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Kenya launches mortgage refinance firm to offer loans to lenders

NAIROBI (Xinhua) -- Kenyan President Uhuru Kenyatta has launched the Kenya Mortgage Refinance Company (KMRC), a financial institution whose sole function is to provide long-term loans to primary mortgage lenders.

KMRC, which starts operations with an initial capital base of 35 billion shillings (about 350 million U.S. dollars), is expected to address inherent financing challenges and unlock liquidity for affordable housing.

Kenyatta said KMRC will provide long-term loans to mortgage lenders in order to increase the availability and affordability of mortgage facilities in the country.

"The intervention is based on recognition that reaching the goal of adequate, safe and affordable housing for all, especially the lower income group, requires a fundamental rethinking of the traditional approach used in the past," Kenyatta said during the launch in Nairobi.

He said the move to provide long-term cheaper funding to primary mortgage providers including banks, microfinance banks and Saccos (financial and nonfinancial cooperatives) is aimed at making mortgage cheaper for Kenyans.

Kenyatta said the initiative is a partnership between the government and the private sector, noting that the initiative demonstrates the possibilities of the growing synergy between the private sector and the government towards the delivery of public goods.

He said the new venture is aimed at addressing the deficit in housing created by the huge rise in the country’s population as well as boosting the government’s job creation initiatives.

"As we continue to experience the dividends of our growing population, the housing supply has, over the years, not kept pace with the concurrent growth in the demand for houses.

"As a result, this has led to a huge housing deficit, particularly for the lower income households," he said.

KMRC was incorporated as a non-deposit taking financial institution under the supervision of the Central Bank of Kenya.

The initial loans to kickstart KMRC were provided by the World Bank which contributed 250 million dollars, and African Development Bank which contributed 100 million dollars.

Kenyatta said the government is making deliberate interventions in the housing sector to make it more responsive to middle and lower income segments of the population.

He said the uptake of housing mortgages in Kenya remains below its potential with the Central Bank of Kenya statistics showing that the total outstanding mortgage debt in 2017 stood at about 2.23 billion dollars.

This, Kenyatta said, represents only about 2.74 percent of Kenya’s GDP, which shows that the housing mortgage business in Kenya is still very small.

"We expect the refinance company to significantly contribute to the development of the housing finance market in Kenya and help reverse the low mortgage penetration, by increasing the number of mortgages from the current 26,000 to over 60,000 by the year 2022," he said.


Kenyan lenders leverage on digital customer data to offer credit

NAIROBI (Xinhua) -- Businessman Gilbert Wandera is currently building a house in his rural home in Busia, western Kenya.

Working in Nairobi, Kenya’s capital, Wandera relies heavily on mobile money to pay his workers and buy construction materials, work that has been going on for the past four months.

Last week, the businessman was in a fix after running short of cash.

After trying several commercial banks, the maximum loan they could offer him via their digital apps was 40,000 Kenyan shillings (400 U.S. dollars), but he needed more.

He turned to leading telecom Safaricom, which runs a digital credit platform, and was offered 750 dollars that he needed via his mobile phone.

Apparently, the telecom used his mobile money data to assess his credit worthiness and offered him the money.

"Being a businessman, I do most of my transactions via mobile money.

"Unlike the banks, the telecom has all the data on my transactions and I believe it is the reason why they gave me the money," he said on Wednesday.

In the past, Wandera would have had to walk into a bank and apply for the loan and surrender a title deed or car log book to get the money.

But all that is now in the past as banks and other lenders turn to digital customer data to extend credit to Kenyans.

The data include bank account and mobile money transactions and airtime top-ups.

The new method is revolutionizing Kenya’s credit sector, with millions of Kenyans who initially would never have borrowed money from banks accessing credit.

The money, which ranges from 5 dollars to 3,000 dollars, is mainly disbursed via the mobile phone.

The use of the data has now put Kenyan banks on the path to disbursing all their loans, big or small, via mobile phone.

With some 46 million Kenyans owning mobile phones and 30 million subscribed to mobile money, according to the latest data from the Communications Authority of Kenya, lenders are easily collecting customer data that inform decisions when offering loans.

The data has given Kenyan lenders confidence to offer businesses and individuals huge sums of money via the mobile phone.

On Monday, five Kenyan banks launched a digital credit facility that will see small-and-medium-sized businesses borrow up to 2,500 dollars via mobile phone, thanks to use of data.

It is a first in a country where over 90 percent of loans are currently being disbursed via the phone.

During the launch of the digital credit product by the banks, Central Bank of Kenya governor Patrick Njoroge termed the growing use of digital customer data to disburse loans in the east African nation as revolutionary.

"Lending has been constrained by the lack of reliable information to assess their creditworthiness.

The innovation in this product is the use of all data on customers’ transactions to fill this gap.

In that sense it is revolutionary," he said.

Analysts noted that use of digital data will radically change the lending sector in Kenya, with banks being forced by the customers’ needs to adopt this method.

"An increase in lending through digital platforms, especially by independent lenders, pointed to the direction the industry was headed, making banks which initially were rigid to conform," said Bernard Mwaso of Edell IT Solution in Nairobi.

Mwaso noted that globally, data is being used to drive business, therefore, the Kenyan banking industry is no different.

"Huge data is collected on mobile money platforms each minute which can be used to analyze peoples’ income, remittances and even the state of the economy.

"This data has a big economic value, it is the reason banks and other lenders are leveraging on it," he said.

Kenya launches bid to host African Continental Free Trade Area secretariat

NAIROBI (Xinhua) -- Kenya on Thursday launched a bid to host the African Continental Free Trade Area (AfCFTA) secretariat.

Macharia Kamau, principal secretary in the Ministry of Foreign Affairs, told journalists in Nairobi that Kenya’s Africa-centric foreign policy is focused on delivering the promise of continental growth development and security through the Agenda 2063.

"Having the secretariat come to Kenya would not only cement Kenya’s role as a lead country in trade and multilateralism, but it would also avail Africa the best venue and the best opportunity to grow free trade and secretariat to its full potential not only for Kenya but for the benefit of all Africans," Kamau said.

Other countries that have expressed interest in hosting the secretariat include Ghana, Egypt, Senegal, Eswatini and Ethiopia.

The AfCFTA aims to create a single continental market for goods and services, with free movement of persons and investments, and thus paves the way for accelerating the establishment of the continental customs union, common market and monetary union.

Kamau said that Kenya has always been at the forefront in championing the African economic integration as well as the free movement of goods, people and services across the continent for the last 40 years.

International Trade Center urges Kenya to empower women to achieve goals

NAIROBI (Xinhua) -- The International Trade Center (ITC), a development agency under the World Trade Organization and the United Nations, on Wednesday urged Kenya to empower women in order to accelerate the achievement of Sustainable Development Goals (SDGs).

Simon Balfe, ITC program officer for sustainable and inclusive value chains told Xinhua in Nairobi that due to a myriad of challenges, women are underrepresented in most business values.

"When women prosper, they spend more on health, nutrition and education, accelerating the achievement of the SDGs," Balfe said during the private-sector meeting and business-to-business session organized by the ITC’s SheTrades in the Commonwealth project.

The initiative aims to increase economic growth and job creation in Commonwealth countries by enabling the increased participation of women-owned businesses in international trade.

Balfe said that one way to enhance women empowerment is through integrating gender awareness and consideration of gender into trade policies and agreements in order to proactively include women and women-owned businesses in the global market.

He revealed that typically women have less access to information on how to navigate the government regulatory environment.

According to ITC, businesses that export also tend to employ more women in their workforce and therefore should be encouraged by the state.



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