NAIROBI, Kenya, Nov 10 – President Mwai Kibaki on Wednesday called for partnership between the government and the private sector to ensure affordable housing for more Kenyans.
Observing that access to decent and affordable housing for Kenyans was a major development challenge, the Head of State called for concerted efforts so that the country can meet its housing demand which is in excess of 100,000 units per year.
In order to spur growth in the housing sector, President Kibaki announced major policy changes including allowing Kenyans saving for retirement to use 60 percent of their accumulated benefits as collateral for mortgage loan and exemption of those participating in the various infrastructural bonds from withholding tax.
President Kibaki was speaking at the Nairobi Stock Exchange where he presided over the commencement of the trading of the first ever infrastructural Housing Finance Bond.
The President regretted that despite recent efforts to address the housing problems in Kenya, access to mortgage financing remains a preserve of those who have qualifying collateral and also enjoy reasonable and predictable sources of income.
He said these conditions have locked out a sizeable portion of the population and called for a closer working relationship between the public and the private sectors to enable many more Kenyans to access affordable housing.
President Kibaki expressed the government commitment to providing the necessary support to the entire financial sector to enable it contribute more effectively towards the country’s development. He at the same time reiterated the government’s commitment to pursue sound economic management, including maintaining a stable macroeconomic environment conducive for private sector growth and expansion.
Commending the Capital Markets Authority for the important role it has played in developing the market, the President stressed the importance of continued broadening of the range of financial products available to potential issuers and investors.
“The capital markets have been strengthened through improvement of the regulatory framework for issuance, trading and settlement of securities as well as the provision of necessary fiscal incentives,” the President said.
The Head of State challenged the housing sector to come up with low cost building materials to construct houses affordable by lower income groups.
“The launch of this Housing Finance Bond is an important step in this direction. I trust that the funds raised will be directed towards innovative products to cater for the lower income segments of our society,” noted the President.
Underscoring the importance of infrastructural bonds in the facilitation of access to long-term finances in the country, the head of state said the financial sector plays an important role in a country’s economic development and indicators world over associated better developed financial systems with faster economic growth and development.
“It is for this reason that the Government has identified the financial sector as a key driver of the growth and development targets that we have set under Vision 2030,” said the president.
The Head of State noted with gratitude that the country’s financial sector has over the years grown tremendously and is now among the most developed in Africa.To sustain its current growth, President Kibaki called for continued mobilisation of sufficient long-term and affordable financial resources.
“The government issued the first Infrastructure Bond in February last year in order to encourage mobilisation of long-term domestic resources for infrastructure development through the capital markets,” the President said.
In this regard, the Head of State noted with appreciation that the three other infrastructural bonds that were later issued have all been oversubscribed.
Said he: “I am pleased to note that the bond issued by Housing Finance was also oversubscribed. The overwhelming success of these infrastructure bonds is a clear testimony that Kenyans are effectively playing their part in the development of our country.”
In his remarks, Deputy Prime Minister Uhuru Kenyatta assured Kenyans that the on-going divestment of government shares from public companies would be concluded in a transparent manner.
Mr Kenyatta said that funds raised from the privatization would be utilized in infrastructural development in order to spur production in other sectors. The minister revealed that the government has in the last thirteen years borrowed from the domestic market Sh700 billion to support infrastructural development in the country.
The Corporate Bond which commenced trading at the Nairobi stock exchange today is expected to increase Housing Finance participation in mortgage leading and housing supply.
Others who spoke during the occasion included the chairman Housing Finance Board Steve Mainda and his Nairobi Stock Exchange counterpart Eddy Njoroge.
In attendance were Housing Minister Soita Shitanda , Central Bank Governor Njuguna Ndung’u and Internal Security Permanent Secretary Francis Kimemia among other senior government and capital markets authority officials.