April 30th, 2025

Given that 61.4% of Kenya’s population is rural, promoting climate friendly home improvement solutions in rural areas is of importance to Kenya’s development.

FSD Kenya partnered with KFS (K-Rep Fedha Services) in this work – KFS is an umbrella organisation that provides technical professional management services and oversight for community based financial institutions in rural Kenya. KFS’s umbrella currently supports 33 Financial Sector Associations (FSAs) with a membership base of 375,000 people.

From 2023 to date, KFS and FSD Kenya have partnered to diagnose, co-design and implement a pilot that will support their members to access credit for improved cook stoves, rainwater harvesting, sanitation and housing units. A demand analysis was undertaken in five areas which clearly showed the need for climate-friendly housing solutions to support a move away from the commonly used practices which damaged the environment and provided poor housing conditions including the use of burnt bricks, high use of firewood, inefficient adoption of rainwater harvesting etc.

Two of the five FSAs where the customers had a higher ability to repay, were selected for a pilot. Local members of the financial institutions were engaged in the product vision, and local artisans were trained to build with climate friendly technologies including sand cement blocks and soil stabilised blocks. Loan product development was done in conjunction with input from borrowers, staff and management of the financial institutions and KFS.

Key accomplishments include a high-level awareness and positive attitude towards the new technologies being promoted due to inclusive stakeholder engagement. The loan product branded as ‘Boresha Boma’ ranges from as small as KShs 5,000 to KShs 600,000, with tenors of

12 months to 60 months depending on the home improvement solution pursued. The loan products allow for improved cookstoves, rainwater harvesting, toilets and shower structures, and housing structures to be built incrementally or at one go, depending on the household’s needs and ability to repay.

As of Dec 2024, five months after the launch of the pilot loan product, KShs 2,595,000 had been disbursed in 45 loans at an average loan size of KShs 56,400. 46% of borrowers are women. In addition, 33 artisans (mix of experienced and polytechnic students) have been trained with the ability to create the blocks and undertake the home improvements. A catalogue of all the housing solutions has been developed and disseminated freely.

While these technologies have been available for decades, uptake has been very low as previous attempts focused on providing training on the technology itself. In this pilot, FSD Kenya and KFS took an end-to-end value chain approach. The demand survey, training of artisans and financial institutions and staff, and product development was done in conjunction with KFS, the financial institutions staff, members of the financial institutions and an experienced alternative building technology expert. FSD Kenya also provided a risk capital loan fund, to allow FSAs to lend for Boresha Boma products, as these are longer term loans than their core portfolio and would tie up the institutions’ capital. Additional technical capacity is being provided to help the trained artisans create bills of quantities for each respective loan request, as many of the housing products need to be tailored to the specific household’s existing conditions and ability to pay.

Based on the success of the pilot (loan uptake and repayment), KFS expects to be able to recover this capital from the two pilot FSAs and then revolve it to other FSAs who are interested in this product. The need for improved rural housing is significant, and will result in strong economic, environmental, health and social benefits. This pilot can provide insights on supporting rural housing ambitions of The Affordable Housing Fund.

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Creating climate smart rural affordable housing – baseline survey

Creating climate smart rural affordable housing – A practical guide for builders and homeowners

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This blog is one of the articles in FSD Kenya’s 2024 annual report. Click here to read the full report (PDF). 

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