 percent levy of taxpayers’ gross salaries in September, an initiative designed to provide affordable houses to more people.