European Investment Bank Boosts Nairobi’s Affordable Housing with Green Initiative

In a major development for Nairobi’s urban landscape, the European Investment Bank (EIB), through its specialized development arm, EIB Global, has announced a significant investment of KSh 3.2 billion (equivalent to €21.5 million) to fund the construction of over 600 affordable, sustainable houses in the capital. This initiative is a part of a broader, ambitious plan to provide green, climate-friendly homes for low- and middle-income Kenyans, a demographic that has been significantly underserved by the formal housing market.

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This groundbreaking project is a collaboration with a local partner, IHS Kenya, which manages the IHS Kenya Green Housing Fund. The fund aims to redefine what’s possible in affordable housing by integrating high standards of sustainability and quality into housing developments, as detailed in this EIB press release. This approach tackles the dual challenges of housing shortages and climate change simultaneously.

The EIB’s commitment is more than just financial. As Edward Claessen, the Head of the EIB Regional Hub for Eastern Africa, stated, “We’re working with local experts and policymakers to improve living standards, cut energy costs, and support green urban growth.” This support includes providing technical expertise and advisory services to ensure the projects are both financially viable and environmentally sound, aligning with the bank’s mission as a leading global climate bank.

The Affordable Housing Crisis in Kenya: A National Challenge

To fully understand the significance of this investment, it’s important to grasp the scale of Kenya’s housing crisis. According to a report by the Kenya Institute for Public Policy Research and Analysis (KIPPRA), over 7 million urban households, a staggering number, currently reside in informal settlements. These areas often lack basic amenities like clean water, sanitation, and electricity, and residents have little to no security of tenure. This situation is a direct consequence of a massive housing deficit, which is estimated to be over 2 million units and grows annually.

The problem is exacerbated by rapid urbanization. With Kenya’s population becoming increasingly urbanized—a trend projected to see 50% of the population living in cities by 2050—the demand for housing is far outstripping the supply. While the government has made efforts to address this through initiatives like the Affordable Housing Programme (AHP) under the “Big Four Agenda,” a report from Cytonn Investments noted that progress has been slow. Past government initiatives have delivered less than 10% of their intended targets, primarily due to hurdles like high land and construction costs, inadequate financing, and bureaucratic delays, as highlighted in this analysis of housing finance challenges.

A critical bottleneck is the market itself. A 2021 KIPPRA report highlighted that only about 2% of formally built houses in Kenya cater to the low-income market, demonstrating a severe market failure to serve the majority of the population. This is the gap that the IHS Kenya Green Housing Fund, with the backing of the EIB, is aiming to fill.

The Rise of Green Housing: What Makes These Homes Different?

The term “green housing” is central to this project. This isn’t just about painting buildings green; it’s a comprehensive approach to construction and design that minimizes environmental impact and reduces costs for residents. The homes under the IHS Kenya Green Housing Fund are being developed to meet the International Finance Corporation’s (IFC) Excellence in Design for Greater Efficiencies (EDGE) Green Building standard.

Key features of these green homes include:

• Energy Efficiency: The buildings are designed to reduce energy consumption through features like passive design, proper insulation, and the use of energy-saving lighting. Some projects may even incorporate solar PV for common area lighting, further cutting down on electricity bills and reliance on fossil fuels. You can read more about these sustainable housing features.
• Water Conservation: The homes will utilize water-saving fixtures, such as low-flow taps and showers. Rainwater harvesting systems may also be integrated for non-potable uses like flushing toilets and watering green spaces, which is a crucial feature in a city facing water scarcity.
• Sustainable Materials: The construction process prioritizes the use of materials with a lower environmental footprint. This includes the use of materials that have a lower “embodied energy”—the energy consumed by all processes associated with the production of the material, from extraction to delivery. This commitment reduces the overall carbon emissions of the building.

The environmental benefits of this approach are significant. The United Nations Environment Programme (UNEP) has stated that the building sector is responsible for about 30% of global greenhouse gas emissions. By focusing on energy and water efficiency, these projects are directly contributing to Kenya’s climate action goals and helping to create a more sustainable urban environment. For residents, this translates to lower utility bills, making the homes truly affordable in the long run.

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Project Spotlight: Muzi Stawi at Garden City

The first flagship project, Muzi Stawi, is a tangible example of this vision. Located within the modern and well-connected Garden City precinct along Thika Road, Muzi Stawi is already nearing completion. With construction at about 90%, the project is on track to deliver over 200 one- and two-bedroom units by October 2025. This project will offer a lifestyle that combines comfort, functionality, and sustainability within a planned urban community.

Beyond Muzi Stawi, IHS Kenya has secured other key project sites. The company has a total of 664 homes currently under construction across three sites:

• Muzi Stawi at Garden City
• Tilisi
• Mashiara Park

In addition, there is a strong pipeline of over 2,600 units planned for development in Nairobi and the neighboring Kiambu County. These projects are a clear demonstration of the scalability of this model. The ultimate goal is to deliver a total of 4,000 green-certified homes by 2030, which will make a substantial dent in the housing deficit and provide quality homes for thousands of Kenyans.

A Model for Sustainable Development Finance

The success of the IHS Kenya Green Housing Fund underscores a crucial shift in development finance. The fund has already attracted a total of KSh 12.3 billion (€83.4 million) in total commitments from both Kenyan and international investors. This level of private sector engagement is a powerful signal that sustainable urban development in Africa can be a profitable and impactful investment.

The EIB’s role is particularly noteworthy because of its focus on providing flexible financing, including equity funds, which are often a better fit for development projects than traditional loans. The bank’s partnership with IHS is part of its wider strategy under EIB Global, which is the bank’s specialized arm for international partnerships and development finance. EIB Global is a key partner in the Global Gateway initiative, which aims to mobilize up to €300 billion in investment by 2027 to support projects in various sectors, including digitalization, clean energy, healthcare, and education.

This collaboration is a perfect example of the Team Europe approach, where the European Union and its member states work together to provide comprehensive support for partner countries. By combining financial support with technical assistance, the EIB is not just funding construction; it is helping to build a sustainable housing ecosystem in Kenya that can be a model for other rapidly urbanizing cities in Africa and beyond.

Conclusion: A New Dawn for Affordable Living

Kioi Wambaa, IHS Kenya’s Managing Director, powerfully summarized the project’s ethos by stating, “We’re not just putting up buildings, we’re promising that affordability and quality can co-exist.” This sentiment is at the heart of the initiative. By delivering homes that are not only affordable to buy or rent but also cost-effective to live in, the EIB and IHS Kenya are providing a meaningful solution to a long-standing problem.

The focus on green building standards ensures that these homes will be a positive force for both the environment and the residents. As urban populations continue to grow, this model of sustainable, climate-friendly, and financially accessible housing offers a clear path forward for Kenya and provides a beacon of hope for a future where everyone has the opportunity for a decent, dignified, and sustainable home.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

8th August, 2025