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Affordable Housing Requires a New Shape for Mortgage Industry

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By Johnstone Oltetia

There are two essential parts to achieving affordable housing: building decent, low-cost homes, and developing a housing finance market that enables low-income earners to buy those homes. For, without finance, almost no home price is low enough to be affordable on an average salary.

For this reason, the mortgage market has been growing. Housing loans have risen more than ten-fold since 2006, from 1,278 loans valued at Sh19m 12 years ago to 24,458 loans valued at Sh203.3bn by 2015, according to the Central Bank of Kenya (CBK).

But the market still remains tiny when compared with other nations. In Tanzania and Uganda, the mortgage loan value is under 2.5 per cent GDP while in Kenya stands at 3.15 per cent of GDP by 2015. In South Africa, it contributed some 32 per cent of GDP.

Yet in countries where mortgages drive a large flow of home buying, home owners prime the pumps of the economy with additional spending power in an inflow that makes for faster economic growth.

However, our own mortgage market is held back by multiple constraints, including bureaucracy. Normally, the purchase of a property takes around three months to complete. For instance, mortgage finance in Kenya typically takes six months to arrange, mired in nine separate, manual, administrative processes.

These span land rent and rates clearance certificates, transfer filing and consent, the search, the valuation and its endorsement, and the stamp duty and lodging of documents. This process, which the government is now working to simplify, adds cumbersome work, as well as risk, thus increasing the cost of mortgages.

Most primary mortgage lenders in the region thus set higher mortgage rates and focus on high net worth individuals and high earners who can afford higher rates. They also run shorter repayment periods, ranging from as low as three years to an average of eight years.

But repaying at such high rates, so rapidly, puts borrowers under considerable pressure and leads to defaults, which today stand at some 12 per cent of Kenyan mortgages. It is additionally a model that offers very few opportunities for low and middle-income Kenyans to own homes.

We, thus, need a radical overhaul of mortgage financing if we are to achieve widespread home ownership, which is where mortgage refinancing comes in.

Providing a source of secure, long-term funding for mortgages has a direct impact on the affordability of home loans for home buyers and is a vital pillar to achieving a developed mortgage system. Such funding was critical, for instance, in Malaysia and Singapore, where about 80 per cent of houses are now mortgage-owned.

For this reason, the Kenyan National Treasury is contributing to the Affordable Housing Pillar of the BIG 4 Agenda by supporting the creation of a lending facility (the Kenya Mortgage Refinance Company) to provide longer-term funds for banks and SACCOs for residential mortgages in Kenya.

The Kenya Mortgage Refinance Company (KMRC) will provide secure funding to mortgage lenders so that they can offer more mortgages at lower prices. With such long-term funding, primary mortgage lenders will also be able to lengthen repayment periods to 15 to 25 years, and offer a fixed interest rate, making mortgages both safe and affordable for low income earners.

The new financing will mainly be available for lower cost housing, valued at less than Sh4m in Nairobi metropolitan area (Nairobi, Machakos, Kiambu and Kajiado) and Sh3m elsewhere. Likewise, to qualify for the housing loan, Kenyans must be earning less than Sh150,000 a month.

Refinancing the financial institutions will also enable them to expand their lending scope to finance developers as well, a strategy that can also be borrowed by other East African countries in meeting their affordable housing agendas.

The Government Affordable Housing project seeks to develop 500,000 houses in five years, which presents the largest real estate opportunity for a long time. But with the country having only managed to produce about 50,000 units over the last two to three years, achieving the targeted 100,000 houses a year will require considerable investment in construction.

The financing structures necessary to achieve this will be outlined in forums at the April 10th -11th East African Property Investment Summit, which aims to support the Government Affordable Housing Project. But as government and industry leaders convene to discuss the delivery of the targeted affordable housing, mortgage refinancing will be taking center stage as a crucial enabler.

Johnstone Oltetia is the Interim CEO of Kenya Mortgage Refinance Company (KMRC)

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via [email protected]

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Abidjan-Lagos Corridor Highway Under Construction

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Abidjan-Lagos Corridor Highway

By Kestér Kenn Klomegâh

Never underestimate the power of the Economic Community of West Africa States (ECOWAS), also known as CEDEAO in French and Portuguese, created on 28th May 1975 as a regional political and economic union bringing together fifteen (15) countries of West Africa. Per the date of its establishment, this so-called regional bloc marks its 50th year in 2025, a significant historical celebration.

Considered one of the pillar regional blocs of the continent-wide African Economic Community (AEC), ECOWAS generally has its primary common goal of working consistently towards achieving, what is first referred to, as “collective self-sufficiency” for its member states by creating a single large trade bloc by building a full economic and trading union. Additionally, ECOWAS aims to raise the living standards of an estimated population of over 425 million people and to promote economic development based on the principles of interdependence, solidarity, and cooperation.

Until writing this article, ECOWAS has frequently been discussing and reviewing the Abidjan-Lagos Corridor Highway Development Project, one single regional infrastructure project these several years. It has shown its total commitment to looking for funding while billions have been siphoned by leaders into foreign banks. African leaders are quick negotiating and paying for foreign military weapons but are grossly unsuccessful in soliciting similar assistance from these external partners to invest in infrastructure development such as the Abidjan-Lagos Corridor Highway Development Project.

