How Affordable Housing Problem is a golden opportunity for Credit Market players in Africa.

We are living in uncertain times.

The business environment has become extremely harsh, financial markets have declined and have become highly volatile, the economy has generally slumped, and the cost of living has increased drastically. 

With all this happening, people must adjust and make more brilliant borrowing and investment decisions to develop resilience and thrive.

The future will be bright for those who make intelligent decisions and take advantage of emerging opportunities when the world is experiencing all sorts of crises.

Research reveals that most African people borrow to finance consumption instead of funding assets that can generate income and build wealth.

This typical behavior has made most of the lower middle-class population slide into poverty, especially during the Covid-19 pandemic.

A loan’s repayments depend on several factors, which depend on borrower’s character and ability, purpose, and means, and this explains the reason behind the increased delinquency in the credit financial sector.

The purpose for which a loan is secured is very essential in the end. It determines the timely settlement of the loans and it’s a significant factor for lenders to consider as well, as it helps address the lending risk.

So what amounts to responsible borrowing?  A loan to secure an affordable buy-to-let apartment would be an excellent purpose for obtaining funding from the Bank, Credit Unions, or MFis.

For example, if you  acquire an apartment at Romar Place in Juja, a strategic property in Kiambu County selling at Ksh 850k, it could fetch you an annual rental income of Ksh 117k. This is a high return on capital investment (ROI >13.7%).  In the case of asset financing, this kind of asset will help generate revenue that can predictably meet the borrower’s installment obligations and significantly reduce the lender’s risk.

Another example of such an affordable asset is  ‘The Arcadia,’ an apartment in Kasarani, ideally located in the middle of significant developments, minutes away from Thika Super-highway and major shopping malls, e.g., Thika Road Mall and Garden City Mall, schools, and other major industries. Again, very prime and spacious apartments with a price starting at Ksh 1.2M.

This is a true definition of affordable housing; cheap and decent.

According to UN Habitat (2011), affordable housing means providing adequate quality and location houses that do not cost so much that it prohibits its owners/occupants from meeting other basic living costs or threatens their enjoyment of fundamental human rights. 

There exists a nexus between the credit/finance market and affordable housing.

Most financiers prefer providing finance to “speedy investments” of high yield within a short period, with little focus on prolonged investments such as housing, which usually take a long time to recoup.

That explains why the vision of affordable housing will remain elusive in Africa. Lenders have no incentives to fund housing, even though it’s less risky to do that.

This means that to make house finance attractive for lenders, we need to make the affordable assets affordable so that the costs can fall within the ability of the borrowers to repay and meet the obligations in a shorter time.

For example, in the case of the affordable housing project dubbed (Romar apartments) above, after a deposit of 30%-50%, a borrower can pay within their ability, flexible monthly installments for up to two years. This is different from similar mortgage financing, which is expensive and takes a minimum of 5-30 years.

Therefore, borrowers must invest in high-potential and low-risk businesses, and real estate is one of the sectors to consider. Sub-Saharan Africa has a significant gap of more than 50 million affordable houses. More than a 250Million people have no access to affordable and decent housing in Sub-Saharan Africa.

This is an ample opportunity for lenders and investors as well. It’s high time that lenders should improvise ways of reducing credit risk by using affordable property assets to secure loans as they channel finance to plug the housing deficit in the region. 

Financial lenders need to review their purpose and goals, align customers’ needs, and tailor makes loan products that contribute to the fulfillment of the sustainable development goals, which is a UN blueprint for achieving a better and more sustainable future for all.

Naivera exists for that purpose. We are promoting and enabling credit market players to borrow/lend responsibly and sustainably to grow wealth.

Through partnerships with financial lenders and asset owners/property developers, we make assets to be more affordable and incentivize channeling credit towards affordable investments.

In Naivera, we enable lenders to lend securely and offer them tools to improve efficiency. We help people acquire affordable finance and assets (houses) that can generate income and help property developers/asset owners get capital, better ROI, and faster payback.

Written by;

Charles Nyandia,

Team Leader,


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