Kenya’s affordable housing plan under the Big 4 agenda has received major backing after the Central Bank of Kenya (CBK) licensed the Kenya Mortgage Refinance Company (KMRC), the public-private partnership (PPP) firm formed by the Government to drive the affordable housing finance in Kenya.
CBK Governor Patrick Njoroge confirmed the report and said that the licence has been granted pursuant to the CBK (Mortgage Refinance Companies) Regulations, 2019 after KMRC’s fulfilment of the stipulated licensing requirements.
The license gives the mortgage refinancing firm the greenlight to commence its core business of providing fixed long-term financing to participating banks, microfinance banks and Saccos for onward lending to borrowers seeking long-term home loans at affordable rates. It is the first mortgage refinance company in Kenya, having been incorporated on April 19, 2018, under the Companies Act, 2015 – as a Public Limited Company.
National Credit Guarantee Scheme
The company is expected to play a significant role in the structuring of the proposed National Credit Guarantee Scheme, in order to create an effective backstop mortgage guarantee component to cover the losses incurred by lenders on future home loans.
According to KMRC Chief Executive Officer Johnson Oltetia, the issuance of the license paves way for disbursement of funds by the World Bank and continental DFI (Development Finance Institution) African Development Bank (AfDB), to the tune of Ksh. 35 billion in form of debt financing through the National Treasury.
The licensing of KMRC and the expected release of long-term funds to participating banks and saccos is timely for the affordable housing finance agenda in Kenya, moreso with the Covid-19 pandemic having severely impacted the mortgage market. With reduced household incomes triggering increase in nonperforming loans and liquidity squeeze especially in the Sacco Sector, KMRC is part of the solution to mitigate the effects of the Covid-19 pandemic in the financial market.
“The company will offer fixed-rate long-term loans at concessional rates to mortgage providers who are expected to pass the benefit to citizens at lower than market rates. Moreover, in response to the Covid-19 pandemic, KMRC will help maintain adequate liquidity among primary housing mortgage providers, in order to keep housing finance and the market functioning. This will avert potential credit crunch that would hurt lower-income households and interrupt efforts to support affordable housing,” said Treasury CS Ukur Yatani
