This blog originally appeared as the introductory essay to the 2022 edition of the Housing Finance in Africa Yearbook.

Around the world, climate issues have been a dominant focus of the year. Sustainability and green are keywords on everyone’s lips. From energy consumption to construction practices, to finance structuring, to household living, the key focus this year is on finding ways to achieve the net zero carbon emissions target for 2050, stipulated by the 2016 Paris Agreement, and to hold the global average temperature at no more than 1.5°C above pre-industrial levels. The reason for this is clear – in the past few years, the globe has experienced an unprecedented number of climate emergencies, with serious, obvious impacts, especially for poor households. Floods in Pakistan, fires in Australia and Greece, cyclones in Mozambique, drought in East Africa and Central America, sandstorms in China, and heatwaves in North America and Europe – the impact has been overwhelming and expensive in all respects, bringing the challenge of climate resilience into sharp and local focus. [1] 

African countries are the most affected by climate shocks. According to African Economic Outlook (2022), five of the ten countries most affected by climate shocks in 2019 were in Africa. [2]. In 2020 and 2021, there were 131 extreme-weather, climate change-related disasters recorded. The majority of these (99) were floods, followed by 16 storms, 14 droughts and two wildfires.

According to the IMF’s Climate Change Dashboard, the majority of disasters reported in Africa were in South Africa, followed by Ethiopia, Mozambique, Kenya and Madagascar. Sixteen countries have reported having more than 40 climate-related emergencies in the 41-year period, 1980-2021. [3]

Of course, many disasters go unreported and, critically, most go uninsured. When houses are destroyed, they are gone – and their residents are left homeless. African Economic Outlook suggests that in 2022, a further 30 million people were pushed into extreme poverty, [4] as a result of the effects of the COVID-19 pandemic, the impact of the war in the Ukraine, and the impact of climate-related, natural disasters. Droughts, floods, landslides, storms, wildfires and extreme temperatures – all climate emergencies – destroy crops, which then reduces the availability and price of food, and export earnings. Climate emergencies damage both public and private infrastructure, create health risks, and undermine household livelihoods – especially for the most poor whose incomes are already precarious.

The impact on housing – in terms of its production, cost, and longevity – is devasting, and across the continent hundreds of thousands of people are being left homeless. This year, heavy rainfall in Uganda’s Elgon sub-region left thousands of people displaced and homeless, and thousands more without access to clean water. [5] In Kenya, it has been noted that prolonged drought impacts negatively on the supply of building materials such as timber, while also reducing water levels, which then impacts the cost of electricity. Nigeria’s National Emergency Management Agency (NEMA) has reported that 33 out of 36 states experienced floods in the first eight months of 2022, affecting over 508 000 people and destroying 37 633 houses.[6] Similarly so in Ghana, heavy rainfalls flooded cities and damaged homes. In April 2022, flooding and landslides in South Africa’s KwaZulu Natal province displaced approximately 40 000 people, destroyed 12 000 homes, and caused severe damage to schools, roads, and health centres. [7]

The costs of climate disaster are substantial. Tanzania, for example, is the most flood-affected country in East Africa. USAID anticipates that sea level rise will cost about US$200m per year in lost land and flood damage by 2050. [8] In Egypt, it is estimated that up to one million housing units are at risk due to sea level rise. The annual loss in property value is expected to be between 7-16 billion EGP (US$ 372.340 million – US$ 851.063 million) by 2060, not accounting for commercial properties. [9] In Côte d’Ivoire, the World Bank estimates that GDP losses associated with climate change will be between CFA429.07 billion (US$681 million) and CFA882.07 billion (US$1.4 billion) between 2022 and 2040. [10] In Mozambique in 2019, the total cost of reconstruction following Cyclones Idai and Kenneth (including for housing) is estimated at MT204.3 billion (US$3.2 billion) across seven provinces.[11]

A particularly significant impact of climate emergencies raised in the profiles in this Yearbook, is the increase in urbanisation. In Tunisia, for example, it has been reported that rising sea-levels, drought, land degradation and declining crop productivity are forcing people to give up their agrarian livelihoods and move to the cities to look for other employment. This is also reported in Morocco and Mauritania. Many cities struggle to cope with this influx – particularly with respect to affordable housing. With informal settlements often being the “arrival city”, [12] this puts increasing pressure on the percentage of people living in slums. So, while climate emergencies impact on the movement of people, they also add to the precariousness of the built environment, underscoring even more significantly the importance of the green agenda in housing.

