Govt Sets Conditions in Rollout of Cheap Mortgage for Kenyans Building in the Village

Thursday, 𝐃𝐞𝐜𝐞𝐦𝐛𝐞𝐫 𝟏9, 𝟐𝟎𝟐𝟒

Following yesterday’ lead story on a Ksh10 billion loan programme for rural home construction, the government has further clarified its approach, ruling out flashy homes under its low-cost housing initiative. The loans, offering single-digit interest rates and a 10-year repayment plan, target rural and underserved areas. The Business Daily reports that with Ksh150 billion allocated for housing projects, the government plans to build modest homes to improve living conditions for low-income families. However, slow disbursement of funds under the National Housing Development Fund (NHDF) and challenges in securing land for construction have hampered progress. The initiative is part of broader efforts to boost affordable housing across Kenya.

The Star reports that MPs have rejected a proposed amendment to the Unclaimed Financial Asset Act, which sought to allow claimants to designate others to receive unclaimed assets. The Finance Committee raised concerns over potential fraud, abuse, and the facilitation of illicit transfers, recommending the provision's removal. Stakeholders, including the Law Society of Kenya, echoed these concerns, highlighting legal risks and lack of safeguards. A plenary vote on the bill, sponsored by Majority Leader Kimani Ichung’wah, is pending. 

Kenya experienced three power blackouts on Tuesday night due to a technical hitch in Tanzania, highlighting the vulnerabilities of cross-border electricity trade. According to the Business Daily, the outage occurred just days after launching the Ksh39.97 billion Kenya-Tanzania high-voltage power line, which enables electricity trade between the two nations. Energy CS Davis Wandayi confirmed the disruption originated in Tanzania, as Kenya increasingly relies on imports from neighbors like Tanzania, Uganda, and Ethiopia. The incident underscores the need for improved regional grid coordination and resilience.

Private developers in Nairobi are slowing down on housing projects, with only 2,053 new houses built in 2023, marking a 1% growth compared to 27% in 2022. The Business Daily reports that the slowdown is attributed to costly loans, high interest rates, and competition from the government’s Affordable Housing Program, which aims to deliver 250,000 units annually. While the government has significantly increased its housing budget to Ksh92.5 billion, concerns persist that the program may deter private sector investments, potentially undermining efforts to address Kenya’s annual housing deficit of 200,000 units.

The digitization wave is transforming Kenya's Saccos, with those adopting digital platforms reporting up to an 80% rise in revenues and reduced operational costs as per the Business Daily. Key advancements include USSD, mobile apps, and internet banking, improving accessibility and efficiency. However, challenges persist, such as limited integration with national payment systems and cybersecurity risks. While 74.3% of deposit-taking Saccos offer digital credit services, the adoption rate among non-deposit-taking Saccos remains low. Digitization promises operational efficiency, transparency, and enhanced customer experience, but requires robust infrastructure, partnerships, and continuous staff training to navigate risks and maintain trust.

The East African reports that Ethiopian MPs have approved a historic decision allowing foreign banks to enter the country’s financial sector. This move follows Cabinet approval earlier this year and marks a significant step in liberalizing Ethiopia’s economy. It is expected to attract foreign investment, enhance competition, and improve access to financial services in Africa's second-most populous nation.

Kenya has been ranked fourth among International Development Association (IDA) countries with the highest debt burdens relative to export earnings, according to a World Bank report. Mozambique leads with a ratio of 38.3%, followed by Senegal (25.9%), Pakistan (13.6%), Kenya (12.8%), and Dominica (10.3%). This highlights Kenya's significant debt servicing challenges, as a substantial portion of export revenues is dedicated to interest payments. The report underscores the need for sustainable debt management strategies to ease the financial strain on the country as reported by the Business Daily.

The government plans to save up to Ksh0.9 million per vehicle annually by switching to electric vehicles (EVs) under its leasing program. The Treasury has invited vehicle dealers and assemblers to supply EVs for use in public service, including police and security agencies. EVs are expected to cut fuel expenses significantly, with the government estimating an annual saving of Ksh185,000 per EV based on a 40-kilometer daily drive as per the Business Daily. The move supports cost-effective and environmentally friendly transport, with additional benefits for the insurance, auto parts, and charging infrastructure sectors.

Tanzanian conglomerate Amsons Group has acquired a Ksh8.9 billion stake in Bamburi Cement, marking the first step in its bid for a full buyout of the Nairobi-listed company. The deal, which involved 13.2 million shares representing 23.8% of Bamburi's total shares, was executed through block trades on the Nairobi Securities Exchange. Amsons, controlled by Tanzanian businessman Edhah Abdallah Manit, is seeking to gain control of 75% of Bamburi's shares to facilitate a full acquisition, with plans to delist the company once the buyout is complete as per the Business Daily. The transaction follows a competitive bidding process, with Amsons initially offering Ksh66 per share, outbidding a counteroffer from Kenya’s Savannah Clinker.

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