Low cost housing gets a boost from Lafarge’s loans deal

Construction workers build a house in Kisumu.
Construction workers build a house in Kisumu. PHOTO/FILE
Kenya’s low cost home builders will receive cheap loans to finance their projects following the signing of an agreement by Bamburi Cement’s parent firm Lafarge and the World Bank.

The deal by Lafarge and the World Bank’s private sector lending arm, International Finance Corporation (IFC), will see builders – who use Bamburi’s products – receiving loans of between Sh130,500 and Sh175,000 per 20 square metres of a low cost house project.

“The loans will range between $1,500 (Sh130,500) and $2,000 (Sh175,000) per every 20 square metres,” said Francois Perrot of Lafarge’s innovation department.

Mr Perrot, who visited Nairobi in July, said that although the partners were yet to agree on the interest rate, it will “definitely be below market rates.”

He added: “There is a need for affordable housing for those in the lower end of the market who lack the capacity to secure funding from the mainstream financial institutions.”

According to Britt Gwinner, IFC’s housing finance manager for sub-Saharan Africa, “tens of millions of dollars” will be advanced to local micro-finance firms who will be the final lenders.

As part of the deal, Bamburi will design plans, prepare bills of quantity and offer technical assistance in the construction of houses while the loan recipients will buy cement from the company.

Faulu Kenya, Rafiki Microfinance Bank and KWFT Bank are some of the micro-finance institutions that have been identified to roll out the Lafarge programme that kicks off in October.

READ: Low cost housing boom hits Kenya

The programme, which also covers renovation and extension of existing houses, seeks to grow Bamburi’s sales in the wake of intensified competition that has slashed cement prices to a 12-year low.

Kenya is among nine African nations earmarked by Lafarge for the development of low cost housing. The company aims to improve living conditions of at least two million people by 2020.