A three-bedroom house may sound modest by some people’s standards, but it is the ultimate dream home to many Kenyans.
With innovation, most hurdles can now be overcome, enabling people earning less than Sh25,000 a month to own this type of house. One home ownership model, piloted by microfinance organisation Bora — now a bank — seems to be taking shape, giving hope to low income earners.
For 2,000 families living in Mathare, Kibera, and Mukuru Kwa Njenga slums in Nairobi, the dream of owning their own home is coming true. About 250 families have already moved into their houses in Kaputiei, Kajiado District.
Ms Ingrid Munro, the founder of Bora, says the idea was successful because it was based on the simple logic that you do not own a house until you have fully paid for it, and you are free to sell it if you wish. “But I doubt anyone would want to sell,” she says.
A shift from informal settlements to permanent two-bedroom houses — complete with a sitting room and a bathroom — that cost Sh150,000 does not sound like a bad idea, especially when you factor in the Sh2,500 monthly payment.
The low-cost housing model incorporates what mortgage financiers have not been able to offer. Members receive loans from Bora, repayable with an annual interest of 8.5 to 10 per cent.
The microfinance organisation members can chose from different house models. They are organised in groups to guarantee each other mortgages of Sh300,000 for a three-bedroom house or Sh495,000 for a four-bedroom one. Such houses would cost between Sh3.5 million and Sh20 million at current market rates, depending on their location.
“People need to get out of the slums into better places, where they can bring up their children. But there is no affordable housing for them in Kenya,” says Ms Munro, an architect. The microfinance organisation spent Sh300 million to construct 2,000 houses and a similar amount on supporting infrastructure.
Half of the cost of infrastructure is charged on the residential area and the rest on the commercial zone. The homeowners pay the microfinancier a Sh500 monthly maintenance fee. In this low-income housing estate, residents organise themselves into neighbourhood management associations to develop and maintain their open spaces, parks, and playgrounds.
So, how did Ms Munro manage to secure building materials for only Sh150,000? The trick lay in on-site production of building blocks, prefabricated materials, and windows. This guaranteed that the cost of -the materials was cut by up to 50 per cent. Construction time was also considerably reduced.
The cooperative model has also helped low income earners to own their own homes. The government has mandated cooperative societies to deliver up to 25 per cent of the 200,000 housing units that Kenya needs annually, according to official State estimates. To this end, the Ministry of Cooperative Development and Marketing has launched a strategic plan for the period running up to 2012.
One of its most important activities is the provision of decent shelter to Kenyans through cooperatives. “By coming together and working towards a specific goal, members are able to attract resources and technology to help accelerate their development agenda,” said assistant minister Lina Jebii Kilimo during the ground-breaking ceremony for 300 pre-fabricated houses in Athi River.
The houses were commissioned by the National Cooperatives Housing Union (NACHU) in partnership with Afrohomes Ltd. When completed, the Sh1.5 billion structural insulated panels (SIPs) housing investment will see each unit cost Sh4.9 million instead of the Sh10 million it would have cost if it was constructed using conventional building materials. (The figures change depending on the level of inflation).
The SIPs are manufactured under factory-controlled conditions by sandwiching a core of rigid foam plastic insulation between two structural skins of oriented strand board. The panels can be used as floors, walls, and roofs for residential and light commercial buildings. “The Kenya Bureau of Standards has certified the panels and we had no problem getting insurance firms on board as the products have a 50-year guarantee,” says NACHU chairman Francis Kamande.
The public and private sectors have in the recent past shown a keen interest in tackling the housing problem in the country, even though clear ownership plans that would benefit the low-income groups have yet to be developed. For instance, past efforts like the Mathare 4A project by the Catholic Diocese of Nairobi and the Kibera Highrise project spearheaded by the government failed to give ownership of the housing units to the targeted beneficiaries.
NACHU plans to provide mortgages to its members through a five-year repayment plan in partnership with the Kenya Commercial Bank’s mortgage subsidiary, S&L. The Cooperative Insurance Company (CIC) has come on board to provide cover for the construction sites and the homes, once they are completed.
In the cooperative model, according to an official, members will be allowed to save a minimum of Sh200 a month over a certain period of time. They will then qualify to get a loan up to five times their total savings, depending on their ability to repay. A gradual financing method will be used to assist those who already have land to build the houses.
Under the scheme, a member would get a loan to build a two-room house, starting with one room, to enable him/her move out of the rented house and get financing for the rest of the building. In such a case, a house that would cost Sh2 million may be financed in instalments of Sh500,000.
In another model, groups that want to pool their resources to buy land for later subdivision only need to raise 20 per cent of the price; the remaining 80 per cent would be financed.
Giving hope
It may take longer for lower income earners to save up before they can get a title deed to their own property, but these developments are giving these people hope where, in the past, there was none. According to Ms Munro, “when you make people rent, the landlord will always want to make more profits and will end up charging high fees. Poor people will get nothing when they leave.”
Mixing microfinance and housing is the way forward, she recommends. “Many housing projects have failed because the owners, in need of emergency cash, ended up selling to people who did not need the houses,” says Ms Munro.
Source:
Nation Media
