CAPE TOWN, South Africa: Taking place at Cape Town’s Westin Hotel from 4-6 November, this year’s joint African Union for Affordable Housing Finance (AUHF) and International Union for Housing Finance (IUHF) Conference is “international in best practice and African in execution” says its organizer and host Kecia Rust, of the AUHF Secretariat.
With more than 300 delegates drawn from 30 African and international countries; this year’s conference theme is, “Realising Affordability in Global Markets.”
According to Rust, the joint conference has attracted speakers from leading DFIs, mortgage refinancers, local and regional banks, and multi-laterals such as the African Development Bank and the International Finance Corporation, which is indicative of the growing interest in affordable housing, as an attractive and necessary asset class globally.
African Development Bank
As one of this year’s participants, the African Development Bank (AFDB), views the conference as a key platform for designing innovative financing schemes to resolve Africa’s housing challenges, says AFDB’s Chief Capital Markets Officer – Financial Sector Departments, Ahmed Attout.
Adding that the conference will help to “Identify new business opportunities in the housing sector that match the Bank’s Ten-year Strategy and its High 5s Priority Agenda which is chiefly to ‘Improve the quality of life for the people of Africa’ and ‘Industrialize Africa.’
The value of the conference according to Attout, who was speaking ahead of this year’s conference, is that it helps to unify the sector and creates a unique platform for different players from across the value chain to address challenges and access opportunities.
“One of the critical issues facing Africa’s housing finance ecosystem is the capability to bring together key market players, policy makers, and institutional investors to share their views and brainstorm on possible solutions to address market challenges,” says Attout.
With affordable housing becoming one of the most pressing social needs and future opportunities in Africa for real estate investors, Rust believes that Africa needs a multiplicity of innovative solutions due to the sheer scale of demand and opportunity.
A perspective which Attout agrees, and why the AFDB has been focused on developing alternative solutions designed to improve greater access to more capital in Africa.
Market Solutions
“The market is changing, and we are seeing more participants actively engaged in the sector to overcome affordable housing challenges in Africa.”
As he notes, the scale of the challenge in AFDB’s Regional Member Countries necessitates the “need for MDBs and other financiers to pool resources to tackle the affordable housing challenges through the introduction of new asset classes that depend on innovations and capital market solutions.”
These developments have included the promotion of long-term local currency funding using alternative capital markets solutions, and innovation has become an integral part of the AfDB strategies.
Developing New Finance Infrastructure
As Attout explains, “The AFDB has been leading initiatives tailored to mobilize long-term finance for housing development in Africa, crowd in pension funds money, and assist private and public sector institutions in identifying, financing and implementing affordable housing finance schemes and related infrastructure.”
Some of the most notable interventions and development by the AFDB has been in the development of mortgage financing products for affordable housing, and it has “directly intervened in several African markets including Zambia, Kenya, South Africa, and Ghana as well strengthening other regional players,” says Attout.
According to Attout, “Each intervention has assisted in lengthening tenors of mortgage financing as well as improving the stock of affordable housing available for eventual securitization and capital markets (re)financing. Securitization of housing assets is a process, usually taking up to 3-5 years after the creation of the original mortgage and for attracting private sector investors into the eventually securitized mortgage assets.”
A timeline, which makes the timing of this year’s Global conference as particularly fortuitous and impactful for the sector says Attout.
“The upcoming joint IUHF and AUHF Conference is timely and deemed to be an excellent opportunity to share our experiences and to foster collaboration between all parties involved in the development of an affordable housing finance market in Africa. We are excited to showcase our structures and experience at the event, and actively present our views in changing the perception by investing in affordable housing as a profitable and secured asset class for investment.”
Global Best Practice
And while the development of Affordable Housing as an asset class is long-term, it’s role in the development of vibrant capital markets is pivotal says Attout. “While noting the important role of capital markets in creating alternative structures for mortgage and housing availability, the Bank is also drawing on lessons learned from the global financial crisis and is, therefore, encouraging global best practices while providing facilities to commercial banks and specialized financial institutions to increase the supply of affordable mortgage finance products.”
APO
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