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World Bank approves $250m loan to Kenya for affordable housing days after China rejects SGR loan request

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The World Bank has approved a Ksh25 billion ($250 million) loan to Kenya for affordable housing loan for Kenyans who are unable to access affordable housing finance.

The loan is expected to provide a silver lining for the government’s affordable housing project, which has been rocked by controversy due to poor public buy-in.

The lender said on Wednesday that the Kenya Affordable Housing Finance Project (KAHFP) will support the establishment and operationalisation of the Kenya Mortgage Refinance Corporation (KMRC), a largely private sector-owned and non-deposit taking financial institution supervised by the Central Bank of Kenya (CBK).

The private sector own 80 per cent of KMRC while the remaining 20 per cent is for the National Treasury.

Besides the World Bank investments, about 20 banks and savings and credit cooperative societies (saccos) have contributed capital so far.

KMRC intends to drive the affordability of mortgages by providing more long-term funding to financial institutions, an incentive to enable them offer long tenure loans to homebuyers.

“The project will also assist the Ministry of Lands and Physical Planning to improve property registration and address structural constraints in the land management system in Kenya,” the World Bank said in a statement.

The project will be implemented through KMRC, the National Treasury and the Lands ministry.

“We believe Kenya’s vibrant private sector offers an excellent opportunity to crowd in privately-held skills and resources towards achieving the country’s Big Four affordable housing goals and in alignment with the World Bank Group’s Maximizing Finance for Development agenda,” said Felipe Jaramillo, World Bank’s Kenya Country Director.

The lender did not, however, reveal the process for Kenyans to access the funds, the terms, or interest rates.

Currently, commercial banks in Kenya hold only about 26,000 mortgage loans of an individual value of Ksh11million ($100,000).

According to the World Bank, the 2016 interest rate cap, coupled with an overall Non-Performing Loan (NPL) ratio of 12 per cent, led banks to tighten their credit standards and offer variable rate loans, locking out middle to low income would-be homeowners.

“Urban housing currently remains unaffordable for most Kenyans due to cost of financing, the short loan tenures and the high cost of properties,” the World Bank boss added.

Kenyans largely access loans from saccos that are estimated to provide almost 90 per cent of Kenya’s total housing finance.

Regarding this, the lender said, “While saccos’ interest rates remain low at 12 per cent, they remain highly constrained by the short-term nature of their deposit liabilities and short loan tenures of not more than five years.”

Employed population

The KAHFP support will target households classified by the government as falling within the mortgage gap and low-cost categories representing 95 per cent of the formally employed population.

“The World Bank has supported many mortgage refinance companies in emerging markets, and Kenya has the right pre-conditions for KMRC to be successful, such as supportive macroeconomic conditions, well-developed capital markets and financial institutions active in housing finance,” said Caroline Cerruti, World Bank’s Senior Finance Specialist and Task Team Leader for the Project

KAHFP is expected to increase access to finance by tripling the proportion of urban households with access to a mortgage.

The project will promote inclusive finance by way of the KMRC serving saccos and microfinance banks which target borrowers on low and irregular incomes.

Investment in affordable housing will have a strong economic multiplier effect, given the number of linked sectors, and could support 132,000 new jobs.

“Better housing conditions are also linked to improved health and education outcomes,” the lender noted.

SOURCE: Eastafrican

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Business

Keeping our family coffee business picking

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When 41 -year-old Gitau Waweru Karanja was a boy, he recalls spending his school holidays in his grandfather’s coffee farm with his cousins. His late grandmother would push them to pick berries to earn pocket money. Though he took up his parents’ passion in interior design and studied Interior Design in Kwa Zulu Natal University in South Africa, he did he know that one day he would wake up and smell the coffee and participate in running his grandfather’s coffee farm.

Gitau is the third generation of his family to manage Karunguru Farm, which belonged to his late grandfather Geoffrey Kareithi. Kareithi had bought the 300-acre farm in Ruiru, from a white settler in 1972. Gitau is married to Wangeci Gitau who grew up in Maragwa, in Murang’a where they also had a coffee farm.

