Mortgage lender Housing Finance is eyeing construction contracts with county governments under the proposed public private partnership (PPP) law that seeks to tap private capital to build public assets.
Frank Ireri, the HF managing director, said yesterday the mortgage lender is already in negotiations with a local authority that could see the firm loan out Sh3 billion for construction of 3,000 homes.
“We will enter into a joint venture,” said Mr Ireri.
Mr Ireri did not, however, disclose the name of the public entity, saying the contract would only be finalised after the PPP Bill—approved by the cabinet this week – is passed into law.
The model is similar to other large scale projects such as the Buru Buru housing estate that was constructed on City Council land with financing from the World Bank and HF.
The PPPs are expected to ease access to public land, with the private sector contributing financing and expertise.
HF launched an expansion plan to establish 100 service centres across the country yesterday, in a bid to establish a presence in all the 47 counties.
Among the services to be offered at the outlets include account opening, developer loan application, mortgage enquiries and property sales.
Through the sales and service centres, the mortgage lender expects to achieve a wider reach across the country at a lower cost compared to setting up full branches.
Costs of establishing a Central Bank of Kenya approved branch exceed Sh20 million, mainly due to costs of securing the premises, whereas a service outlet requires about a tenth of the amount to set up.
“It would cost more than five times to set up a branch than a service outlet but we will provide all services except cash handling,” said the MD, adding that clients can use mobile fund transfer to transact with the company.
HF, which was established by the State in 1965 to develop homes and offer mortgage loans, plans to develop several other estates similar to Nairobi’s Buru Buru which was built by its newly revived subsidiary, Kenya Building Society.
Experts in the financial services sector have lauded Cabinet’s approval of the PPP Bill, saying it would open avenues for the participation of the private sector in the provision of public services including housing and roads.
Lee Karuri, the chairman of Homes Africa, a real estate company, says that having a regulatory framework would unlock the resources of public institutions.
“The law is a turning point in infrastructure development, especially housing where public institutions will unlock the value of the resources they have under utilised for long,” said Mr Karuri, whose firm is behind the 760-acre Migaa golf estate.
“Having the synergy between the public and private sector will also allow for the development of more affordable homes that some people would otherwise never own,” he added.
Other developers such as Daniel Ojijo of Villa Care have cast blame on the government for hoarding land, especially in Nairobi where low density State-owned estates built in the pre-colonial era are sitting on prime land amid soaring land prices fanned by scarcity.
“A joint venture with the private sector would be the only way that the government could redevelop the old estates, I am ready for such partnerships,” said Mr Ojijo, whose views were shared by Terry Mungai, a Nairobi private developer.
Patrick Obath, the chairman of the Kenya Private Sector Alliance said in an earlier interview this week that PPPs would not only eliminate the need for government to raise expensive credit for infrastructure projects but would also enable the private sector to provide essential services.