World Bank Document

Public Disclosure Authorized

Housing

Drought

Mortgage

Low Income

Drought

Property

GDP

Drought

Housing

Percent

GDP

Housing

Mortgage

Property

GDP

Fiscal

GDP

GDP

Housing

Rural

Fiscal

Growth

Public

SACCO¡¯S

Urban

Mortgage

Drought

Housing

Fiscal

Mortgage

Low Income

Domestic

Rural

Public

Drought

External

Fiscal

Public Disclosure Authorized

Mortgage

Revenue

Drought

External

Domestic

Public Disclosure Authorized

Housing

Revenue

SACCO¡¯S

SACCO¡¯S

Public Disclosure Authorized

April 2017 | Edition No. 15

Housing

Housing

HOUSING

Unavailable and Unaffordable

Growth

SACCO¡¯S

Urban

Mortgage

GDP

Perc

HOUSING

Unavailable and Unaffordable

? 2017. World Bank Group

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TABLE OF CONTENTS

ABBREVIATIONS AND ACRONYMS ................................................................................................................................................................................... i

FOREWORD ................................................................................................................................................................................................................................ ii

ACKNOWLEDGEMENTS......................................................................................................................................................................................................... iii

EXECUTIVE SUMMARY........................................................................................................................................................................................................... v

PART 1: THE STATE OF KENYA¡¯S ECONOMY

1. Recent Economic Developments: 2016 in Retrospect............................................................................................................................................ 2

1.1 Economic Activity in Kenya Remained Robust in 2016 ......................................................................................................................................................... 2

1.2 Growth was Broad-based with the Service Sector Being the Most Dynamic........................................................................................................... 2

1.3 The Macroeconomic Environment was Stable in 2016 ......................................................................................................................................................... 4

1.4 Fiscal Consolidation Remains a Challenge ..................................................................................................................................................................................... 6

1.5 Financial Markets Faced a Tough Environment in 2016.......................................................................................................................................................... 9

2.The Changing Economic Landscape and Kenya¡¯s Growth Prospects ................................................................................................................ 10

2.1 Emerging Head and Tail Winds Influencing the Economic Landscape ....................................................................................................................... 10

2.2 How Will These Emerging Head and Tail Winds Impact on Growth Prospects? ..................................................................................................... 12

3. Downside Risks to the 2017 Growth Outlook............................................................................................................................................................ 14

3.1 Domestic Risks ................................................................................................................................................................................................................................................. 14

3.2 External Risks...................................................................................................................................................................................................................................................... 15

4. Policies...................................................................................................................................................................................................................................... 15

4.1 Kenya Needs to Safeguard its Robust Performance and Accelerate Growth Potential...................................................................................... 15

4.2 Prudent Fiscal and Monetary Policies will be Critical to Safeguard Macro Stability.............................................................................................. 16

4.3 Structural Reforms will be Required to Unleash Further Productivity Gains............................................................................................................. 16

PART 2: SPECIAL FOCUS

5. Affordable Housing and Housing Finance .................................................................................................................................................................. 24

5.1 Housing and Housing Finance in Kenya ¨C Unaffordable and Unavailable ................................................................................................................ 26

5.2 Investing in Affordable Housing Pays Off ....................................................................................................................................................................................... 27

5.3 What is Holding Back Affordable Housing? .................................................................................................................................................................................. 27

5.4 It¡¯s More Than Finance Constraining Affordable Housing .................................................................................................................................................... 30

5.5 Innovative Instruments to Address Financing Can Be Catalytic ....................................................................................................................................... 32

5.6 Regulatory Reforms for Unleashing Housing Finance Supply and Demand ........................................................................................................... 37

5.7 Accompanying Housing Finance Reforms .................................................................................................................................................................................... 38

5.8 What Role can the Government Play? .............................................................................................................................................................................................. 39

REFERENCES .............................................................................................................................................................................................................................. 42

STATISTICAL TABLES .......................................................................................................................................................................................................................... 43

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