How World Bank has lowered private loan targets for Kenya’s housing programme
By Kenneth Mwenda, February 17, 2026The World Bank has scaled back the private financing it hopes to secure for Kenya’s housing and land reform initiatives.
Commercial lenders will now provide Ksh46.4 billion ($360 million), down sharply from the original Ksh116 billion ($900 million) target. The overall project package has dropped from Ksh174 billion ($1.35 billion) to Ksh117 billion ($910.3 million). Officials insist the adjustment does not reduce the project’s scope but reflects a more cautious expectation of private investment.
Kenya’s government, led by President William Ruto, has made affordable housing a key policy goal. The programme aims to build homes for low-income families while reforming land laws to ease access to property. The World Bank plays a role in raising funds, combining concessional loans with market borrowing. Yet recent updates show commercial lenders are hesitant to commit as much as first projected.
Isfandyar Khan, the World Bank’s lead financial sector specialist for Kenya, explained the change.
“This is not a reduction in the project cost but the estimated private capital mobilisation under the project,” he said. “Until the World Bank Board approves any project, all amounts are subject to change.”
Khan spoke to reporters as questions mounted over the scale-back.
Board review
The World Bank Board is set to review the proposal on March 19. If approved, the Bank will increase its concessional loan to Ksh61.29 billion ($475 million) from Ksh48.38 billion ($375 million). Concessional loans offer better terms than commercial borrowing, with lower interest rates and longer repayment periods. The OPEC Fund will contribute an additional (Ksh9.68 billion) $75 million.
Ruto’s administration stresses that housing is a key way to create jobs and ease urban poverty. At a ceremony last year, he handed over newly built units, saying:
“We are committed to delivering affordable homes to Kenyans.”
The government links the programme to broader economic goals, including boosting construction and improving land rights.
But challenges persist. High global interest rates make commercial borrowing expensive for Kenya, already burdened by substantial debt to creditors such as China and the IMF. Banks weigh risks from inflation, currency fluctuations, and political uncertainty. Analysts say these factors explain the cut in private investment targets.
“The adjustment does not represent a cut in the overall project cost, but rather a revision of the expected private capital to be mobilised through commercial lenders,” the World Bank told media outlets.
The revision shifts reliance toward public funding. Concessional loans from the World Bank and the OPEC Fund now make up a larger share of the total. This helps Kenya avoid costly market borrowing, which could strain public budgets, but also signals caution from private investors. Kenya’s credit rating remains below investment grade, deterring some lenders.
The programme targets key areas. It funds the construction of new homes under the Affordable Housing initiative, a flagship policy for Ruto since 2022. Land reforms aim to digitise records and resolve disputes, making it easier for citizens to obtain titles. Officials argue these measures could encourage investment in both agriculture and real estate.
Opposition figures, however, question the pace of progress. They argue that housing levies burden workers without delivering enough results. Courts have challenged parts of the plan, adding further uncertainty. Despite this, the government continues to seek support from partners like the World Bank.
Ruto met World Bank President Ajay Banga in Nairobi in March 2023 to discuss infrastructure support.