of doing business for financial institutions with the main aim of bringing down the cost of financial services. further, the cbk will pursue better regulation as opposed to more regulation so as to create room for more innovations by financial institutions and also be ready with effective tools to deal with any system vulnerabilities and emerging risks. it is my hope that a strategic framework for affordable housing finance will provide solutions on some of the pertinent problems in the housing market in kenya, sensitive to the immediate demands and the need to have a sustainable vision. ladies and gentlemen, it is now my pleasure to welcome mr. henry rotich, cabinet secretary to the national treasury, to make his remarks and officially open the workshop. welcome bwana waziri bis central bankers ’ speeches

patrick njoroge : affordable housing finance in kenya – developing a strategic framework remarks by dr patrick njoroge, governor of the central bank of kenya, at the workshop “ developing a strategic framework for affordable housing finance “, co - hosted by the national treasury and the world bank, nairobi, 27 april 2016. * * * good morning! i am indeed honoured to be here today at the opening of this workshop on affordable housing finance, and i thank the national treasury and the world bank for co - hosting it. the theme of this workshop – developing a strategic framework for affordable housing finance – is timely given the state of the real estate sector in kenya. the country continues to experience acute problems of affordable housing and to deal with this, there is need for higher investment, both private and public. as you may be aware the country needs approximately 240, 000 new housing units per year to meet the ever growing need. this is a big challenge given the high cost of construction material and other related expenses. in addition, shelter without the supporting infrastructure of water, sewerage, electricity, and social services fails to achieve the desired benefit. affordable housing therefore is a herculean and multi - faceted objective for which practical solutions are needed. in the words of nelson mandela, “ it always seems impossible until it is done ”. allow me to share with you some statistics on the real estate sector : • the sector continues to receive a small but rising share of bank credit. this now accounts for 13 percent of credit to the private sector, rising from 7 percent in 2010. • the real estate and construction sectors contributed approximately 13 percent to gdp in 2015. • the residential mortgage finance market has more than tripled in the last five years, from ksh. 61 billion in 2010 to ksh. 203 billion in 2015. • the number of mortgages in the banking sector has grown from 13, 800 to 24, 500 over the same period. • though the data is weak, we understand that saccos have provided substantial support to the sector. a critical piece in the puzzle is the role of the financial sector in driving this objective. it is important that this be probed, also highlighting the opportunities but also the significant risks. in particular, the seemingly perennial issue of high interest rates, in addition to high property prices and transaction costs, are often cited as key drawbacks. evidently, the mortgage industry does not seem to provide adequate solutions for affordable housing. however, kenya ’ s outstanding mortgage