West African Highway Launched in 2017

The construction of this proposed grandiose West African highway has its chequered history. The proposed project was successfully launched in 2017, and since then it has had a series of high-powered meetings and conferences, technical studies have been conducted, and the construction to its feasibility and practical operationalization. The Abidjan-Lagos highway, the six-lane dual carriage highway, is estimated at $15.1 billion.

On resource mobilization, it was explicitly noted that ECOWAS had adopted a new regulatory framework on the Public Private Partnership (PPP) – an incentive for the entry of the private sector in large investments like the nature of this project. The African Development Bank (AfDB) on behalf of the development partners offered its assurance for unwavering commitment to the realization of the highway.

Akinwunmi Adesina, President of the African Development Bank (AfDB) has several times highlighted the importance of the Abidjan-Lagos highway as an infrastructure project in West Africa that would ease the free movement of people, goods and services, generate social and economic activities, and ultimately promote cross-border trade within the region, its economic viability and enormous potentials especially now that African Union looks to implement the African Continental Free Trade Area (AfCFTA). Noticeably, Africa has long been considered a frontier for manufacturing, technology, for food production. Africa is getting ready for business, it is busily building the world’s largest single market of 1.4 billion people.

Special Meetings and Technical Consultations

Several meetings upon meetings and meetings have been held since the project was proposed in 2017. Since 2017, paid meetings have been held, and experts have been paid. The latest of such a paid meeting was held on November 10-11, 2024. This roundtable was initiated following the instructions given to the ECOWAS Commission. Late September 2024, such a roundtable meeting was held in Abidjan, the capital city of Côte d’Ivoire, under the auspices of the Commission of the Economic Community of West African States (ECOWAS), the African Development Bank (AfDB) and the ECOWAS Bank for Investment and Development (EBID).

The highway corridor is calculated to be approximately 1,080 km long. It will connect some of the largest and most economically dynamic cities Abidjan, Accra, Cotonou, Lomé and Lagos while covering a large proportion of West Africa’s population. It will also link very vibrant seaports in West Africa. In addition, it will serve all the landlocked ECOWAS member-states, for example, Burkina Faso, Mali and Niger in the region. Nearly 40 million people are estimated to be living along the Abidjan-Lagos corridor while 47 million people travel along the axis every year. These are expected to be direct beneficiaries of the development of the project touted to be a real backbone of trade in the region.

According to official documents, this highway project falls in line with the key objectives of the ECOWAS Vision 2050, including (i) facilitating the movement of people and goods, and (ii) accelerating trade and transport, regional and international, improving road infrastructure. It is eventually expected that the transport corridor will be transformed into a development corridor to stimulate investment, sustainable development and poverty reduction within the entire region.

West African Highway and AfCFTA

The focal point of controversy and debate, these several years, are centred on the mechanism of financing, and the state-of-the-art management of this new mega-highway – from planning through practical construction to its final commissioning, ready for cutting-edge usage by the transport industry. The idea of prioritizing highway innovation, signalling a bold leap in West Africa’s transportation infrastructure, is its recognizable potential transformative impact. Simply intended to improve and facilitate the movement of services, goods and people across the region. The Abidjan-Lagos Highway highlights its potential to enhance regional connectivity and drive economic growth, especially with the establishment of the African Continental Free Trade (AfCFTA), the ambitious flagship of the African Union (AU).

According to ECOWAS’ latest document issued after their two-day special meeting held on November 11 in Abidjan, Côte d’Ivoire, “experts have lauded findings of the study which has among others, unveiled a potential $6.8 billion investment prepared and ready to be implemented to unlock economic growth and enhance the viability of the proposed highway.” The overall objective is to identify and unlock the inherent and latent economic potential (short, medium and long-term) and commercial viability of economic and industrial value chain projects. These economic projects, once implemented, will also generate trade volumes and traffic to augment the viability of the highway.

The final draft reports were issued after groups revisited (that was not the first time) several tolled bridges and roads in Abidjan for knowledge and experience sharing strategy envisaged for the Abidjan-Lagos Highway. At the end of the exercise, the study report (re)validated commitment to unlock the inherent and latent economic potential of the highway construction and estimated $6.8 billion in potential investment in the region.

Final Construction Still Out of Sight

For the past few years, significant attention has been drawn by the widely publicized announcement of securing enough funds from African banks and external sources for the construction of this regional highway which could become a cornerstone, and the public narrative of achievement by ECOWAS, which marks its 50th year in 2025. However, transport industry analysts, researchers and experts have already cast serious doubts and skyline scepticism if ECOWAS could live up to this onerous task. Grandiose ceremony-infested ECOWAS future task of achieving its primary target of constructing a ‘speed-highway’ remains an eternal dream. Noticeably, ECOWAS has little to celebrate, except its existence by name, (the golden jubilee) at its 50th year in May 2025. At least, Africans will rather jubilate over the authenticity of reforming and transforming the Economic Community of West African States (ECOWAS).

