In a major boost to Kenya’s affordable housing agenda, the National Treasury has committed Ksh603.1 million (€4 million) to capitalize the Kenya Mortgage Guarantee Trust (KMGT), a bold move aimed at unlocking home financing for low-income and informal sector workers.
The announcement was made by Treasury Cabinet Secretary FCPA John Mbadi Ng’ong’o, EGH, during the second day of the 4th Kenya Affordable Housing Conference at the Grand Royal Swiss Hotel in Kisumu.
“This capitalization marks a critical step in de-risking lending to informal income earners by offering partial credit guarantees,” Mbadi said. “We are committed to deploying innovative financial instruments that open up access to dignified shelter for all Kenyans.”
The funding complements the success of the Kenya Mortgage Refinance Company (KMRC), which has mobilized Ksh38.7 billion ($300 million) from the World Bank and the African Development Bank. Blended with funds raised through local bond markets, KMRC has enabled the issuance of single-digit interest rate mortgages, unlocking home ownership for over 4,600 Kenyans across 39 counties. Nearly half of these beneficiaries are women.
CS Mbadi said the government is shifting from traditional housing budget allocations to innovative financing tools such as mortgage-backed securities, bonds, and blended capital. “The future of housing finance lies in sustainable instruments that deepen market liquidity and reach excluded demographics,” he noted.
KMGT is designed as a risk-sharing facility that gives financial institutions confidence to lend to the informal sector, long viewed as too risky. The Treasury is also exploring tax reforms and capital market incentives to spur private sector participation.
KMRC CEO Johnstone Oltetia praised the Treasury’s backing and emphasized the success of blended finance. “By combining concessional funds and domestic bonds, we’ve enabled lending institutions to offer affordable rates. The impact is already being felt nationwide,” he said.
He lauded the presence of international delegates from Uganda, Tanzania, India, Pakistan, and Malaysia, calling it a sign of global interest in scalable housing solutions. KMRC’s Ksh1.4 billion bond in 2022, part of a Ksh10.5 billion Medium-Term Note Programme, was highlighted as a benchmark in development financing through local capital markets.
CS Mbadi also revealed that the FY2025/26 budget allocates Ksh120.2 billion to housing and settlement, with additional reliefs such as a Ksh360,000 annual tax break for incremental home builders.
With only 2% of Kenyan households holding mortgages, according to the Kenya Housing Survey, and urbanization surging at 4.3% annually, Mbadi underscored the urgency for inclusive housing finance mechanisms.
“Our journey must be anchored on bold vision, innovation, and guarantees that bridge traditional lending gaps,” he said.
He pledged continued mobilization of concessional funding for KMRC and called for strong collaboration between government, lenders, developers, and global partners.
The two-day conference, themed “Revolutionizing Housing Finance: Innovation Meets Sustainability,” closed with calls for urgent reforms in legal frameworks, land access, and construction costs to accelerate the affordable housing dream.