While governments are increasingly attentive to the risks of climate change, the impact is so significant that most can’t keep up, and often, they fail to engage with the housing circumstances of people at risk of, or suffering from, climate disaster. In Côte d’Ivoire, the government’s COP 26 commitment was to reduce its greenhouse gases by 30% by 2030 and to increase contributions to renewable energy in the energy mix from 39.5% to 42% by 2025. [13] Although the Ivorian government has also indicated it will strengthen energy efficiency in the building sub-sectors, the notion of “green housing” is still undeveloped, and not yet articulated in regulations, policies, or law. [14] Togo has established a National Platform for Disaster Risk Reduction, a National Civil Protection Agency, and national strategies for disaster risk and post-disaster recovery. These policies and structures introduced the concept of risk reduction to building codes, rules and plans for land use, town planning and construction. [15] Similarly, Morocco’s Institute of Digitisation has released a “Guide to Sustainable Development in Construction” which sets out targeted standards and norms for sustainable construction in Morocco. [16] Responding to the devastation in recent years by cyclones, the Mozambican government launched a five-year, MT383 million (US$6 million) initiative – Building Resilience in the Coastal Zone – aimed at protecting local livelihoods and building adaptative capacity of climate vulnerable coastal areas in southern Mozambique. [17] Although there are a number of such examples, very few of these efforts engage with the particularities of affordable housing and the current living situations of low income households who are at the greatest risk.

Understanding climate as it relates to housing

The relationship between climate and housing goes in both directions: housing, in both its construction and ongoing life, has an impact on the environment, and the environment has an impact on housing and households. These impacts are substantial and affect the cost and safety of housing in significant ways.

And yet, the link between climate and housing – and affordable housing in particular – is not explicitly tracked, especially not in Africa. Isimbi and Park (2022) make the point that globally recognized green building certification systems such as LEED [18] rarely mention Africa. In LEED’s list of the top 10 countries with the most LEED-certified projects (excluding the US), no African countries are mentioned. [19]

IFC’s Excellence in Design for Greater Efficiencies (EDGE) tool is designed to demonstrate the business case for building green and unlocking financial investment, with a particular focus on emerging markets. [20] To achieve the EDGE standard, a building must demonstrate a 20% reduction in operational energy consumption, water use, and embodied energy of materials, as compared to typical local practices. EDGE defines a global standard while contextualizing the base case to the occupants and their location. The tool calculates and tracks the costs of going green: utility savings; city-based climate and cost data; and consumption patterns. The EDGE Platform showcases several project studies that can be filtered by building typology and/or country. As of May 2022, African project studies on the platform include two in Ghana, five in Kenya, one in Senegal and 17 in South Africa. Just a drop in the ocean and not at all representative of building activity on the continent.

Investors and financiers are increasingly incorporating environmental, social, and governance considerations into investment decisions. Guided by the six Principles for Responsible Investment (PRI),[21] about 4 600 PRI global signatories have identified climate change as the highest priority ESG issue. Signatories are working with institutional investors to make net zero commitments. [22] Despite the various net zero commitments, a key concern held by investors is the lack of accounting of climate risks in financial reporting. To this end, the PRI’s Driving Meaningful Data Programme “works on the types of data, sources and reporting frameworks needed to support responsible investors.” [23] Signatories are required to report on their investment activities annually.

In a report prepared for the African Local Currency Bond Fund, Consulting for Sustainable Solutions (Sager et al) explores the different green building standards used in South Africa. [24] Energy efficiency regulations are part of the National Building Regulations and Building Standards Act. Voluntary green building rating systems include the Green Building Council of South Africa, which certifies four main tool categories: Green Star, Net Zero, Energy and Water Performance, and EDGE. The primary motivator for developers to rate their developments using these systems is access to capital. Development Finance Institutions use EDGE and other tools as ways to certify ‘green’ stock as eligible for their investments.

