The opportunity for African countries to support the growth and development of affordable housing is immense. This and other issues will take the centre stage at the 34th African Union for Housing Finance (AUHF) conference and Annual General Meeting, which hold in Abidjan, Cote D’Ivoire, this month, MUYIWA LUCAS reports.
When eggheads in the African housing and finance sector converge on Abidjan, Cote D’Ivoire, between October 23 and 25, the focus will be on primarily providing solutions to the housing challenge confronting the continent.
This is because providing affordable housing opportunities for Africa’s rapidly urbanising population is a major policy driver for African governments. It also provides opportunities for both local and international investors and developers. This is hinged on the recent estimates by the World Bank, which suggested that more than one billion people will live in African cities by 2040- a figure which more than doubles the current urban population on the continent.
According to experts, Africa’s cities’ capacity to respond to this challenge and to turn the demand for affordable housing into an opportunity for stimulating local economic growth and development, is critically dependent on an efficient flow of finance.
The conference, with the theme: “Building Africa’s Housing Financing Chain,” will provide stakeholders with an opportunity to examine the housing needs in the region, including addressing the challenges and opportunities in Africa’s housing finance chain.
It will also explore key links in the housing financing chain: the finance instruments that support each link in the housing delivery chain, and the funding instruments that make these possible.
Stakeholders are convinced that as the conference holds in a leading regional economy like Cote D’Ivoire, which is also the hub for West Africa Monetary Union (UEMOA), one of its focal points will be building UEMOA’s housing finance sector. Considering that mortgage lending is a key issue, Director General of the UEMOA mortgage refinance institution, the Caisse Regionale de Refinnacement Hypothécaire de l’UEMOA, Christian Agossa, will deliver a keynote address on this key area.
According to Agossa, mortgage lending products need to be well-targeted to the demand side; however, adjustments to product design, including mechanisms to underwrite informal incomes, savings-linked and micro-mortgage products, and pension-backed lending will expand the potential market for mortgage lending dramatically in affordable housing.
“The affordable housing challenge promises to be a significant driver of economic activity,” the executive director for the Centre for Affordable Housing Finance’s (CAHF), Kecia Rust, said.
Yearly, CAHF analyses the most affordable homes, which are being built on the continent. In Nigeria, it is reported that Millard Fuller has developed a starter house for a cost of $7,500. According to the body, if this was available for purchase with a mortgage across the continent, the potential effective demand would translate into about 52 million houses. This activity, it further said, could generate $400 billion in economic activity and provide more than 1.3 million jobs in the construction sector alone.
Based on this, the CAHF maintained that investors are clearly interested in the continent. It further noted that although such gesture is still relatively small in relation to the potential opportunity, investment in residential real estate and affordable housing in particular, is growing.
“Development finance institutions, as well as international and local investors all working towards maximising the impact investment potential that the numbers suggest. The 34th Annual AUHF conference will give them a platform for the growing number of affordable housing stakeholders to accelerate their conversation,” CAHF said.
Rust argued that African governments have a critical role to play in land assembly and the awarding of development rights that support affordability. Infrastructure investment, he further said, must accommodate the expected densities and should ultimately be funded over a longer time frame than the housing itself. Besides, he noted that the capacity of developers to deliver truly affordable housing at scale is an issue that will require policy support and private sector construction financing.
“And then there is the question of end user financing, the cost of capital, and the trust lenders have in the underlying security. These are all policy and regulatory issues on which the government will need to focus – beyond simply visioning a magic number,” he admonished.
Indeed, the interest of policy makers to ensure that housing needs of the continent are surpassed needs to be sustained. It is encouraging to know that policy makers as well as several other stakeholders are responding with supportive rhetoric and explicit programmes. For instance, President Kenyatta’s commitment to see the construction of half a million affordable homes in Kenya is one example. Similarly, governments in Nigeria, Uganda, Côte d’Ivoire, Rwanda, South Africa, and others have all expressed a commitment to affordable housing in the past years.
Top thought leaders
Financial Sector Development Department Director, African Development Bank, Mr. Stefan Nallemtaby, is already upbeat about the conference. “We will have a robust discussion on the affordable housing value chain and Abidjan, as one of Africa’s high growth economies is the perfect host city for this conference and AGM,” he noted.
His assumption may not be faulted given that more than 200 delegates and stakeholders are expected at the summit in October. Some of the confirmed regional speakers include: Mr Christian Agossa, Directeur Général at Caisse Régionale de Refinancement Hypothécaire de l’UEMOA, the Chief Executive of the Federal Mortgage Bank of Nigeria, Ahmed Musa Dangiwa; acting Chief Executive Officer of the Nigerian Mortgage Refinancing Company, Kehinde Ogundimu, among others.
The summit is a strategic platform for the continent’s affordable housing financing thought leaders to build a more robust housing finance value chain.
Source: The Nation