The International Finance Corporation (IFC) recently sealed a Ksh 3.08 billion ($20.9 million) equity investment deal with IHS Kenya. The project, led by the US-owned Southern African Private Equity fund manager, aims to develop 5,000 affordable houses across the nation. The IFC’s commitment was formalized on December 15, 2023, at the IFC/WorldBank Headquarters in Upperhill Nairobi, marking a pivotal step towards realizing the affordable housing vision.

The Investment Details

The equity co-investment between IFC and International Housing Solutions (IHS) is earmarked for a fund dedicated to financing the affordable housing venture. IFC’s involvement entails taking a maximum stake of 20 percent in this strategic initiative. IHS, leveraging funds from diverse institutional investors, focuses its efforts on the Nairobi metropolitan area initially, with potential expansion into other counties based on demand. Notably, a minimum of 15 percent of the committed capital will target areas beyond Nairobi, contributing to a more inclusive housing solution.

IFC’s Commitment and Structure

The IFC’s investment of up to €19.3 million (approximately $20.9 million) is a testament to its dedication to fostering the development and acquisition of approximately 5,000 resource-efficient, green affordable housing properties in Kenya. The investment breakdown includes up to €10 million from IFC’s account and an additional $10 million equivalent in euros from IFC, acting as the implementing entity of the UK-IFC Market Accelerator for Green Construction Program (MAGC).

IHS’s Track Record

Having successfully raised over $740 million (Sh104.7 billion) since 2008, IHS has demonstrated its prowess in deploying capital through various funds and even listing a publicly traded REIT in Johannesburg. The IHS Kenya Green Affordable Housing Fund, initiated in 2021, aligns with Kenya’s broader vision, particularly within the framework of the Big Four agenda items outlined by previous administrations.

Kenya’s Affordable Housing Drive

The push for affordable housing in Kenya gained momentum as one of the key policy areas under the Kenya Kwanza administration. Operating largely under a Public Private Partnership (PPP) model, the initiative addresses the country’s annual housing deficit estimated at 200,000 units. The IFC’s strategic investment not only injects substantial capital but also signals confidence in the potential of Kenya’s affordable housing sector.