Kenya is among four countries targeted by a new housing microfinance fund which intends to provide catalytic investments in affordable housing and basic services in African cities.

The fund, New Urban Finance Facility for Africa (NUFF), intends to invest $100 million (Sh8.7 billion) in housing across Africa and Middle East.

Its initial target countries in Africa are Kenya, Ghana, Tanzania and Uganda, with the intent of lending for housing microfinance and other programmes for affordable housing real estate development.

The fund's investments will be structured through local banks and microfinance institutions (85 per cent), and indirect investment through the International Finance Corporation's credit enhancement programme for housing microfinance (15 per cent).

A new report by South Africa-based Centre for Affordable Housing Finance in Africa (CAHF) titled 'State of Housing Microfinance in Africa' says there have been positive developments in the housing microfinance arena.

"There have been some notable and encouraging advances in the industry with a steady trickle of new commercial entrants into housing microfinance," CAHF says.

Notably, there is an increase in on-stream funding in the form of grants, debt and equity finance from donors, direct foreign investments and commercial investments.