Climate-focused activity within the affordable housing sector, however, is still very new and data is scarce. Recently, CAHF and Reall have undertaken the second round of data collection of Market Shaping Indicators – this is part of CAHF’s Data Agenda for Housing. In this second round, a series of new indicators explicitly engaging with the relationship of affordable housing and climate has been included. Data points are scarce – there is very little data collected and publicly available in an aggregated format to describe the impact of housing on the environment, or the impact of the environment on housing, at a national or city level. As part of the effort, a series of qualitative questions seek to fill in the data gaps:

  1. What are the dominant climate risks (flooding, cyclones, wildfires, droughts) faced by poor people and are these different from those faced by the wealthy? Provide examples of any recent climate-related disasters.
  2. To what extent are suppliers developing off-grid infrastructure products that can be added to existing homes to improve their green performance (for example, solar water heating systems, solar panels, biodigesters, clean cooking stoves, etc.)?
  3. Which of the following key residential construction materials are predominantly imported: concrete, cement bricks, steel, window frames, timber, pipes, roof tiles, corrugated iron, sanitaryware, faucets, tiles, other?
  4. To what extent do green finance providers or green mortgages exist for new home builds or renovations?
  5. Are climate and sustainability issues part of the national discussion relating to affordable housing? In what way?
  6. Does the country have a national disaster risk management plan? Does this plan extend to housing?
  7. To what extent are policies/ regulations/ building codes in place to support green building?
  8. Do green rating/certifying systems bodies such as a Green Buildings Council exist? If they exist, to what extent are they functioning and do they have reasonable reach?
  9. To what extent does the Building Code include guidelines or specifications for energy efficiency/conservation concerning: thermal performance or R-values (heat gains/losses) of envelopes through passive solar design; space heating and cooling requirements; water heating alternatives to electrical resistance element heating?
  10. Do tax or other monetary incentives to encourage green building exist?
  11. Describe the level of market penetration and acceptance of green products and building systems in the marketplace.
  12. To what extent are green products and building systems targeted specifically at low income households?

Preliminary responses to these questions show that there are efforts, in both the public and the private spheres, to incorporate green thinking and climate relevant interventions in the housing industry. As noted by Sager et al, however, notwithstanding the obvious relevance of the cost savings that efficiency interventions have for low income households, few interventions are directly targeted at this market. Where data is collected, standards and metrics are poorly framed for the conditions and context of low-income, affordable housing, especially when such housing is delivered incrementally or by small-scale builders or developers, or through inner city building refurbishments. The current approach, which sees ‘green’ as an outcome that can be shaped by investment demands, overlooks those categories of housing delivery that are unable to access investment. Ironically, this reinforces their isolation from investment, which has become structured to only recognise ‘green’ in certain ways.

What does it mean to be green?

Given its size and the way in which it uses resources, the construction sector has a considerable impact on the environment. In 2018, the International Energy Agency reported that the building and construction sector was responsible for 36% of global final energy use and 39% of energy-related CO2. [25] The universal recycling symbol introduced on the first Earth Day in 1970 provides a framework for thinking about green issues and affordable housing. [26] How have Africa’s housing markets engaged with the principles of conservation that underlie our broader thinking of what it means to be green?

Reduce the impact that housing has on the environment

With an emphasis on the 2050 net zero target and a reduction of our carbon footprint, the primary focus of climate-related initiatives has been on efficiency – whether in energy or water usage, or in the construction process. In part, this is because efficiency is the easiest to measure.

In South Africa, TUHF’s Luhlaza product explicitly measures efficiency, and seeks to create between 25% – 30% savings on the baseline usage (per unit per month) of energy, water and carbon in the buildings that TUHF finances with its green mortgage. Luhlaza has developed a green feasibility savings calculator that can be used to derive a building-specific baseline and the proposed usage for various scenarios. [27] The tool supports TUHF in the implementation of its Sustainable Bond Framework [28] which sets out how TUHF classifies investments as green and social, creating a basis for green-seeking impact investors to realise their own targets by investing in TUHF’s issuances. In 2021, TUHF issued the first social bond on the Johannesburg Stock Exchange Sustainability Segment with the assistance of Standard Bank. [29] The Urban Ubomi 1 (RF) Limited Mortgage Backed Securities Programme was listed on the Johannesburg Stock Exchange in March 2021. A total of R609m (US$33.5m) worth of notes were issued in the first issuance. [30] Together, these initiatives guide developers and landlords towards efficiency, not only driven by the operational cost savings enjoyed, but the access to capital to make it happen. [31]

International Housing Solutions is a developer financier based in South Africa and with a recently established green affordable housing fund in Kenya. Working with IFC’s EDGE, they have demonstrated the affordability contribution that EDGE certification enables. [32] In a project in South Africa, utility savings for tenants were equal to one month’s rental over a twelve month period, in the rental range of R4 000 – R6 000 (US$ 230 – US$345) per month. According to IHS, an estimated 5 200 tonnes of CO2 per year will be eliminated from the atmosphere through the energy savings realised in the construction of 6 250 homes. [33]

