AUHF 2015 Conference: Making Housing Finance Markets Work in Africa

How do we make housing finance markets work? This ever pressing question—increasingly urgent as Africa urbanises—was debated by over 95 housing finance practitioners from 64 companies and 19 countries at the 31st Annual AUHF Conference and AGM. Held in Durban, South Africa, and hosted by AUHF member, the Banking Association of South Africa, the conference was opened with an address by the AUHF’s new Chairperson, Oscar Mgaya, the CEO of the Tanzania Mortgage Refinance Company. Mgaya outlined the severity of the challenges facing Africa’s housing finance sectors, and how the AUHF, through its 31 years, has tried to create a platform for deliberation about these complex issues.

Before the sessions started, the African Development Bank’s Dr. Issa Faye presented on the findings from their joint research with UN Habitat on Africa’s housing finance sector. Dr. Faye was followed by Thomas Ogutu, Head of the Housing and Urban Development Coordinating Unit of the African Union. Ogutu presented Africa’s Draft Common Position for Habitat III, the United Nation’s conference on urbanisation that is held every 20 years. The Common Position will be Africa’s position for Habitat III, and form the core of the continent’s input into what will be the world’s urbanisation agenda for the next two decades. Ogutu was at the conference looking for feedback on the paper from Africa’s housing finance sector, and the sessions that followed aimed to provide the input from the various institutions present.

The first session, titled, Financing the Housing Value Chain, included presentations that looked at various parts of the chain, including rent-to-own schemes, guarantees for infrastructure and construction loans, the issuing for bonds by municipalities, refinancing of mortgage portfolios with local currency bonds, as well as mortgage refinancing facilities. Afterwards, as part of the inaugural Housing Finance Marketplace, Making Finance Work for Africa (MFW4A) held a panel discussion that included the International Finance Corporation, Shelter Afrique, UN Habitat, the World Bank and Olivier Hassler, the renowned housing finance expert. The morning of the final day of the conference started with the second part of the Housing Finance Marketplace—one-on-one meetings between stakeholders and the financiers that are part of MFW4A’s Housing Finance Donors Working Group, including International Finance Corporation, Shelter Afrique and the World Bank. These one-on-one meetings have already led to two deals, and it will form an important part of future AUHF conferences. This will hopefully result in further deals, as it will create a platform for greater engagement and cooperation between financiers and stakeholders.
The next two sessions focused on housing microfinance and how to adequately respond to particular types of demand. The key overlap of the sessions was how to increase the supply of housing microfinance to meet the significant demand by those who derive their income from the informal sector. Because of the informality of their employment, and their general low incomes, it was argued that more market research as well as new ways to underwrite the many households who cannot be adequately accommodated for by traditional mortgage instruments are needed. These three sessions fed into the fourth and final session: breakaway groups of the different groups of practitioners. These four groups—mortgage lenders; housing microfinance lenders; delivery agents; and development finance institutions, guarantors, wholesale financiers and private equity—discussed what was required to make housing finance markets work for them.

The feedback from the breakaway sessions provided the basis for the Durban Declaration—a paper that serves to provide input into the Habitat III process by Africa’s housing finance sector and to make public a commitment to increase access to housing finance across the continent. The Declaration notes that the development of mortgage and housing microfinance markets have insufficiently kept apace with Africa’s urbanisation, that housing finance is a critical link in the housing delivery value chain and that affordability is a key issue in all of this. It calls for transparent land management systems, investment in infrastructure and serviced land for housing, greater attention to how macroeconomic and monetary policy affects housing markets, that housing microfinance should be elevated in national importance, and for the need for consistent housing policy and regulatory frameworks.

The Declaration ends with a commitment, signed by all 48 members of the AUHF, to contribute to making housing finance markets work. From ensuring that housing and housing finance products are affordable to our populations and mobilising more resources in the sector to contributing to research and creating robust and sustainable housing supply chains, there is a lot that can be done that will help overcome these seemingly intractable problems. The AUHF continues to work towards the goal of working housing finance markets, and looks forward to assisting current and new members in their work across Africa.

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