Nairobi — UK Climate Investments (UKCI) and FSD Africa Investments (FSDAi) have confirmed a Sh5.2 billion funding commitment to a Kenyan green affordable housing venture.
In a statement, the partners say the initiative has received 100 percent of its targeted Sh9 billion investor backing for the first close, enabling this locally managed fund to become operational as early as July 2021.
The partners further reveal that the initiative is targeting the delivery of approximately 10,000 homes using modern green technologies.
The housing units will provide affordable ownership and rental opportunities with 100 percent ownership at an average cost of Sh4.5 million and rentals ranging from Sh15,000 to Sh50,000 per month.
The investments from UKCI and FSDAi are expected to deepen and strengthen the UK Government's commitment to supporting a green post-Covid-19 recovery in Kenya.
Richard Abel, Managing Director of UKCI, said the investment represents an inspiring opportunity to model how sustainable building designs can help fight the effects of climate change.
"The need for affordable housing in Kenya is greater than ever with urban populations increasing by more than 4 percent in the last five years. Our investment is meeting this need and will benefit thousands of Kenyans currently without affordable housing."
Data collected by the investment partners reveals that despite the booming demand for affordable housing in Kenya, only 50,000 new homes are built each year compared to a target of 250,000 housing units.
This has resulted in unaffordable housing prices and the continued growth of the city's informal settlements.
They further reveal that nearly half of Nairobi's population lives in slums where construction standards are poor and unsustainable, and access to essential services is limited.
"Nearly 40 percent of the population in Kenya lives below the international poverty line and access to affordable housing continues to be a significant issue, especially in urban areas," they said.
The development of green affordable housing will focus on increased availability to the low to the middle-income population [whose family income is below $1500 a month].
The investment mainly targets Nairobi, and will contribute to the country's goal of building 500,000 new affordable homes by 2022, which is part of President Uhuru Kenyatta's ambitious big four agenda.
High levels of population and economic growth in Kenya have come with increasing levels of urbanization over the last decades, creating an urgent need and opportunity to develop housing solutions that are both affordable and sustainable.
Commenting on the initiative, Anne-Marie Chidzero, Chief Investment Officer of FSD Africa Investments, said they are confident that their investment in the fund and their support for the Open Access platform will address some of the critical factors that prevent financial markets from playing a bigger role in affordable housing in Kenya.
Efforts to develop low-carbon buildings in Kenya also opens a new opportunity in the country's rapidly progressing energy transition.
Kenya is already a leading clean energy market in the region, with renewables accounting for 60% of power generation as of 2019.
Jane Marriott, UK High Commissioner to Kenya, said, "as part of the Kenya-UK partnership on climate change, we are proud to support the creation of 10,000 new green homes that not only will help us close the housing gap but will also provide new green jobs that will last. I am delighted that this British initiative has successfully attracted new investment and I hope it will lay the groundwork for further investment in the sector, especially in the run-up to COP26.
The deal has been announced at a time when President Uhuru Kenyatta is in London for a three-day visit.
Kenyatta is expected to co-chair the Global Education Summit with the UK Prime Minister Boris Johnson and make major announcements strengthening the Kenya-UK Strategic Partnership.
Alongside meeting Prime Minister Johnson for talks at his country residence, Chequers, President Kenyatta is also expected to jointly announce major investments into Big Four projects, on affordable housing, manufacturing, and health partnerships.
The centrepiece of the visit will be co-chairing the Global Education Summit, which aims to raise $5 billion to educate children across the developing world over the next five years. The President will also meet senior members of the UK Royal Family as part of his visit.