Karibu Homes Moves to Address Affordable Housing Scarcity in Kenya
Africa’s tremendous economic growth has captured the attention of both the global business and development. Much of this new economic growth comes as Africa continues to take advantage of new technological advances such as mobile phones and Internet.
Yet as African countries like Kenya and Ghana rush to build new infrastructure – even entire cities – to support this technological gold rush, affordable housing for many Africans remains inaccessible. 60% of urban Kenyans live in slums: for these citizens, the African “economic miracle” may appear to be more of a mirage. For every five Kenyans looking for affordable housing there is only one unit of affordable housing available for rent or purchase.
Recognizing the immense opportunity within this immense problem, Irfan Keshavjee leads a seasoned team of entrepreneurs in building – literally – a response. His team is about to begin building Karibu Homes, a 1,000 unit affordable housing development located just outside Nairobi. Karibu is Kiswahili for “welcome.” The project is financed with the help of our client, Blue Haven Initiative, who invested $1 million in the project. Our own Bruce Campbell oversaw all aspects of Blue Haven’s investment in Karibu Homes and will sit on Karibu’s board of directors as Blue Haven’s designee.
The development is targeted at Kenya’s growing middle class. Once built, homes in the development will start at $10,000 USD. But with the African Development Bank defining middle class as those African spending between $2 and $20 USD a day (or, $730 USD and $7,300 USD annually) how can most Kenyans afford these homes?
The answer for Irfan and the Karibu team lies not only in the Western microfinance model but also in SACCO’s, Kenya’s saving societies. SACCOs are member-owned and operated legally recognized entities that pool their members savings in bank accounts where they accrue interest. This pooled capital is then reinvested in the members through loans. In order to receive a loan from the SACCO, a member must be guaranteed by other members. The member can then borrow about three times the amount that they have saved in the SACCO. Members of these saving societies ought to be ideal candidates for saying, “Karibu,” as they invite friends and neighbors into their new homes.