STIMA SACCO LAUNCHES AFFORDABLE HOUSING MORTGAGE SCHEME

Hot on the Shariah – compliant products and services heels, tier one Sacco launches an innovative product that will facilitate the ownership of decent and   affordable homes among its members

Many individuals aspire to be home owners.  Indeed, it is the right of every Kenyan to access decent and adequate housing as outlined in our Constitution. But the market tells a different story.  In the urban areas especially, many people reside in rented premises. Taking Nairobi as an example, a big number of people reside in sprawling areas like Kibera, Mathare Valley, Kawangare, Kangemi and Mukuru Kwa Njenga. Shelter is a basic need. The other two are food and clothing.   Against this background, as part of its Big Four Agenda, the Kenyan government has identified affordable housing as a key pillar. Low access to finance hinders many people from buying or putting up their own houses. 

The government has therefore established the Kenya Mortgage Refinancing Company (KRMC) whose mandate is to offer affordable home loans to workers with an income of less than Kshs.150, 000 per month. KRMC commenced its operations in September 2020. So far it has raised about Kshs. 40 billion:  an equity capital of Kshs. 40 billion, Kshs. 25 billion from the World Bank and Kshs. 10 billion from the African Development Bank.

In order to achieve its noble goal, KRMC has  partnered with eleven savings and credit co-operative societies (Saccos),  eight commercial banks and one  microfinance bank  that  are also its shareholders.  It offers funds to these institutions at an annual interest rate of five per cent for onward lending to their customers who either want to purchase or construct homes at single digit interest rate.  In the current fiscal year, KRMC will offer affordable home loans amounting to Kshs. 7 billion.

Timely solution

Stima Sacco is one of the members of KRMC.  With an asset base of Kshs. 41.05, Stima Sacco is a leading tier one   deposit taking Sacco in Kenya.  The giant lender has a membership of over 140,870 – mainly from the energy sector and the business community and a loan book of over Kshs. 32.8 billion. Besides its  branch  footprint in Nairobi, Kisumu, Mombasa, Nakuru, Olkaria ( Naivasha), Embu and Eldoret, Stima Sacco has leveraged technology in delivering its  wide array of innovative   products and services to its members through various channels.

In line with its strategy of deepening its product offering to members, the giant Sacco recently  launched affordable housing scheme.  According to Mrs. Rebecca Miano, Stima Sacco’s National Chairperson, the launch of this product could not have come at a better time. “To many people, home ownership is preferable to renting. Those who rent know that at the end of the month, they must set aside a portion of their income to pay the owners of the houses they live in,” she said in her speech during the launch.  The home loans are capped at Kshs.  4 million for property within Nairobi metropolis and Kshs. 3 million for the rest of the country.   For those in permanent jobs or contracts, their loans   are repayable within   a maximum period of twenty five years depending on their terms of employment or contracts, at an interest rate of 9%, calculated on a reducing balance.  On the other hand, members in business or who have rental income will repay their loans within twenty years, at an interest rate of 9.5%, calculated on a reducing balance as well.

Active listening

In the same regard, Dr. Gamaliel Hassan, the Chief Executive Officer, Stima Sacco, noted that they developed the affordable housing mortgage scheme after listening to their members.  “This product is a hallmark of our responsiveness to our customers’ needs,” he said. He further said that the product will go a long way in easing the shortage of housing in the Kenya, besides helping the members to attain financial freedom by relieving them of the burden of rent.  According to Dr. Hassan, every year, only 35,000 new houses are put up in Kenya’s major urban centres, hence leaving a shortage of about 250,000. “The mismatch of   demand and supply of housing units ultimately drives the lower income people to the slums,” he lamented. Dr. Hassan gave an assurance to the members   that Stima Sacco will continue reviewing its products and services offerings regularly, for their benefit.

In his key note speech, Mr. Charles Hinga, the Principal Secretary, Housing and Urban Development observed that it is important to build many houses in the country since  this will accelerate the growth of the economy.  “Housing development packs a multiplier effect that touches many lives. Each shilling spent directly on a single housing unit indirectly contributes to the growth of the economy in various ways,” Mr. Hinga said. 

In the same breath, he noted that home ownership is very valuable during retirement,   a   period   when individuals are less productive economically, hence limiting their cash flow.  Another benefit is that members can secure funds using their houses as collateral, which they can in turn   invest in other income generating ventures, including more housing units.