In a strategic move poised to address Kenya’s pressing housing deficit, Shelter Afrique Development Bank (ShafDB), a leading Pan-African institution focused on financing housing, urban, and related infrastructure development, has signed a Memorandum of Understanding (MOU) with CPF Group. This agreement, which represents a significant milestone in the ongoing efforts to provide affordable housing across Africa, particularly in Kenya, aims to scale up the development of large-scale affordable housing projects in the country.

A Strategic Partnership for Affordable Housing

The MOU, signed in Nairobi by CPF Group Managing Director Dr. Hosea Kili and Shelter Afrique Development Bank Head of Credit and Operations Mr. Christopher Chege, on behalf of Managing Director Mr. Thierno-Habib Hann, is designed to leverage the strengths of both organizations to make a tangible impact on Kenya’s housing landscape. Mr. Chege emphasized the strategic importance of this partnership, stating, “Our overriding strategy is the provision of affordable housing across our member states through public-private partnerships. This strategic partnership with CPF Group will be key in expanding our projects in Kenya.”

The Scope of the Agreement

The agreement seeks to provide a comprehensive platform for intervention across the affordable housing value chain by fostering a partnership in housing delivery through co-financing. This initiative aims to address the entire spectrum of challenges associated with affordable housing, from the supply of construction materials to the demand for housing units by low-income earners.

One of the key components of this partnership is the establishment of a Housing Solutions Fund for Kenya. This fund will focus on making targeted interventions on both the supply and demand sides of the affordable housing value chain. ShafDB and CPF Group will jointly design and manage this fund, providing essential capital raising and technical support to ensure its successful implementation.

Dr. Kili of CPF Group expressed his enthusiasm for the partnership, highlighting the potential for collaboration in various areas. “We are excited to partner with Shelter Afrique Development Bank and leverage each institution’s strengths as we jointly address the perennial problem of decent and affordable housing in Kenya. This partnership opens up opportunities for collaboration in many areas, including product and services design and finding innovative funding solutions for our current and future projects,” he said.

Addressing Kenya’s Housing Deficit

Kenya’s housing deficit is a well-documented challenge. The country faces a shortfall of approximately 2 million housing units, a figure that is expected to rise due to the country’s high population growth rate and urbanization. Kenya’s urbanization rate stands at 4.4%, significantly above the global average of 2.1%. Out of the country’s total population of 50.6 million, approximately 29% reside in urban areas, further exacerbating the demand for affordable housing.

The Kenyan government, recognizing the urgency of the situation, has set an ambitious target through its Bottom-Up Economic Transformation Agenda (BETA) to deliver 250,000 housing units per year. However, current delivery stands at only 50,000 units annually, highlighting the need for innovative solutions and strategic partnerships like the one between ShafDB and CPF Group.

The Role of Shelter Afrique Development Bank

Shelter Afrique Development Bank has been at the forefront of addressing Africa’s housing challenges. With a strong mandate to finance and advance housing, urban, and related infrastructure development across the continent, ShafDB has been instrumental in mobilizing resources and driving initiatives that contribute to sustainable urban development. The bank’s focus on affordable housing is aligned with broader continental goals, including the African Union’s Agenda 2063, which prioritizes inclusive growth and sustainable development.

The bank’s partnership with CPF Group is a reflection of its commitment to creating impact through strategic alliances. By collaborating with key stakeholders in the public and private sectors, ShafDB aims to bridge the housing gap and contribute to the realization of affordable housing for all.

The CPF Group’s Vision and Mission

CPF Group, a prominent financial services provider in Kenya, has a longstanding commitment to enhancing the welfare of Kenyans through innovative products and services. The group’s involvement in affordable housing is part of its broader mission to contribute to the social and economic development of the country. By partnering with ShafDB, CPF Group is not only expanding its portfolio but also reinforcing its role as a key player in Kenya’s development landscape.

Dr. Kili reiterated CPF Group’s dedication to the affordable housing agenda, stating, “Our collaboration with Shelter Afrique Development Bank is a testament to our commitment to addressing Kenya’s housing needs. We believe that through this partnership, we can make a significant impact on the lives of many Kenyans by providing them with access to decent and affordable housing.”

Innovative Solutions for Affordable Housing

The partnership between ShafDB and CPF Group is expected to pave the way for innovative solutions in affordable housing delivery. One of the anticipated outcomes of this collaboration is the development of new financial instruments and products that cater to the unique needs of the housing sector. These could include tailored mortgage products, housing savings schemes, and other financing mechanisms designed to make homeownership more accessible to low- and middle-income earners.

Moreover, the Housing Solutions Fund is expected to play a critical role in mobilizing resources from both local and international investors. By attracting investment into Kenya’s housing sector, the fund aims to scale up the construction of affordable housing units, thereby addressing the supply-side constraints that have historically hampered efforts to reduce the housing deficit.

The Broader Impact on Kenya’s Economy

The successful implementation of affordable housing projects has far-reaching implications for Kenya’s economy. Housing is not only a basic human need but also a key driver of economic growth. The construction of housing units creates jobs, stimulates demand for construction materials, and generates economic activity in related sectors such as finance, insurance, and retail.

Furthermore, providing affordable housing has significant social benefits. It improves living conditions, promotes social inclusion, and contributes to the overall well-being of the population. By addressing the housing deficit, Kenya can also reduce the prevalence of informal settlements and improve urban planning and development.

A Step Towards Sustainable Urban Development

The ShafDB-CPF Group partnership aligns with global trends in sustainable urban development. As cities around the world grapple with the challenges of rapid urbanization, there is a growing recognition of the need for affordable and sustainable housing solutions. The integration of sustainability principles into housing projects, such as energy efficiency, green building materials, and eco-friendly designs, is becoming increasingly important.

In this context, the Housing Solutions Fund is expected to prioritize projects that incorporate sustainability features. By promoting green housing initiatives, the fund will contribute to Kenya’s efforts to reduce its carbon footprint and mitigate the impacts of climate change. This is particularly relevant as Kenya, like many other African countries, is vulnerable to the effects of climate change, including extreme weather events and changing rainfall patterns.

The Future of Affordable Housing in Kenya

Looking ahead, the partnership between ShafDB and CPF Group is poised to play a pivotal role in shaping the future of affordable housing in Kenya. As the country continues to urbanize and its population grows, the demand for affordable housing will only increase. Strategic partnerships, innovative financing solutions, and a strong commitment to sustainability will be essential in meeting this demand and ensuring that all Kenyans have access to decent and affordable housing.

The success of this partnership could also serve as a model for other countries in Africa facing similar housing challenges. By demonstrating the effectiveness of collaborative approaches to affordable housing, ShafDB and CPF Group have the potential to inspire similar initiatives across the continent.

In conclusion, the signing of the MOU between Shelter Afrique Development Bank and CPF Group marks a significant milestone in Kenya’s affordable housing journey. Through this partnership, both organizations are well-positioned to make a lasting impact on the lives of millions of Kenyans, contribute to the country’s economic growth, and promote sustainable urban development. As the housing projects envisioned under this agreement come to fruition, they will not only address the immediate housing needs but also lay the foundation for a more inclusive and resilient urban future for Kenya.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

16th August, 2024