National Treasury Cabinet Secretary John Mbadi addressing attendees of the 4th Kenya's Affordable Housing Conference on Friday, August 7, 2025 at the Grand Royal Swiss Hotel, Kisumu. Photo/Newsflash
By Newsflash Correspondent
KISUMU, August 8, 2025 — The Government of Kenya has taken a bold step to boost access to housing finance for underserved populations by committing €4 million (KSh603.1 million) to capitalize the Kenya Mortgage Guarantee Trust (KMGT).
The announcement was made by National Treasury Cabinet Secretary Hon. FCPA John Mbadi Ng’ong’o, EGH, during the closing day of the 4th Kenya Affordable Housing Conference (KAHC) in Kisumu.
This strategic intervention is designed to address the financing gap experienced by informal sector workers and other low-income earners who are often excluded from mainstream mortgage financing. The move also complements broader efforts by the Kenya Mortgage Refinance Company (KMRC), which has mobilized KSh38.7 billion (equivalent to USD 300 million) in concessional funding from the World Bank and African Development Bank (AfDB) to drive affordable housing initiatives.
Targeted financing to unlock home ownership
In his keynote address, CS Mbadi emphasized the importance of moving beyond traditional budgetary allocations to embrace innovative financing mechanisms. He described KMGT as a risk-sharing facility that will de-risk lending to borrowers in the informal economy by offering partial risk cover to lenders, making them more willing to extend credit.
Read more: Gov’t hails KMRC’s role in Affordable Housing agenda
“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.
The Treasury’s support also includes other fiscal tools such as capital market incentives and tax reforms. These include a KSh360,000 annual tax relief for incremental home construction loans introduced in the Finance Act 2025, which acknowledges that most Kenyans build their homes progressively.
KMRC: Powering mortgage access through blended finance
The conference highlighted KMRC’s pivotal role in expanding housing access through its blended finance model. By combining concessional loans from development partners with proceeds from bond issuances, KMRC has enabled lenders to offer mortgages at single-digit interest rates—a first in Kenya’s housing market.
KMRC CEO Johnstone Oltetia hailed the support of the National Treasury, describing it as essential in building a sustainable housing finance ecosystem. “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.
To date, KMRC has refinanced over 4,600 home loans across 39 counties, valued at KSh21.7 billion. Of these beneficiaries, 48.3% are women, underlining the inclusivity of the model.
Read more: Kisumu to host the 4th Kenya Affordable Housing Conference
The company’s KES 1.4 billion bond issuance in 2022, part of a broader KSh10.5 billion Medium-Term Note Programme, was cited as a practical example of how local capital markets can be tapped to fund critical development goals.
CS Mbadi underscored the urgency of affordable housing, citing the latest Kenya Housing Survey, which shows that only 2% of households in urban areas hold mortgages, while the vast majority rent in informal settlements. With Kenya’s urbanization rate at 4.3% annually, the pressure on urban housing is mounting, calling for urgent interventions to expand access to affordable home ownership.
He reiterated the government’s commitment by pointing to a KSh120.2 billion budget allocation in FY2025/26 toward housing and settlement. “Our journey to inclusive and sustainable housing must be anchored on bold vision, innovative financing, and targeted guarantees that bridge gaps in traditional lending,” said Mbadi.
International interest and multi-sector collaboration
The two-day conference, themed “Revolutionizing Housing Finance: Innovation Meets Sustainability,” drew policymakers, developers, lenders, and international experts from countries including Tanzania, Uganda, India, Pakistan, and Malaysia. Their participation, said Oltetia, underscores growing global interest in sustainable, scalable housing models.
Read more: COTU opposes use of Housing Levy to build roads
Participants engaged in dynamic panel discussions and Q&A sessions on challenges such as legal and regulatory frameworks, construction costs, and land availability. These conversations are expected to inform future strategies in the affordable housing space.
CS Mbadi officially opened the final day of the conference by calling for continued collaboration between the government, the private sector, and international development institutions. “Together, we can make dignified shelter a reality for every Kenyan,” he declared.
About the Author
