Report launch on Access to justice, land, and services in Nairobi's informal settlements.

1. |
Financing Perspectives
Strathmore University
School of Finance and Applied Economics
5 February 2015

2. |
The Affordability Gap?
2/5/2015
Access to Land, Justice and Services
One City, One People Project 2
Proposed housing
type
In situ
Re-blocking
(cheapest)
In situ
Incremental
(average)
Comprehensive
Market-driven
(most expensive)
Estimated
property value
Kshs. 216,000 Kshs. 504,000 Kshs. 990,000
Estimated
household income
Kshs. 4,839 Kshs. 9,171 Kshs. 14,516
Ideal monthly
mortgage
Kshs. 1,613 Kshs. 3,057 Kshs. 4,839
How much mortgage would a household qualify for @ 6% interest?
10-year mortgage Kshs. 145,288 Kshs. 275,355 Kshs. 435,835
15-year mortgage Kshs. 191,146 Kshs. 362,265 Kshs. 573,399
20-year mortgage Kshs. 225,144 Kshs. 426,698 Kshs. 675,385

3. |
What is hidden behind the numbers?
2/5/2015
Access to Land, Justice and Services
One City, One People Project 3
 Current best mortgage term in Kenya is
15 years
 Current best mortgage rate in Kenya is
approximately 12.9%

4. |
What does this mean for a Mukuru
resident?
2/5/2015
Access to Land, Justice and Services
One City, One People Project 4
“Hypothetical” Best-case scenario:
20-year mortgage @ 6%
Only 4 of the 6 plans that
accommodate up to 50% of
residents affordable.
The rest gentrified?
“Negotiated” scenario:
15-year mortgage @ 6%
Only 4 of the 6 plans that
accommodate up to 50% of
residents affordable.
The rest gentrified?
Open market scenario:
15-year mortgage @ 12.9%
Only 2 of the 6 plans that
accommodate up to 20% of
residents affordable.
The rest gentrified?

5. |
Bridging the financing gap
2/5/2015
Access to Land, Justice and Services
One City, One People Project 5
• Infrastructure
• Land?
• 50% of housing unit
Gap fund
(50%)
• Mortgage
• Savings
Mukuru
resident
(50%)

6. |
Finance Team’s
Key Recommendations
2/5/2015
Access to Land, Justice and Services
One City, One People Project 6
1. Lobby for favourable government
policies and interventions
2. Leverage Mukuru’s high property value
3. Develop innovative financing for some
essential services
4. Mop up community savings

7. |
Recommendations to Government
2/5/2015
Access to Land, Justice and Services
One City, One People Project 7
 Clear up land issue (cost of purchasing
land)
 Make 6% interest rate a reality
 Participate in closing the 50% gap
through infrastructure financing

8. |
Establish a Special Purpose Registered
Housing Company
2/5/2015
Access to Land, Justice and Services
One City, One People Project 8
 Embed community influence
 Leverage Mukuru’s high property value
 Buy out investor / government equity

9. |
Recommendations for Formal Service
Institutions
2/5/2015
Access to Land, Justice and Services
One City, One People Project 9
 Issue revenue bonds for targeted service
in Mukuru (e.g., water or garbage)
 Offer level of guaranteed return (80%)
 Enter into work plans with Small-Scale
Service Providers (SSSPs)

10. |
Recommendations to the
Mukuru Community
2/5/2015
Access to Land, Justice and Services
One City, One People Project 10
 Mop up savings
A household saving 50 bob a day will have Kshs. 54,000
after 3 years. This will total between 5% to 25% of the
upgraded housing costs, depending on unit!
 Formally register units
 Participate in building a credit history

11. |
Other Findings and Considerations
2/5/2015
Access to Land, Justice and Services
One City, One People Project 11
 Discontent with joint liability in chamas
 Power and influence of Mukuru’s
structure- owners and small-scale service
providers
 Wider housing problem in Kenya

12. |
Ole Sangale Road, Madaraka Estate. PO Box 59857-00200, Nairobi, Kenya
Tel +254 (0)20 606155, 606268, 606380 Fax +254 (0)20 607498
Mobile +254 (0)722 25 428, (0)733 618 135 Email info@strathmore.edu
www.strathmore.edu