The Government of Kenya, through the National Treasury and Economic Planning, has announced a bold move to capitalize the Kenya Mortgage Guarantee Trust (KMGT) with €4 million (Ksh603.1 million), reinforcing its commitment to unlocking housing finance for underserved populations, particularly those in the informal sector.
The announcement was made by the Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi during his keynote address at the 4th Kenya Affordable Housing Conference (KAHC) held at the Grand Royal Swiss Hotel in Kisumu, the second day of the high-level event.
This move complements a significant financing milestone achieved by the Kenya Mortgage Refinance Company (KMRC), which with support from the National Treasury has successfully mobilized $300 million in concessional funding from the World Bank and African Development Bank (AfDB).
The funds were on-lent to KMRC and strategically blended with proceeds from domestic bond issuances to offer refinanced mortgages at single-digit interest rates a breakthrough for thousands of aspiring homeowners.
In his remarks, CS Mbadi emphasized that sustainable housing finance must evolve beyond traditional budgetary allocations to embrace innovation and catalytic financial instruments.
“We must leverage tools like mortgage-backed securities (MBS), bonds, and blended finance to mobilize long-term capital, deepen market liquidity, and enhance inclusivity in housing,” he said
One such innovation is the capitalization of the Kenya Mortgage Guarantee Trust, which Mbadi described as a risk-sharing facility aimed at de-risking lending to informal and irregular income earners.
“By providing partial risk cover, KMGT will empower lenders to extend credit to those typically excluded from formal finance such as informal sector workers and small business owners,” he noted.
He reaffirmed the National Treasury’s dedication to enhancing policy frameworks, including tax reforms and capital market incentives, to attract private sector participation in housing development. The conference also spotlighted KMRC’s pivotal role in the affordable housing ecosystem.
The institution has so far refinanced over 4,600 home loans across 39 counties, valued at approximately Ksh 21.7 billion. Notably, 48.3pc of these beneficiaries are women, demonstrating Kenya’s commitment to gender-inclusive finance.
The CEO of KMRC, Johnstone Oltetia in his welcoming remarks, celebrated the Treasury’s support and reiterated the value of blended finance in housing delivery. “By combining concessional loans with capital raised through bonds, we’ve enabled financial institutions to lend at affordable rates. This model is already proving successful in transforming access to housing,” he said.
He also expressed appreciation for the presence and leadership of CS Mbadi, and commended the participation of international guests from Tanzania, Uganda, India, Pakistan, and Malaysia, which he said reflects growing global interest in scalable, sustainable housing solutions.
The Ksh 1.4 billion bond issued in 2022 part of a Ksh 10.5 billion Medium-Term Note Programme was cited as a prime example of how local capital markets can be harnessed to finance development goals.
CS Mbadi detailed additional fiscal commitments by the National Treasury, including a Ksh 120.2 billion allocation in the FY2025/26 budget for housing and settlement.
He also highlighted provisions in the Finance Act 2025, such as an annual tax relief of Ksh 360,000 for incremental home construction loans designed to reflect how most Kenyans build their homes progressively.
He acknowledged Kenya’s rapid urbanization rate of 4.3pc per annum and cited the latest Kenya Housing Survey, which showed only 2pc of households hold mortgages, with the majority renting in informal settlements. This underscores the urgency for targeted interventions in affordable housing finance.
“Our journey to inclusive and sustainable housing must be anchored on bold vision, innovative financing, and targeted guarantees that bridge gaps in traditional lending,” he declared.
He concluded by pledging to mobilize more concessional funding for KMRC from development partners to scale refinancing capacity and expand access to home loans.
Now in its fourth year, the Kenya Affordable Housing Conference brought together policymakers, lenders, developers, and international experts under the theme: “Revolutionizing Housing Finance: Innovation Meets Sustainability.”
The two-day event facilitated cross-border dialogue on regulatory reform, financial inclusion, and scalable housing models. Attendees engaged in vibrant Q&A sessions addressing key challenges such as financing legal frameworks, construction costs, and land availability.
CS Mbadi officially opened the final day of the conference by calling for continued collaboration between government, private sector players, and international development institutions. “Together, we can make dignified shelter a reality for every Kenyan,” he said.
By KBC Digital
