The government is exploring the use of mobile money transaction records and other alternative financial data to help millions of Kenyans without formal payslips qualify for affordable housing loans.
Housing and Urban Development Principal Secretary Charles Hinga said conventional mortgage systems have largely favoured salaried employees with predictable incomes, leaving out traders, farmers, small-business owners, freelancers and other self-employed workers.
Under the proposed approach, banks and other lenders could assess borrowers using mobile money transactions, SACCO savings, rental payment records, utility bills and business transactions when determining their ability to repay housing loans.
The shift would allow lenders to assess people’s actual income and spending patterns rather than relying primarily on payslips and formal employment records.
Speaking during the fifth Kenya Affordable Housing Conference in Naivasha, Hinga said home ownership should not be restricted to those who can meet traditional mortgage requirements.
The proposal comes as more than 280,000 affordable housing units worth an estimated Ksh731.5 billion are under construction across the country. A further 45,000 units, valued at about Ksh52 billion, are expected to be completed by December.
With housing supply expanding, Hinga said the government must also ensure there is a sufficiently large pool of buyers who can access financing.
He said Kenya should rethink mortgage eligibility with the aim of growing the country’s mortgage market from about 30,000 loans to one million.
A significant portion of Kenya’s workforce earns an income outside formal employment. Although many self-employed Kenyans have the capacity to make regular housing payments, they often struggle to prove their creditworthiness using conventional documentation.
Hinga said alternative financial records could help bridge this gap by providing lenders with a clearer picture of the financial behaviour of borrowers who lack formal income documentation.
Also Read: Kibera to Get 15,000 Additional Affordable Housing Units as Phase II Begins
The government is also pushing for a standardised affordable housing mortgage with uniform requirements covering borrower eligibility, underwriting, documentation, property valuation and loan servicing.
Such standardisation could make mortgages easier to pool and refinance, potentially enabling the Kenya Mortgage Refinance Company (KMRC) and other financial institutions to attract more long-term investment from pension funds, insurers and other domestic institutional investors.
The Boma Yangu platform could also play a role in connecting prospective homeowners with lenders. More than 1.29 million Kenyans have registered on the platform, creating a substantial pool of potential buyers who could be linked to banks, SACCOs and other financiers.
Greater integration between the platform and financial institutions could enable prospective homeowners to move more easily from registration and prequalification to allocation, financing and eventual acquisition of property.
The affordable housing programme is also generating significant economic activity, with projects currently under construction supporting more than 640,000 direct and indirect jobs.
However, stakeholders say increasing housing supply alone will not solve Kenya’s housing challenge unless buyers can also access affordable financing.
KCB Bank Senior Manager for Affordable Housing George Laboso said financial institutions need to support the entire housing value chain rather than focusing solely on financing completed homes.
He identified limited investment financing, rising construction costs and inadequate serviced land as some of the factors driving up housing prices.
Laboso said lowering housing costs would require greater adoption of alternative construction materials and technologies, as well as energy-efficient designs, sustainable materials and climate-resilient infrastructure.
He added that affordability should be assessed beyond the purchase price because transport, water, sanitation, energy and access to other essential services can significantly increase the overall cost of home ownership.
KMRC Chief Executive and Managing Director Johnstone Oltetia said the sector must address both the shortage of affordable homes and limited access to housing finance.
He called for practical measures that would translate housing commitments into actual home ownership, including partnerships between banks, SACCOs and microfinance institutions and financing models that accommodate irregular and non-salaried incomes.
Shelter Afrique Development Bank Managing Director and Chief Executive Thierno-Habib Hann said the challenge extends beyond Kenya, noting that conventional housing finance models across Africa have traditionally been designed around formal employment and stable incomes.
With more than 80 per cent of Africa’s workforce earning income within the informal economy, he said millions of potential homeowners remain excluded from conventional mortgage systems despite having savings and regular income streams.
Hann said housing finance models should instead reflect how people actually earn, save and meet their financial obligations.
As Kenya continues to expand its affordable housing programme, policymakers and lenders now face the challenge of ensuring that the growing number of homes being built can be matched with accessible financing for the households they are intended to serve.
