World Bank to Loan Kenya, Help Mobilise Up to Ksh174 Billion for Affordable Housing Project

World Bank to Loan Kenya, Help Mobilise Up to Ksh174 Billion for Affordable Housing Project

Kenya’s affordable housing program is set to receive a major boost after the World Bank announced plans to mobilise $1.35 billion (approximately Ksh174 billion) to support the initiative. The financing package is expected to expand access to cheaper mortgages and help bridge the country’s housing deficit, which has long been a challenge for urban development.

According to official records, the World Bank will provide Kenya with $375 million (Ksh48.4 billion) in concessional funding. In addition, the lender will support the launch of a sovereign sustainability‑linked loan to raise $900 million (Ksh116.3 billion) from commercial lenders. The Organisation of Petroleum Exporting Countries (OPEC) Fund is also contributing $75 million (Ksh9.6 billion) towards the project.

Financing Structure

Under the plan, the Kenya Mortgage Refinance Company (KMRC), a state corporation, will be tasked with disbursing affordable mortgages and refinancing home loans. The World Bank explained that the sustainability‑linked loan is designed to diversify Kenya’s financing sources, reduce borrowing costs, and demonstrate how sovereign debt can be structured to deliver social impact. The loan is expected to be approved by May 2026.

“New supply has averaged less than 50,000 units, fueling the growth of informal settlements, where 62 per cent of urban residents now live,” the World Bank noted in its report.

The lender highlighted Kenya’s housing deficit, which exceeds two million units, with demand growing by about 250,000 households annually.

Affordability Challenges

The World Bank underscored affordability as a key constraint in the housing sector.

“Affordability is also a constraint, as three‑quarters of employees in formal work earn below 50,000 shillings per month and are essentially priced out of traditional mortgage products,” the institution said.

The mobilisation of funds is intended to support President William Ruto’s affordable housing program, which has been a central pillar of his administration’s development agenda.

Broader Support

Beyond the World Bank, other international partners have demonstrated support for Kenya’s housing ambitions. The International Finance Corporation (IFC) has financed local investment firms to construct affordable housing and invested in a Green Affordable Housing Fund aimed at increasing the delivery of environmentally sustainable housing.

The World Bank has also been involved in credit guarantee schemes designed to make mortgages more accessible to informal or non‑salaried workers, a segment often excluded from traditional financing.

President Ruto has actively courted external investors, including partners from the Gulf region. Nations such as Saudi Arabia have committed significant investment to finance affordable housing projects in Kenya, reflecting the administration’s push to attract diverse sources of funding.

Government Commitment

Ruto has repeatedly emphasized the importance of scaling up affordable housing as part of his broader economic transformation agenda. His government has positioned the program as a means to create jobs, stimulate economic growth, and provide dignified living conditions for millions of Kenyans.

Analysts say the World Bank’s involvement, coupled with contributions from other development finance institutions, signals growing confidence in Kenya’s housing program. The initiative is expected to not only address the housing deficit but also strengthen Kenya’s financial innovation through sustainability‑linked debt instruments.

Conclusion

With the World Bank’s $1.35 billion mobilisation plan, Kenya’s affordable housing program is poised to make significant strides. The combination of concessional loans, commercial financing, and international partnerships underscores the scale of investment required to tackle the housing deficit. As the government intensifies efforts to deliver on its housing agenda, the initiative is expected to reshape urban living and provide more Kenyans with access to affordable, secure homes.

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World Bank to Loan Kenya, Help Mobilise Up to Ksh174 Billion for Affordable Housing Project