(Xinhua) -- The World Bank on Wednesday said Savings
and Credit Cooperatives (Saccos) could help ease Kenya’s housing
deficit that currently stands at 200,000 housing units.
World Bank Lead Financial Sector
Specialist Mehnaz Safavian told journalists in Nairobi that the
share of Saccos financed housing in Kenya is estimated at 90
percent as banks do not consider housing finance to be
“Saccos provide a credit for housing
finance that is much more accessible and is provided at a
cheaper rate as compared to what many banks can offer,”
Safavian said during the launch of the 15th
Edition of the Kenya Economic Update.
According to the Central Bank of
Kenya, there are 25,000 bank mortgages in the country.
Government data also indicates that
the East African nation currently produces less than 50,000
housing units annual against an annual demand of 244,000 units
forcing 61 percent of urban residents to live in slums.
Safavian said that commercial banks
have to assess credit risk of borrowers before they advance
mortgage loans. “This is difficult in Kenya where majority of
people are in the informal sector,” she said.
In Kenya, Saccos typically offer
unsecured loans to members, while formal mortgages remain
affordable to most households.
Safavian noted that Saccos are able to
offer smaller formal mortgage loans that can be used for self
construction of houses.
The World Bank official said that the
majority of Kenyans are in the informal sector and few can
afford homes built by formal developers resulting in mortgage
lending being only accessible to a small segment of the