The World Bank is set to help mobilise $1.35 billion (Ksh174 billion) for Kenya’s affordable housing program in a bid to increase access to cheaper mortgages and bridge the gap in the nation’s housing deficit.

According to official World Bank records, the global lender will loan Kenya $375 million (Ksh48.4 billion) in concessional funding and support Kenya in launching a sovereign sustainability-linked loan for an additional $900 million (Ksh116.3 billion) from commercial lenders.

In addition, the Organisation of Petroleum Exporting Countries (OPEC) Fund will provide another $75 million (Ksh9.6 billion) towards the housing project.  

In the new plan, Kenya Mortgage Refinance Company, a State corporation, will disburse the affordable mortgages and refinance home loans.

According to the World Bank, the planned sustainability-linked loan is designed to diversify Kenya’s financing sources, reduce borrowing costs and demonstrate how sovereign debt can be structured to drive impact. It estimates the loan will be approved by May 2026.

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The World Bank noted that Kenya has a housing deficit exceeding two million units, with demand growing by about 250,000 households yearly.

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

In justifying the mobilisation of the funds, the World Bank cited the lack of affordable units in the traditional housing space, and thus the need to support Ruto’s affordable housing program.

“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 World Bank said.

In the past, Ruto has pursued an active policy of scaling up affordable housing, repeatedly courting external and international investors and development finance partners to help fund and deliver the programme.

Aside from the World Bank, the International Finance Corporation (IFC) has demonstrated tangible support for affordable housing. For example, the IFC provided a local investment firm with financing for the construction of affordable housing and invested in a Green Affordable Housing Fund, which is intended to increase the delivery of green housing.

Further World Bank involvement is seen in the form of credit guarantee schemes to make mortgages for informal or non-salaried workers more accessible.

Ruto has also courted the Gulf region to provide investment into affordable housing, and this has resulted in significant investment from nations such as Saudi Arabia to finance affordable housing.