Mukuru Cross Subsidised Housing

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Focus Areas: Housing

This project is a Greenfields housing development for 2000 slum dwellers in Mukuru, Nairobi.  It involves the development of a market subsidy for construction of slum dweller housing.  Loan financing for construction has been accessed from the African Investment Bank for the first phase of 500 units.  Additionally, a line of credit has been attracted from Shelter Afrique towards mortgage financing.  This means that the repayment risk of mortgage financing is not borne by community savings.  Part of this contract’s money has been invested in a high return low risk land investment. Within one year, value of the investment has grown over 500% through land price appreciation.

This process shows that community organisations, savings and advocacy can help leverage resources for upgrading from the market – this has relevance outside Kenya in countries which lack housing subsidies for the poor.  This project impacts directly on the financial and banking sectors both in Kenya and in the African Region as a whole. The relationship between the Federation and the market has advanced from conceptual, product development, and piloting levels to actual transactions.  The project supports the development of a market subsidy for construction of slum dweller housing

ATTENTION: 

SDI is aware of the problem with the Mukuru upgrading project. An organisation called Makao Bora Trust is contesting the AMT projects in Mukuru.

The circumstances of the case, according to the Kenyan Alliance, is that Makao Bora Trust is an organisation formed by community leaders who were involved in developing the project and who retain project bank accounts. Makao Bora, however, is different from the community savings group which was, and remains, the vehicle to deliver the project. 

Makao Bora has entered into agreements with, and received funds from, a Norwegian non profit towards developing a school on part of the land. This deviates from the housing development objective of the project and may be a major reason Makao Bora wants to get title to the land. 

The Kenyan Alliance feels that Makao Bora is unable to demonstrate that they represent the project beneficiaries; that the beneficiaries still have US$20,000 outstanding in repayments to AMT; and that Makao Bora is not a legally recognized entity of the project. In short the Kenyan Alliance is not satisfied that Makao Bora represents the wishes of the 2300 community members that have contributed to the project and feel that a lot of negotiation needs to be done before land title is transferred. This has occassioned a legal case being filed by Makao Bora to compel AMT, the Kenyan urban poor fund, to release the title to them. 

 At the same time an ongoing parallel discussion between the Kenya federation and Makao Bora seeking to find a compromise solution. 

 In the meantime, AMT does not wish to counter, what they regard as disinformation by Makao Bora. They do not have a fight with the community organisation but feel they have a responsibility to conduct themselves properly so that all stakeholders are satisfied with an eventual outcome. They expect that the legal case may precipitate a negotiation that will resolve the current disupte. 

 AMT is willing, however, to respond to specific queries about the actual  project. 

 At this point the Kenyan alliance does not feel that a specific intervention by SDI is required.

CURRENT STATUS:

 Initially these funds were for the development of the first phase of the Mukuru Sinai Housing Project. However due to the dispute they could not be spent on Mukuru and were re-routed to other projects. These projects are Katana Housing and Borehole and Ghetto Housing. UPFI is holding the balance of $98 000 and should the dispute be resolved in 2014 the funds will be made available as per the Federation request. Should this not be the case, the project will be closed. 


 

Location: Mukuru, Nairobi, Kenya
Irene Karanja ikaranja@mustkenya.or.ke (+254) 20 267 770 View Website
Project social media channels:


Project information updated: 20 March 2014

Project in depth

Detailed Information

This project sees the Kenyan Alliance of Muungano wa Wanavijiji and Akiba Mashinani Trust (AMT) respond to the need to design plans for and construct affordable houses in Mukuru.  It forms part of SDI's 7 Cities project, one of the cities focused on being Nairobi. 
 
 
This project has been able to attract a line of credit from Shelter Afrique for USD 500 000 towards mortgage financing. This shifts the repayment risk of mortgage financing from community savings. The project has further attracted construction loan financing for the first phase of 500 units from the African Investment Bank. USD 200 000 of this contract is invested in a high return low risk land investment. Within one year, value of the investment has grown above 500% through land price appreciation. This ensures financial sustainability of the project. The project demonstrates that community organisation, savings, and advocacy can leverage resources for upgrading from the market.
 
FINANCIAL SUMMARY: 
 Capital - $370 000
T/A - $30 000
Total Contract- $400 000
Disbursed - $302 000
Reported T/A(closed)- $30 000
Reported Capital (revolving)-$170 000
Capital held by AMT Kenya - $272 000
Captial held by SDI- $98 000
Detail: Originally was USD400K  for Mukuru Phase one houses but was changed by Kenya to be Katana &Ghetto Housing  and Borehole and reported under Katana & Ghetto Housing

Funding Information

Raised:

$400,000.00

Implementing Partners

Bill and Melinda Gates Foundation


Muungano wa Wanavijiji


Akiba Mashinani Trust


Norway Ministry of Foreign Affairs


The Rockefeller Foundation