The International Finance Corporation is set to invest $2 million (Sh202 million) in Kenya Mortgage Refinance Company (KMRC), a public-private company that will provide long term funding to banks and saccos to enable the institutions to expand their mortgage loans.
The global financier becomes the latest to provide funding capital to KMRC in which the Kenyan government will hold a 20 percent stake while the rest of the equity will be spread across local banks, saccos and development finance institutions.
“IFC is looking to invest in straight equity of up to $2 million (Sh202 million) equivalent in common shares of KMRC,” the institution says in its investment disclosures.
IFC did not say what stake it will get for its investment. Other companies that have participated in KMRC’s capital raise include Co-op Bank which invested Sh200 million in the institution.
The global financier says it is particularly keen on addressing “the primary market failure of lack of access to viable financing, including in the underdeveloped counties of Garissa, Isiolo, Lamu, Mandera, Marsabit, Samburu, Tana River, Turkana, Wajir, West Pokot.”
Creation of KMRC is part of the government’s ambition to deliver 500,000 houses in major towns across the country over the next four years.
Besides the capital provided by its shareholders, KMRC will also issue bonds to expand the pool of funds available to bankroll banks and saccos making housing loans.
The company will be regulated by the Central Bank of Kenya as a non-deposit taking financial institution, with the Capital Markets Authority (CMA) providing oversight over its bond issuance operations.
KMRC has attracted more than 20 investors so far including eight commercial banks, one micro finance bank, and 11 saccos. Other firms expected to invest in the institution include Shelter Afrique.It is envisaged that private companies will make a combined equity investment of up to $12 million (Sh1.2 billion).
The World Bank recently approved a loan of $250 million (Sh25 billion) for KMRC whose total funding requirement is estimated at Sh26.4 billion. The government made an initial investment of Sh1 billion.
Demand for houses in the project is expected to be spurred by the National Housing Development Fund which has faced opposition from employers among other stakeholders.