Values instilled

For Wangeci, despite growing up in the coffee fields, she was more passionate about tourism and was a travel consultant before becoming a tour manager at a local company.

In 2012, she got an ectopic pregnancy, which put her on bed rest and thus was compelled to quit her job. When she recovered, she began assisting her husband. “By that time, my husband was selling modern house doors, but the business took a while to pick. Then we began selling milk from Karunguru Farm, but the milk production went down in 2016. The management, comprising of family members, told us to address the issue by becoming dairy managers. But when we joined the management of Karunguru Farm, we saw an opportunity in coffee tours,” she says.

Taking cue from South Africa where they do wine tourism and also export wine, Gitau and his wife sought to use that knowledge in their coffee farm. “We started Karunguru Coffee and Tours after we found out that despite it being our main export, it was being underutilised when it comes to tourism. So, here we take visitors through the journey that coffee has to go through before getting to your cup,” explains Gitau. Everything is done in Karunguru Farm— including value addition such as processing coffee, drying and even roasting. “We have our very own packaged Karunguru Coffee, which is available in the market,” he adds.

Their late grandfather instilled in them a love for each other and every holiday it is the family culture to meet and bond as a family. The grandpa also ensured that the farm management is shared amongst all his seven children who meet every week to discuss the business of the farm. Once they come to an unanimous decision, it is then passed on to their children, who implements their decision.

Before one is given any role, you have _ . to be qualified for the position. “It’s not about being favoured, but your qualification. I am in tourism, so I handle the tourism aspect, my husband is in operations. In fact, one applies for the position and then you are interviewed. If you qualify, you are placed on probation until the management is satisfied that you can handle the role well,” says Wangeci.

No entitlement

What makes family business go down is the fact that people who are less qualified are employed. Other people have to cover up for their messes and this creates bitterness and conflict. Gitau sometimes watches his nephews and nieces in the farm, giving them roles to check out whether they have interest in the farm or not before beginning to mentor them. Everyone begins from the lowest level and must know how to roast, pack, as well as prepare a cup of Karunguru coffee. This is to en inculcate the spirit of appreciation and value for the workers employed to do the role.

“My uncles always tell us that we didn’t come in the business because we are their children, but because of the passion we had in the business. With that, entitlement is killed and we ensure that we do our best to take the farm to higher levels,” says Gitau

They don’t entertain gossip,  ‘‘ but if someone has an issue, I then the person is invited ‘ to a meeting where one is confronted and told in love where they have missed the mark.

by PD.co.ke

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Business

VIDEO: Inspiring Journey Taking Shape at Kiambu’s Top Gated Community

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Amani Ridge the Place of Peace was extremely busy today as the Engineers set their focus on achieving the very best in preparing the roads to murrum standard, ready for cabro when time comes.

The following activities will follow:

1. Storm water drainage

2. Piping water along the main lines (those building will only need to pay for water meter)

3. Underground power will follow

4. Installation of solar street lights will be the next step

5. After this, planting of 2, 000 trees will follow along all the roads in the estate

6. The sewerage systems will be replaced by Water recycling technology as initially promised

We are committed to #GoingGreen

Become part of the Amani Ridge family today

 

Call: 0790 300 300 | 0723 400 500
Website: www.optiven.co.ke

 

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Business

Big Smiles on the way for Garden of Joy Owners

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A big announcement concerning the Garden of Joy gated community is set to be made this coming Friday, 23rd October 2020.

The planned announcement will be a cause of great joy for clients who have already made a decision to make the Garden of Joy their joyous home.

Those joining the success train later, will pay slightly higher for this property. We call it the ‘waiting-to-see-expense.’

If you are reading this message, go ahead and call your relationship advisor today to save the waiting cost and to become part of the joyous brigade.

Check us on FB Live on the 23rd October at 4PM as we unveil the greatest news at the Garden of Joy.

Secure your jewel today
Call us on: 0790300300 | 0723400500
Website: www.optiven.co.ke

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