Property Reporter —
ABOUT 60 percent of Africa’s urban population lives in slums compared to an average of 34 percent in other parts of the world, according to a recent report.

The report presented recently at the FSD Capital Markets Development in London noted that housing development in Africa lags behind urbanization by 9 years. Zimbabwe is among the countries noted to have challenges regarding accessibility of housing and affordable mortgage finance.

Challenges around capital markets architecture, cost and accessibility of housing finance have resulted in huge housing backlogs in Africa including Zimbabwe; where there is shortage of 1,25 million units, 2 million in South Africa and Kenya and about 700 000 each for Cameroon and Ivory Coast.

Despite apparent demand, less than 30 percent of land within 5km of Africa’s CBDs remains unbuilt. The majority of urban housing is built by households, one-by-one and most housing in Africa has to be bought with cash.

“Housing is expensive so even the income-earning live rough, informal housing is even more expensive, but easier to manage day-to-day. Urban living costs are higher in SSA than elsewhere, relative to GDP/capita,” the report says.

Housing finance, investment capital, construction capital, end user finance, and all the facilitative interventions (guarantees, insurance, and subsidies) that happen in between, are critical ingredients to addressing the housing challenges in Africa.

This section of the financial sector is underdeveloped for two reasons.

First, financial sector development initiatives focus largely on other sectors: insurance, agriculture, small business development, and mobile money.

The notion of a housing sector in the African context is still very new and the financial sector is unfamiliar with its dynamics.

This is possibly because of the second reason: that housing finance is dependent on a much wider array of activities and sectors that together comprise the housing value chain, activities that are beyond the financial sector’s reach.

It has been established that good housing was crucial for economic development in most African cities, labour market mobility, firm productivity and competitiveness, agglomeration economies, productive urban form and municipal services, household asset wealth, home-based enterprises; productive investment and investor confidence and or place desirability.

The presentation on Africa revolved around the reasoning that the house is an asset, has a significant impact on the economy, whose financing depends on the value chain, lenders and that investors favour higher value markets

Generally, housing is expensive – the most significant investment of most families and is long term, as it takes 2-5 years to develop and over 20 years to fund and trade. Housing markets are brand new in Africa – limited data and information, basic conditions (foreclosure, trade, leverage) not yet tested. Naturally, other housing features is that it is bulky, multi-sectoral and an investment opportunity, as everyone needs a place to live. The need for housing across Africa is immediately visible. In every city across Africa, evidence of informal and inadequate housing conditions can be found in the proliferation of informal settlements, slum areas, and overcrowding.

The centre for affordable housing finance in Africa says African cities have among the highest urbanization and population growth rates globally, in some cities as high as 6 percent.

Without the supply of adequate, affordable housing at scale, housing backlogs continue to grow almost to the point of absurdity, according to CAHF.

And yet, the market opportunity, if the housing ecosystem were to function effectively in all markets across the continent, is tremendous.

For every house built in emerging markets it is estimated that five jobs are created. The production and consumption of housing stimulates economic growth and growing property markets support enhanced financial intermediation contributing to the efficient development of national economies.

And housing assets, whether geared with finance or not, can act as a financial springboard to micro and medium enterprise and human capital development.

In the context of the economic downturn in Africa, housing creates an important and strategic opportunity to change the narrative and drive growth from within.

Yet whether in the public or the private sector, among Government officials or investors, housing is considered without its financial imperative that it must be paid for, and a key opportunity for improving efficiency and effectiveness of the sector to meet the growing and pressing needs of urban Africans and contribute critically towards economic growth, is lost.

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