In a 200-unit student accommodation project developed by STAG African, in Cape Town, South Africa, the use of light weight steel building methods reduced construction time and maintenance costs, without compromising quality. Reduced energy demand was achieved through LED lighting, heat pumps and solar water heaters; and reduced water consumption was achieved with timers in showers. This led to an overall 33% in energy savings, 27% water savings, and 45% embodied energy savings. [34]

An interesting take on ‘reduce’ is evident in the South African profile this year, where developers appear to have been reducing the size of units: building plans for houses less than 80m2 showed a significant 68% increase year-on-year from January to May 2022, suggesting an increased demand for smaller housing units. [35] Whether this is an affordability consideration or a green one, the two clearly go hand in hand.

A critically important element of efficiency relates to building materials – not simply the materials themselves, but the areas from which they are sourced. This does not appear to be monitored, however, in any environmental impact assessment framework. Across Africa, the importation of building materials is significant, and this has a real impact not only on cost but also on the carbon footprint of the housing construction process. In the profiles set out in this Yearbook, it is reported that Tanzania, Nigeria, Ghana, Senegal, Egypt, Mauritania, Botswana and Sierra Leone import much of their construction materials. In 2021, Nigeria spent over ₦386.3 billion (US$930.4 million) on the importation of iron and steel, [36] and industry sources suggest that 65% of construction materials are imported. [37] An estimated 90% of building materials in Ghana are imported, either as finished or semi-finished products. [38] Industry players suggest that local materials, such as tiles or paint, some sanitaryware, are seen as inferior to imported products. An unpublished report from the Centre of Excellence of the WAEMU Habitat suggests that 50% of construction costs in Senegal arise from the importation of secondary products – plumbing, paints, tiles, carpentry, waterproofing – and that it is the weight of these products that contributes significantly to the cost. Imports can also undermine the productivity of the construction process when global supply chains are disrupted. This has been the case in Egypt, where it is reported that supply constraints and a deteriorating exchange rate saw the price of iron increase by 35% and the price of cement increase by 54.4% between June 2021 and 2022. [39] As a result, contractors had to raise the price of their units, which led to a decrease in sales by 20% in the first quarter of 2022. [40]

This year, the challenge of building materials feels particularly strained given the exceptionally high inflation rates being experienced in most countries. This is a global issue, driven by the crisis in the Ukraine and the impact that this has had on commodities—notably the availability and price of oil. Inflation in African countries is being felt particularly in the price of food and energy. The impact on building materials in this context is well illustrated in the price of a 50kg bag of cement which often has to be transported. CAHF collects this data annually. This year, in most countries it is not the highest that it has been. In a few, however, the price of cement has spiked dramatically. Some countries keep the price of cement artificially low through targeted subsidies. While these may well improve affordability in the short term, long term considerations for sustainability would suggest that an unsubsidised price would offer a useful incentive to find alternatives.

And then, land efficiency – with densification policies that allow for a reduction in the footprint of the building, not only can cities reduce the land cost associated with a development, improving affordability, but also the land use. This can contribute towards smaller developments, more compact cities, and more viable transportation networks, and the associated environmental benefits that go along with these. To a significant extent, African cities are already embracing this concept in practice, if not in policy. It suggests, however, a shift in policy towards rental accommodation and the management considerations of high-rise buildings. Might environmental assessment frameworks also consider this?

Reuse the built environment to minimise its impact over time

The second component of the universal recycling framework is ‘reuse’. In the context of the built environment, this offers all sorts of opportunities. Many cities across Africa have existing residential buildings that have fallen into disrepair. TUHF is a specialised commercial property financier based in South Africa, that drives inner city investment by providing access to finance for property entrepreneurs, to purchase, convert and/or refurbish buildings to provide affordable residential rental in South Africa’s main inner cities. [41] Since inception in 2003, TUHF has financed 387 property entrepreneurs to deliver 46 427 units in 711 buildings, with an average growth of 13% per year. The availability of existing building stock and infrastructure has supported TUHF’s business model, while also enabling a green approach, by leveraging embedded carbon. However, this leverage is currently not counted in ESG metrics. Impact investors are interested in the social impact of the housing delivery that TUHF finances, but overlook the environmental contribution made in reusing and refurbishing existing buildings. TUHF’s Luhlaza tool manages operational carbon, which the rating agencies count – however, the embedded carbon benefits are not reported.

