Kenya’s Equity Bank has built a hugely successful business by lending to the country’s low-income population.
“The bank struck a sweet spot, finding equilibrium in balancing the often conflicting objectives of social good and profit maximisation as can be testified by a multitude of accolades awarded for its social economic transformation prowess, as well as its impeccable history of solid growth in shareholder value,” said Imara Africa Securities in a recent report.
Equity Bank now wants to give low-income Kenyans the opportunity to own a home through an innovative new mortgage product.
The bank has partnered with steel company Mabati Rolling Mills (MRM) to offer salaried Kenyans, with a monthly income of at least Ksh.20,000 (US$207), a mortgage product designed to facilitate the construction of low-cost housing units using pre-fabricated steel structures manufactured by MRM.
“Equity Bank will provide financing to customers wishing to take advantage of the high quality, cost effective and time saving building solution by MRM,” said the lender in a statement.
According to Equity Bank Group MD, James Mwangi, the cheapest housing option, using MRM’s steel structures, will be about Ksh.195,000 ($2,015).
These affordable housing units can be residential homes or outbuildings in urban areas, townships and municipalities and are not limited in size, design or even price. MRM will also facilitate the training of labourers to erect the pre-fabricated steel structures.
As part of the new partnership, MRM and Equity Bank will also encourage Kenyans to switch from timber-based roofing trusses and building beams to the adoption of MRM’s steel option.
It is estimated that Kenya has a housing shortage of up to 200,000 units annually, but that only 40,000 units are built every year.
Mortgage financing is already emerging as Equity Bank’s fastest growing product category. Over Ksh.23 billion ($238 million) has already been disbursed, barely a year into Equity Bank’s mortgage products launch.