africa Finance Housing Nigeria Real Estate South Africa

How Africa can address housing finance gap

Pan-African financier that exclusively supports the development of the housing and real estate sector in Africa, Shelter Afrique, has urge governments to establish a housing microfinance fund to improve access to housing finance by those in the lower end of the market.

Speaking at the Affordable Housing Investment Summit in Nairobi recently, Shelter Afrique’s Chief Executive Officer Andrew Chimphondah said most policies had an exclusive urban focus, and non-consideration of the low-income groups and the rural areas.

According to Shelter Afrique, establishment of such a fund would make it easier to facilitate efficient and inclusive housing market systems and make affordable housing a reality across Africa.

Currently, 90 per cent of Africans cannot afford to buy a house or qualify for a mortgage.

“Access to adequate housing for low-income earners is a critical development issue globally and more so for Africa. A safe and stable home is the first step to a productive, healthy life, yet owning a home is beyond the reach of the vast majority in Africa,” Chimphondah said.

He said majority of African countries were facing housing crisis and that the continent housing industry required at least minimum of US$2.5 billion in new investment annually for any meaningful impact.

“The combined value of the housing shortage of Africa’s first and second largest economy, Nigeria and South Africa respectively is estimated at USD97 billion, stemming from huge annual housing deficits of seventeen million and three million units for Nigeria and South Africa respectively,” he said.

Shelter Afrique’s Chairman Daniel Nghidinua said with the right enabling policies and by following coordinated and inclusive approach, African countries have and can mobilize requisite capacities and resources to tackle the shortage of affordable housing.

Limited long-term financing

Mr. Chimphondah noted that in sub-Saharan Africa, majority have very limited access to long-term financing for housing, which is almost invariably limited to commercial banks offering formal, multi-year mortgages.

“For instance, only 2.4 percent of the Kenyan population is able to afford typical loan rates. At the end of December 2018, there were only about 26,000 active conventional mortgages in the whole country – the majority of which were granted to urban professionals.

In Uganda, which has a population of 42.8 million, the number was just 5,000 in 2018.

This hence calls for an urgent need to expand mortgage finance option, designing appropriate mortgage finance products, and enhancing access to capital markets.

“There is also a need for alternative housing finance products such as medium-term non-mortgage finance instruments, mini-mortgages, and micro-finance for housing,” Mr. Chimphondah said.

Recent reports indicate that more than 60 per cent of sub-Saharan African currently lives in Slums.

Source: The Exchange

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