Within the new build market, the concept of ‘reuse’ suggests building quality, so that buildings last for decades without having to be replaced. Building quality has come under the spotlight in several countries this year, as a result of cases of collapsing buildings. An audit of over 6 000 buildings undertaken by the National Building Inspectorate (NBI) in Kenya found 2 030 unfit for human habitation. Over 2 050 structures in Nairobi were identified as being in need of inspection and evaluation. Since the NBI was established in 2017, over 5000 buildings have been condemned and demolished. [42] In 2015, Kenya’s National Construction Authority found that 58% of the buildings in Nairobi were unfit for habitation. This was demonstrated in November 2022, when two buildings collapsed. [43] The situation in Nigeria is similar, where it is reported that 84 people have been killed in the collapse of 18 buildings in Lagos State in the last two years. [44] In all cases, attention shifts to the national building code and critically, its enforcement. Stories behind the building collapses tell of developers being hostile to the inspectors, underhand arrangements between inspectors and developers, buildings being built multiple stories above what is approved, lack of inspections, and so on.

It is possible that the building codes that exist, and the systems and processes designed to enforce them, do not engage adequately with the profile of the developers who are currently operating in cities across Africa. The majority of housing is still developed by households themselves, employing small-scale contractors, micro builders, and masons. Do building regulations align with their capacities and how they construct the delivery value chain? An interesting initiative by the Development Action Group in South Africa has been the establishment of a Developer and Contractor Academy. [45] This initiative focuses on building the capacity of the small-scale developer sector to undertake their developments with quality and efficiency, to ensure structures are built to code.

Meanwhile, many are familiar with the common sight of unfinished buildings across the continent. An article by the Economist last year argued that this was a result of poor access to construction finance, weak land titling systems, and in some cases, corruption or other conflict between shareholders. [46] Unfinished buildings include large scale developments or multi-storey apartment buildings, in which the shell is developed. However with no internal finishes, fixtures, windows or services, the structure remains uninhabited. Another category includes family homes that are partly constructed. As they stand, these buildings are worthless – indeed, their worth might be negative, given the carbon impact of the abandoned construction.

Mortgage lender Zambian Home Loans has responded to this phenomenon with a business model that actively seeks out half-finished projects and offers finance to complete the effort. [47] From ZHL’s perspective, the risk is managed by understanding the building process, and by knowing that once the investment is made, the latent value is suddenly realised, thereby reducing the loan to value ratio considerably. For the developer or borrower, this approach addresses a key problem they’ve been facing and allows them to complete the abandoned structure and ‘reuse’ it for the intended purpose. ZHL pays out the loan in stages that align with the incremental construction process of the builder. This improves affordability, while also assisting ZHL manage their risk.

Beyond this end-user driven approach, it is worth thinking about capturing the embedded carbon that exists in stalled developments. Construction finance is key. According to the Economist, 40% of firms in Senegal say that access to construction finance is their main obstacle. This is likely echoed across the continent where access to finance efforts focus on end-users rather than builders. In Nigeria, the government has expressed an intention to secure ownership over 600 such buildings, though it is not clear what will happen after that. In Côte d’Ivoire, it is still early days, but an investor is raising funds to purchase the unfinished buildings in that country and turn them into affordable housing developments.

Quality construction also means that buildings should be able to withstand environmental disaster. In Togo, the national disaster risk reduction strategy provides for the inclusion of risk reduction in codes, standards, rules and plans for land use, town planning and construction. [48] Developer Casa Real has had the benefit of first-hand experience in the importance of disaster-resilient housing in Mozambique, when its development was forced to withstand Cyclones Idai and Kenneth in 2019. [49] Thankfully, the buildings held, and with that, Casa Real was able to attract the attention of investors interested in this level and focus of quality. For more recent developments, Casa Real has partnered with Easy Housing, a building concept that uses sustainably-sourced timber to build carbon-negative houses whose design can withstand natural disasters. [50] On the back of this, crypto-financier Empowa has introduced green Non-Fungible Tokens to mobilise capital for EDGE certified developments. [51]

Other national building codes under development prioritise the use of green building materials and construction methods. The Rwanda Housing Authority has developed the Rwanda Green Minimum Compliance System, which encourages the use of indigenous knowledge and local solutions, where possible, in promoting the use of green construction and design practices, and offers incentives for investors in the green construction sector. [52] Senegal is currently revising its urban planning and construction codes to prioritise green building materials. Kenya’s draft building code, currently up for discussion, has been criticised for its prohibition of the use of second-hand building materials and for overlooking a key ‘reuse’ opportunity.

