Rapid urbanization is pushing up demand for housing in Sub-Saharan Africa.
African cities become the new home to over 40,000 people every day, many of whom find themselves without a roof over their heads. With that in mind, IFC has committed to do more to develop the property sector, both to provide new and affordable housing and to encourage an industry that requires significant building materials and has the potential to be a major employer.
In May, IFC and Chinese multinational construction and engineering company, CITIC Construction launched a $300 million investment platform, CITICC (Africa) Holding Limited, to develop affordable housing in multiple African countries. The platform will partner with local housing developers and provide long-term capital to develop 30,000 homes over the next five years. IFC estimates that each housing unit will create five full-time jobs – resulting in nearly 150,000 new jobs on the continent.
Kenya and Nigeria are high on the priority list for the new effort. Kenya’s housing shortage is estimated at 2 million units, while Nigeria is in want of 17 million units. The soaring demand is being met by scant new supply. Africa’s housing market has few local developers with the technical and financial strength to construct large-scale projects.
The IFC-CITIC Construction platform will work with local housing companies to develop affordable housing projects across Sub-Saharan Africa, each ranging in size from 2,000 to 8,000 units. CITIC Construction has a proven track record in constructing and delivering large scale housing projects. The platform will start by developing homes in Kenya, Rwanda and Nigeria, expanding to other countries as operations ramp up.
“In Angola, through planning, financing, construction and post-construction operation, CITIC Construction has successfully completed the 200,000 units housing program, the new city of Kilamba Kiaxi, with relative infrastructure and utilities in four years. CITIC Construction has also founded the CITIC BN Vocational School in Angola which helps youth acquire the skills they need to become professionals”, said Hong Bo, Assistant President of CITIC Group and Chairwoman of CITIC Construction, “CITIC Construction will take advantage of our engineering experience and delivery capability to develop more affordable houses for Africa through the platform with IFC.”
“As Sub-Saharan Africa become more urbanized, the private sector can help governments meet the critical need for housing”, said Oumar Seydi, IFC Director for Eastern and Southern Africa. “The platform will help transform Africa’s housing markets by providing high quality, affordable homes, creating jobs, and demonstrating the viability of the sector to local developers.
IFC will work with financial institutions to support mortgages and housing finance that will allow people to purchase the units.”
The new housing units will be constructed in accordance with IFC’s green building standards, delivering homes that are environmentally friendly and sustainable.
The World Bank Group estimates that by 2030, three billion people, or 40 per cent of the world’s population will need new housing units. To date, IFC has invested more than $3 billion in housing finance in over 46 countries worldwide. IFC focuses on regions where large portions of the population live in sub-standard housing and have limited access to credit to build, expand, or renovate their homes.
Source: World Bank Group (International Finance Corporation)