Analysis of housing finance in Kenya

Abstract

This study investigates the dynamics in the housing sector, in particular the role of the central government and how commercial banks can support private sector in -, residential housing development. Housing has previously been analyzed as a social and economic problem . This study looks at the role of banking in funding residential properties in Nairobi. Kenya is a developing country with 46% of the population living below poverty line at USD1 per day. The country is unable to provide sufficient housing for low to middle income groups, with 70% of the Nairobi population living in slum areas . The banking industry in Kenya is comparatively well developed with banking services available in all urban centres throughout the country. Commercial banks have, however not played an active role in the development of residential housing in the country. Funding for residential housing is limited to ready-to-occupy units for the high-end income earners in the formal sector. Financing for home ownership is relevant to the banking sector because it provides new and profitable business stream. Home ownership is relevant to the Kenya economy because it provides shelter, financial security and sense of dignity to the home owner.