FSD Kenya, on request by the Government of Kenya, undertook a feasibility study to create a Partial Credit Guarantee for financial sector players to enter into mortgages with buyers from lower income and informal sector segments.
The study looked at the Housing Finance market in Kenya, examples of existing PCGs from Malaysia, Pakistan and Philippines, and makes high level suggestions on how a PCG can be developed in Kenya (eg. via the KMRC, Guarantco or KBA). While a guarantee is one way to encourage lenders to undertake risk, the level of subsidy required may be much higher and less efficient than other models of supporting market development.
Discussions with KMRC, Guarantco and KBA all highlighted the critical lack of supply in the market currently. Additionally, a source of funding for the guarantee amount is required.
This study is shared as part of FSD Kenya’s commitment to sharing knowledge under its Open Access framework.