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Criticisms Trail $300bn Climate Finance Deal

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Climate Disclosure Guidelines

By Adedapo Adesanya

After many delays and negotiations, richer countries agreed to take the lead on raising at least $300 billion per year by 2035 to support climate adaptation and emissions reduction projects in developing nations.

This came after two exhausting weeks of chaotic bargaining and sleepless nights at the Conference of Parties (COP29) held in Baku, Azerbaijan.

Other donors — including less wealthy countries, development banks, and private investors — were also invited to chip in. The agreement also called on all these parties to work, on a voluntary basis, toward the goal of $1.3 trillion.

The figures are far lower than what many in Baku had hoped for with delegates from countries like India, Kenya, and Vanuatu among others lamenting the agreed amount. Expectations were around $2.3 trillion.

“The amount that is proposed to be mobilised is abysmally poor. It’s a paltry sum,” said Indian delegate Chandni Raina.

“This document is little more than an optical illusion. This, in our opinion, will not address the enormity of the challenge we all face.”

“The commitments made in Baku — the Dollar amounts pledged and the emissions reductions promised — are not enough. They were never going to be enough,” said Ralph Regenvanu, climate envoy from the island nation Vanuatu. “And even then, based on our experience with such pledges in the past, we know they will not be fulfilled.”

“This COP has been a disaster for the developing world,” said Mohamed Adow, the Kenyan director of Power Shift Africa, a think tank.

“It’s a betrayal of both people and planet, by wealthy countries who claim to take climate change seriously.”

Nations struggled to reconcile long-standing divisions over how much rich nations most accountable for historic climate change should provide to poorer countries least responsible but most impacted by Earth’s rapid warming.

The climate envoy of the European Union, Wopke Hoekstra said COP29 would be remembered as “the start of a new era for climate finance”.

Despite repeating that no deal is better than a bad deal, this did not stand in the way of an agreement, despite it falling well short of what most of these delegates wanted.

The final deal commits developed nations to pay at least $300 billion a year by 2035 to help developed countries green their economies and prepare for worse disasters.

A group of 134 developing countries had pushed for at least $500 billion from rich governments to build resilience against climate change and cut emissions of planet-warming greenhouse gases.

UN climate chief, Mr Simon Stiell acknowledged the deal was imperfect.

“No country got everything they wanted, and we leave Baku with a mountain of work still to do. So this is no time for victory laps,” he said in a statement.

The United States and EU have wanted newly wealthy emerging economies like China — the world’s largest emitter — to chip in.

The final deal encourages developing countries to make contributions on a voluntary basis, reflecting no change for China which already provides climate finance on its own terms.

The deal posits a larger overall target of $1.3 trillion per year to cope with rising temperatures and disasters, but most would come from private sources.

Wealthy countries and small island nations were also concerned by efforts led by Saudi Arabia to water down calls from last year’s summit in Dubai to phase out fossil fuels.

A number of countries also accused Azerbaijan, an authoritarian oil and gas exporter, of lacking the experience and will to meet the moment, as the planet again sets temperature records and faces rising deadly disasters.

The next COP will hold in Brazil in 2025.

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Yellow Card Gets Crypto Asset Service Provider Licence in South Africa

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Crypto Asset Service Provider

By Adedapo Adesanya

Stablecoin-based infrastructure provider, Yellow Card, has been issued a Crypto Asset Service Provider (CASP) licence by the Financial Sector Conduct Authority (FSCA) in South Africa.

This is coming after the company announced the closing of its Series C financing valued at $33 million led by Blockchain Capital, with participation from Polychain Capital, Third Prime Ventures, Castle Island Ventures, Block, Inc., Galaxy Ventures, Blockchain Coinvestors, Hutt Capital, and Winklevoss Capital in October.

Yellow Card, which launched in South Africa in 2020, has facilitated over $3 billion in transactions in the last several years and now operates in 20 countries across the continent.

Commenting on the FSCA’s decision to issue the licence to Yellow Card Financial South Africa, Mr Chris Maurice, Yellow Card’s co-founder and CEO, said, “The CASP licence underscores Yellow Card’s commitment to its customers in South Africa and regulatory compliance across the continent. This achievement reflects our dedication to providing secure, compliant and transformative solutions for our customers both in South Africa and across Africa.”

With the licensing and funding, the company plans to expand its B2B offerings by enhancing its stablecoin rails, upgrading infrastructure, and advancing its B2B API and Widget.

This will further help to drive stablecoin adoption, which is surging throughout Africa, with sub-Saharan Africa having the highest adoption rate in the world at 9.2 per cent.

In South Africa alone, where the number of total users of crypto assets is estimated to amount to 5.8 million people, stablecoins have experienced growth of 50 per cent month over month since October 2023, displacing bitcoin as the country’s most popular cryptocurrency. Stablecoins are cryptocurrencies pegged against the Dollar.

“As the stablecoin landscape continues to evolve, Yellow Card is committed to leading the charge in making digital assets accessible and secure for businesses across Africa,” Yellow Card said in a statement.

“These efforts will empower businesses with seamless solutions for liquidity management and their general operations,” the firm added.

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