IFC, which is a member of the World Bank Group, announced that the funds will be used to help the mortgage lender increase access to housing finance, while pioneering the market for environmentally friendly green housing.
Housing Finance Managing Director Frank Ireri explained that energy prices in the country are too high for the common mwananchi, adding that long term funding for energy efficient homes will encourage property developers to build homes that take advantage of the funding.
“Kenya’s present current account deficit earns perilously at 15 percent of GDP, driven by the persistent and high importation of petroleum products,” he said.
“As a corporate citizen, we will promote energy and water efficiency in line with our vision. We will operate across the property value chain as suppliers and financiers that offer unique solutions to all, while being environmentally responsible,” he added.
As part of the transaction, the IFC-Canada Climate Change Program will offer advisory services to help Housing Finance foster the development of green houses and they will loan out almost Sh350 million of the Sh1.75 billion loan.
Ireri explained that the Housing Finance was quick to recognise that if they took the responsible path to promote active environmental sustainability, they would be directly contributing to the absolute reduction of the 40-45 percent of global energy and water that is consumed in the building, construction and maintenance of properties annually.
“We have decided to develop a funding mechanism that incorporated the construction of homes designed to create savings of at least 20 percent on energy consumed daily through solar hot water systems and energy efficient lighting,” he said.
“We wanted funding that allowed for the construction of homes with rainwater harvesting, low flow shower heads and dual tanks for water closets to reduce water consumption by 20 percent. We also will design techniques that reduce direct sunlight into the home to negate the need for indoor air conditioning in less temperate regions in the country,” he added.
IFC Director for Eastern and Southern Africa Oumar Seydi revealed that this is the IFC’s first housing finance project in Kenya and he noted that there is a limited supply of green houses in Kenya – along with low awareness among home buyers of the benefits of purchasing such a property.
“By developing green properties in Kenya and making them available to buyers, the Housing Finance will apply IFC green building standards and test on a commercial scale the model for green homes on the continent,” he explained.
“IFC will also provide Housing Finance with advisory services on standards and practices. This initiative will provide growth in the sector by creating jobs, entrepreneurship and economic linkages,” he added.
Ireri revealed that the loan is for a term of seven years with a three year grace period and they have sought out foreign funding in order to balance out the 20 percent higher costs passed on to buyers – but he emphasized, that green property owners will save on energy costs in the long term.
“With Housing Finance’s promotion of green homes, we can now envisage a new future where savings on energy water, particularly in urban areas, will lead to enhanced household savings and beneficial investment in other areas like health and education,” he said.