HOUSING
Ukulima Sacco Introduces a Mortgage Product to Enable Members Own Homes By Malachi Motano
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kulima Savings and Credit Co-operative Society, continues to play an important role in the realization of housing and mobilization of funds; in line with the government’s Big 4 Agenda on affordable housing for all. “As you are aware, the Kenyan Sacco sector is the largest in Africa and is globally ranked at the seventh position, according to a report by the World Council of Credit Unions (WOCCU). This puts us in a better position to lend to Kenyans at affordable interest rates,” says Sacco Chairman Dr. Philip Cherono. In its committed efforts to reduce the huge housing supply gap, to enable every Kenyan to own a home; the Sacco has partnered with the Kenya Mortgage Refinance Company (KMRC). The partnership will ensure that funds are availed for onward lending to members, primarily for mortgage uptake purpose. In addition, the Sacco will be able to lend to Kenyans at affordable interest rates, which is nearly half the current market rates.
Ukulima Sacco Chairman Dr. Philip Cherono. provision of quality financial services, in providing long-term funding and reducing our reliance on shortterm loans,” says the Chairman. According to him, as the Sacco introduces and adds the mortgage product to its catalogue, it would also be participating towards the realization of the affordable housing programme for the country; which as aforementioned is part of the Big 4 Agenda for the provision of affordable housing to citizens. While Kenyans are increasingly resorting to mortgages to acquire homes, the 2019 affordable housing
Prospective buyers will qualify for mortgages of up to Kshs.8 million, with a repayment period of up to 20 years. The funding is expected to drive the number of mortgage accounts, to an estimated 2,000 in the first year and 4,000 by the year 2022. “We are very happy that Ukulima Sacco is part of this great and noble initiative. The partnership with KMRC supports our mission of enhancing members’ empowerment; through the
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SACCO TIMES | DECEMBER 2020 - JANUARY 2021
KMRC CEO Johnstone Oltetia (left) CEO Ukulima Sacco.
yearbook published by Centre for Affordable Housing Finance (CHAF); indicated that the main barriers to mortgage issuance includes: asset-liability mismatch by tenor due to the relatively longterm nature of mortgage loans and short-term nature of bank deposits, limited access to capital markets funding for mortgages resulting in low supply of longterm capital, a complex legal and regulatory framework coupled with collateral requirements, making mortgages exceedingly expensive. Even though the number of mortgage loans has been growing by a compounded annual growth rate (CAGR) of 5.7% since 2013; the average mortgage size in Kenya has been growing at a higher CAGR of 9.6% from Kshs. 6.9 million in 2013 to Kshs. 10.9 million in 2017, thus locking out potential homeowners.
