In a move towards advancing Kenya's affordable housing sector, the International Finance Corporation (IFC) has formalized an equity investment, amounting to Sh3.08 billion ($20.9 million) in IHS Kenya.

The latter, a Southern African Private Equity fund manager with U.S. ownership, is set to construct 5,000 cost-effective residences in the Nairobi metropolitan area, with potential expansion to other counties in response to demand.

The agreement, inked on Friday at the IFC/World Bank Headquarters in Upperhill Nairobi, signifies a strategic collaboration between IFC, IHS Kenya, and the International Housing Solutions (IHS).

Leading the signing ceremony were Henrik Elschner Pedersen, IFC's Regional Industry Director for Manufacturing, Agribusiness & Services, Africa; Peter Mayavi, IHS Kenya Managing Director for Capital and Investor Relations; and Kioi Wambaa, IHS Kenya Managing Director for Investments and Assets Management.

IFC's participation in the equity co-investment with IHS is capped at a maximum stake of 20 per cent in the housing fund created to finance the expansive affordable housing project.

IHS, leveraging funds from various institutional investors, is targeting areas both within and outside the Nairobi metropolitan area, allocating a minimum of 15 per cent of the committed capital to areas beyond Nairobi.

In an official statement, the IFC outlined the nature of its investment, stating, "The IFC investment is an equity co-investment package by IFC of up to €19.3 million (approximately $20.9 million) to invest along with IHS Kenya Green Housing Partnership LLP and IHS Kenya Green Housing SCSp (the Fund) in the development and acquisition of approximately 5,000 newly developed, resource-efficient, green affordable housing properties in Kenya."

The proposed investment includes up to €10 million (approximately $10.9 million) from IFC's own account and up to $10 million equivalent in euros from IFC acting as the implementing entity of the UK-IFC Market Accelerator for Green Construction Program (MAGC).

IHS, with a remarkable track record, had raised over $740 million (Sh104.7 billion) in capital since 2008 by the end of last year.

These funds were deployed through six multi-investor funds, one single-investor fund, and the listing of a publicly traded Real Estate Investment Trust (REIT) in Johannesburg.

The inception of the IHS Kenya Green Affordable Housing Fund in 2021 aligns with the broader governmental agenda to address the housing deficit, a critical issue estimated at 200,000 units annually.

The initiative gained momentum under the current administration, emphasizing a Public Private Partnership (PPP) model to accelerate the provision of affordable housing, making significant strides in fulfilling the objectives set forth by the Big Four agenda.

This significant injection of capital by the IFC underscores a shared commitment towards realizing the vision of accessible and sustainable housing solutions for the people of Kenya.