Kenya has launched a new state-owned financial institution called Kenya Mortgage Refinance Company (KMRC). The new company will solely focus on providing long term loans to primary mortgage lenders in Kenya. The primary mortgage lenders in Kenya include banks, microfinance banks, and Saccos.

Kenyan President Uhuru Kenyatta said the new company is launched to satiate the rising demand for affordable housing in the low-and-middle income markets. The African nation faces a housing crisis as construction of new units has not kept pace with rising demand.

“The scheme will include a housing guarantee mechanism for those with low incomes or employed in the informal sector to help expand access to housing finance,” President Kenyatta was reported as saying by the Africa Review at the launch of the Kenya Mortgage Refinance Company (KMRC).

The company is essentially a credit guarantee scheme to help the self-employed and informal sector workers access home loans. The scheme targets creditworthy borrowers who do not have a formal salary.

The company is part of President Kenyatta’s projects to improve living conditions of Kenyans, including the supply of affordable housing. The projects are commonly known as the Big Four and also include manufacturing, healthcare, and food security.

The president presented the initiative as partnership between the government and the private sector. The KMRC has an initial capital base of 35 billion Kenyan Shillings. It is incorporated as a non-deposit taking financial institution under the Central Bank of Kenya.

KMRC will source loans from big investors and multilateral lenders. It will create a pool of funds from which mortgage lenders in the country can source funds at low rates.

The World Bank and the African Development Bank provided the initial loans to fund KMRC with 25 billion shillings and 10 billion shillings respectively.

President Kenyatta also added that the government was making deliberate interventions in the housing sector to make it more responsive to the needs of the middle-and-lower income sections of the Kenyan society.