Absa Bank Bets Ksh 4B on Fixing Kenya’s Housing Deficit
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Absa Bank Kenya has committed Ksh. 4 billion (approximately USD 31 million) to support affordable housing initiatives across the country. The announcement was made during the International Housing Solutions (IHS) Affordable Housing Conference held in Nairobi.
The investment represents a 33% increase from its previous Ksh. 3 billion partnership with the Kenya Mortgage Refinance Company (KMRC), and aims to expand access to affordable home financing for low- and middle-income Kenyans.
Addressing Kenya’s Housing Deficit
Kenya is grappling with a housing deficit of more than 2 million units, primarily driven by rapid urbanization, population growth, and economic inequality. The annual demand for housing in Kenya is estimated at 250,000 units, yet actual supply falls significantly short.
High property prices, limited access to long-term financing, and elevated interest rates continue to block homeownership for most low- and middle-income earners.
In response, the government has rolled out the Affordable Housing Program, a key part of its development agenda, designed to spur private-sector investment through incentives such as reduced stamp duty for first-time buyers and the provision of government land for construction.
Absa Bank Kenya’s latest investment directly supports these goals by offering viable mortgage solutions in a market where traditional lending has remained out of reach for many.
Details of Absa’s Ksh. 4 Billion Investment
The Absa Ksh. 4 Billion Investment will be used for onward lending to retail customers, enabling them to finance home purchases or fund construction projects.
The initiative continues the bank’s collaboration with KMRC, a non-deposit-taking financial institution formed in 2018 to provide low-cost, long-term funds to primary mortgage lenders like banks and SACCOs.
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Speaking at the IHS Affordable Housing Conference, Zaharaa Khanbhai, Absa’s Commercial Property Finance Director for East Africa, emphasized the bank’s broader role in solving systemic challenges in the housing sector.
“If we are truly to unlock Kenya’s housing potential, we must collectively address the barriers from land availability and infrastructure cost, to regulatory complexity and access to finance,” she said.
“Absa Bank is committed to being part of the solution, not just a financier, but as a thought partner, advocate and enabler of change.”
Affordable Home Loan Offering
A major component of the initiative is Absa’s Affordable Home Loan, funded through KMRC. The product offers up to Ksh. 10.5 million in financing at fixed interest rates starting at 9% per annum, with repayment periods of up to 25 years.
This is well below Kenya’s average mortgage rates, which stood at 11.3% in 2021, with rates ranging from 7.1% to 15%.
Borrowers can access up to 105% financing, which includes both the cost of the home and construction-related expenses. In some cases, minimal or no deposit is required, depending on the applicant’s profile and property location.
For instance, a Ksh. 4 million loan at 9.5% interest would translate to monthly repayments of around Ksh. 40,000, making it more manageable for mid-income earners.
Stakeholder Response and Sector Impact
The Ksh. 4 billion commitment has received positive reception from stakeholders in real estate and finance. Shiv Arora, CEO of Superior Homes, pointed out that more accessible financing is critical for increasing mortgage uptake and boosting the supply of affordable housing in Kenya.
The IHS Affordable Housing Conference served as a platform for dialogue among government agencies, developers, financiers, and NGOs. Absa’s pledge was among the key highlights of the event, drawing attention to the need for multi-stakeholder collaboration in tackling Kenya’s housing crisis.
Sustainability and Social Impact
Beyond home financing, the initiative is aligned with Absa Bank Kenya’s sustainability goals. The bank is actively supporting green housing developments, including projects that integrate climate-resilient and energy-efficient design standards.
As part of its environmental and social impact strategy, Absa is prioritizing projects that reduce long-term operating costs for homeowners while mitigating environmental damage.
The housing initiative also complements the work of the Absa Kenya Foundation, launched in October 2024 with Ksh. 500 million in seed capital. The foundation supports programs in education, youth entrepreneurship, natural resource management, and community development.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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