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Affordable Housing

Kenya co-operatives company decry hurdles to affordable housing

Savings and credit co-operatives (saccos) have cited high interests rates, hidden charges in mortgage schemes and inadequate funding as stumbling blocks in the realisation of the affordable housing dream.

Kenya Union of Savings and Credit Co-operatives Ltd (Kuscco) national chairman George Magutu said although the saccos have the potential to contribute in the realisation of the low housing agenda, there are several bottlenecks.

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“In addition, the cost of property is too high for the low-middle income segment of the population. As a result, majority of informal sector borrowers are inclined towards incremental financing and self-construction loans, which are mainly provided by co-operative societies,” he said at Pride Inn Paradise Hotel in Mombasa during the 4th Sacco leaders’ convention.


Mr Magutu said a recent report on sectoral financing from the Sacco Societies Regulatory Authority (Sasra) revealed that from the over Sh300 billion borrowed by members in 2016, Sh118 billion (36 percent) was borrowed to fund housing projects.

“This is an indication of the key role that saccos have over the years played in the provision of housing to their members. With a membership of about 14 million people, the co-operative societies have great potential to bridge the existing housing gap,” he added.

The Kuscco chairman said to help address the housing deficit in the country, his union had over 14,000 mortgage accounts financing long term mortgages for cooperators and saccos to put up houses and offices respectively.

“We therefore call upon the government to fast-track investments through facilitative tax regimes and build capacity in co-operatives.

READ MORE:  Blended finance unlocks the keys to affordable housing across west Africa

“This will enable co-operatives not only produce raw materials in terms of farm produce, but also process and sell finished commodities to an ever growing market,” he said.


Kuscco managing director George Ototo said unfair taxation by the various government agencies is affecting their business.

He said the amendments to the income tax act, through the Finance Act 2018, doubled the withholding tax rate on dividends payable to members to 10 percent up from five percent.

He said this will make saccos struggle to meet capital adequacy ratios required by Sasra if the motivation to save is interfered with.

Source: Baya Samuel

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