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Boosting Affordable Housing in Africa: AfDB approves US $8.2-million equity participation in Shelter Afrique
The Board of Directors of the African Development Bank (AfDB) approved on Thursday, February 18, 2016 a US $8.2-million equity investment in Africa’s housing and habitat company, Shelter Afrique, to strengthen its balance sheet and help it achieve its objective of providing quality affordable housing in Africa. This marks an important step towards addressing the acute shortage of housing in most African countries, while creating jobs and enhancing income in Africa.
Africa’s economic landscape remains positive with promising scope for growth; Gross Domestic Product growth remains robust supported by multiple factors. The continent’s growing population, a growing middle class and the fastest urbanization rate in the world are some of the factors driving increased demand for affordable houses and housing finance. The construction sector in Africa is growing at 20% per annum, but this cannot sufficiently address the rising demand for housing due to various technical and physical constraints including: (i) lack of accessible and well-priced housing finance; (ii) complex land tenure systems; (iii) high costs of land registration and titling (iv) cumbersome registration processes; and (iv) availability of reputable developer with sufficient capacity.
Shelter Afrique is the only pan-African organization devoted to financing the development of proper housing and human settlements in Africa. Created in 1982 and headquartered in Nairobi, Kenya, Shelter Afrique is a pan-African housing finance and development institution that helps to address the acute shortage of housing by providing financial and technical resources for sustainable housing and urban development. Shelter Afrique’s current shareholding comprises 44 African countries, the African Development Bank (AfDB) and Africa Re. AfDB played a key role in the establishment of Shelter Afrique as the vehicle for supporting sustainable housing and urban development in Africa.
The AfDB’s equity participation is part of an ongoing capital increase by Shelter Afrique’s shareholders. It will support Shelter Afrique to implement its revamped Strategic Plan which is focused on modeling Shelter Afrique as a Pan-African DFI with the capacity to respond to the growing demand for affordable housing and related infrastructure services. It will further enhance Shelter Afrique’s capital base and help solve Africa’s housing finance challenges. Through this contribution, AfDB would leverage Shelter Afrique’s technical capabilities, field presence and local knowledge of the regional housing market and help alleviate some of the structural financing inefficiencies encumbering Africa’s real estate growth. The investment will enhance inclusive growth and private sector development through the much needed boost to the availability of affordable housing in Africa.
This investment is well aligned to AfDB’s Ten Year Strategy, 2013-2022, as well as one of the Bank’s High 5 strategic priorities of improving the living conditions of Africans.