The funds are expected to support President William Ruto’s push to reduce the housing deficit and make mortgages accessible for more Kenyan families.
According to official World Bank documents, the global lender will provide $375 million (Ksh48.4 billion) as concessional funding.
Concessional loans have low interest rates and longer repayment periods, making them easier for countries to manage.
The World Bank will also work with Kenya to launch a sovereign sustainability-linked loan that is expected to raise an additional $900 million (Ksh116.3 billion) from commercial lenders.
Apart from the World Bank contribution, the OPEC Fund for International Development will add $75 million (Ksh9.6 billion) to support the same project. In total, the combined funds will reach up to $1.35 billion (Ksh174 billion).
This will be one of the biggest financial commitments to Kenya’s affordable housing programme since the government launched the initiative.
The financing will be channelled through the Kenya Mortgage Refinance Company (KMRC), a State corporation established to increase access to cheaper mortgages.
KMRC provides banks and SACCOs with long-term, low-interest funds so they can offer home loans at more affordable rates.
With the extra support from the World Bank and other partners, KMRC is expected to refinance more housing loans and help lenders offer mortgages that ordinary Kenyans can afford.
This includes buyers from low-income households who usually cannot qualify for traditional home loans due to high interest rates and strict banking requirements.
In its report, the World Bank explained that Kenya faces a housing deficit of more than two million units, and the demand for homes is increasing by about 250,000 households every year.
However, the supply of new homes is still below 50,000 units annually. As a result, many Kenyans are forced to live in informal settlements. The Bank estimates that 62 per cent of urban residents currently live in such areas.
The World Bank also noted that affordability remains a major challenge. Around three-quarters of formal-sector employees earn below Ksh50,000 per month, which makes them unable to qualify for most mortgage products in the market. This gap is what the affordable housing programme seeks to address.
In the Bank’s view, the proposed sustainability-linked loan will help Kenya access cheaper borrowing options, diversify its financing sources, and demonstrate how government debt can be tied to development goals such as housing, urban growth, and environmental sustainability. The loan is expected to be approved by May 2026.
President William Ruto has been one of the strongest supporters of the affordable housing programme. His government has focused on building thousands of new units across the country and encouraging both local and international partners to invest in the sector.
Recently, Ruto oversaw the handover of 1,080 completed homes at the Mukuru Meteorological Site in Nairobi. The government plans to deliver even more units in different counties, with construction ongoing in areas such as Kiambu, Nakuru, Machakos, Kisumu, and Mombasa.
The President has also travelled to different global events to attract financial support. During international meetings, he has highlighted the importance of improving living conditions for Kenyans, creating jobs for youth, and strengthening the mortgage market.
Apart from the World Bank, several other development partners have shown interest in supporting Kenya’s housing vision. The International Finance Corporation (IFC) has already provided financing to a local investment firm to construct affordable homes.
It has also invested in a Green Affordable Housing Fund that promotes environmentally friendly building standards.
The World Bank is also working on new credit guarantee schemes to help informal and non-salaried workers qualify for mortgages. This is important because a large part of Kenya’s workforce is in the informal sector and is often locked out of bank loans.
Ruto has also invited investment from the Gulf region, especially from Saudi Arabia and the United Arab Emirates. Some of these countries have already committed funds to support large housing developments in Kenya.
With the new World Bank-backed plan, Kenya is expected to make significant steps toward reducing its growing housing deficit.
The extra funding will help scale up the construction of affordable units, strengthen the mortgage system, and make home ownership possible for more Kenyans.
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