Housing microfinance: A new solution for the housing crisis.

Author:Ojulu, Epajjar

The Housing Finance Forum 2018, held in Kampala in July, organised by the Mastercard Foundation and Habitat for Humanity's Terwilliger Center for Innovation in Shelter, sought to explore ways of reducing the growing housing deficit in sub-Saharan Africa. It was an eye opener to the capacity of the private sector to assist with the housing crisis, and the value of increasing access to housing finance for those on low incomes.

In Uganda, the Ministry of Housing and Urban Development estimates a housing deficit of 2.4m units. Kenya, on the other hand, is short of at least 2m housing units. With the two countries' populations among the fastest growing on the continent, the housing deficit is increasing every year. With growing urbanisation, the demand for housing is in particular rising in urban areas.

The crisis in the two countries reflects the situation across sub-Saharan Africa. According to the AfDB, the continent is urbanising at a rate of 3.5 per cent, and since its population is growing at a similar rate, a large element of the population is ending up in the mushrooming slums, a habitat for the unemployed, mainly young population. These slums lack basic amenities.

As elsewhere in Africa, national budgets cannot meet the growing demand for housing, despite projects such as the Kenyan government's plan to build 30,000 units to the east of Nairobi.

However, African governments have identified the challenge and have formulated joint policies to deal with it. According to the 19 October 2017 African Union for Housing Finance (AUHF) Kampala Declaration, its member states agreed to "mainstream the delivery of affordable housing by the private sector", through interventions that spur private sector initiative.

To date, financial institutions in Kenya and Uganda have been at the forefront of housing development for a relatively affluent market segment, consisting of those working in the formal sector, who earn regular incomes. The bulk of society, comprising workers in the informal sectors, peasants, artisans and the self-employed low income earners, has largely been left out.

It is estimated that a whopping 80 to 90 per cent of Africans work in the informal sector and because of that, no more than 5 per cent can access a loan of any kind from traditional financial...

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