Once the housing unit is built, a ‘reuse’ approach would emphasize maintenance and quality building management, and in rental buildings, the application of reasonable services charges that make such attention viable. This is a grossly under-attended aspect of housing development, with developers and landlords giving scant attention to the economics of building longevity. In a survey of fourteen developers in Nairobi, CAHF found that very little attention is given to long-term operating and maintenance costs, and how services charges are calculated. Most arrive at their service charge rates by dividing equally the total project operation cost by the number of units, and then comparing this with a so-called “market standard”. There was very little reference to actual costs. This creates problems for buyers who are unaware of the larger monthly implications of their purchase. When owners face affordability problems, the development loses in its service charge collections, which undermines the property manager’s ability to invest in necessary maintenance. As a result, the lifespan of buildings is shortened.

The resale market is a further expression of the ‘reuse’ concept, as households move up and down the housing ladder to meet their changing housing needs. A critical ingredient is strong titling, which is then leveraged with appropriate financing mechanisms. Governments in Kenya, South Africa, Uganda and Tanzania are all addressing this in various ways. Leveraging existing housing stock to enable property market filtering allows for the market to also find its own efficiencies in the relationship between buildings, preferred location and affordability.

In Nigeria, Spleet has pioneered an interesting approach to reuse, by creating a mechanism that facilitates rental through sub-lets of existing properties. [53] Established in Nigeria in 2018, they have over 200 listings and have processed more than US$3 million in rentals. The approach works similar to Airbnb but for longer-term listings. Renters stay an average of 11 months with a 96% retention rate. More recently, Spleet has branched into Ghana, Kenya and Rwanda. The key innovation in the Spleet model is that landlords are able to collect the rents they need in a way that tenants can afford, and this in turn has stimulated both demand and supply. The Spleet model has also created a sense of market opportunity not only among traditional landlords, but also households with room to spare. They upgrade their unit or home with en suite bathrooms, and enter the rental market with a tech support that makes the business side of the process manageable.

Recycle in the building process to leverage existing assets

The final component in the universal green framework is “recycle”. Recycling of building materials and buildings, and the broader process of urban regeneration offers an nimportant opportunity for reducing the carbon footprint and promoting green housing.

A few companies are championing this approach. Green Pavers is a company in Kenya that develops affordable housing materials from recycled plastic. [54] Kubik is an Ethiopian company that takes a similar approach, turning plastic waste into low-carbon buildings. [55] In Rwanda, building material recycling cooperatives operate informally, assisting in the distribution of recycled building materials among masons. And of course, individual households share and trade all the time – saving costs by recycling what they have.

Building conversions, from commercial, retail or industrial to rental, is another form of recycling that creates important opportunities by capturing the embedded carbon of the existing building, while delivering new accommodation more affordably than new build. The approach has been tried and tested in South Africa, financed by TUHF and realised by institutions such as Madulamohho Housing Association, a non-profit social housing company, the Affordable Housing Company (AfHCo) and others. Since the Covid-19 pandemic, however, the trend seems to have accelerated as office vacancies increased while residential demand rose. [56] Meanwhile, although EDGE certification does allow for conversions, it is not often used as a mechanism to champion green, as practitioners note that it is very difficult to measure.

In the context of the built environment, the main recycling opportunity, however, is place: the existing built environment that can be repurposed for affordable residential uses. In late 2021, the Green Building Council of South Africa published a study together with the Divercity Urban Property Fund which demonstrated that the location of housing has an overwhelming impact on the carbon footprints of its residents. [57] The study demonstrated that if all new housing in Johannesburg was built on the urban periphery, by 2020 the carbon emissions would reach 224Mt CO2e, or ten times the total annual carbon emissions of the entire city of Johannesburg in 2016. [58] Low income housing is often put on the urban periphery because of the price of land. However, by mobilising undervalued inner-city areas, Divercity was able to leverage these areas in favour of affordable housing that is also green.

Remarkably, there is no metric that engages with the significance of location. While Green Star takes location into account, it ranks this far lower than the Divercity study suggests would be appropriate – and it doesn’t engage with the different transportation habits of low, middle and higher income households. Divercity has submitted its Jewel City Precinct, [59] a 2700-unit affordable housing rental development in downtown Johannesburg, South Africa, to the PRI Awards 2022, and has been shortlisted for Best Real World Impact and Best Emerging Market Impact, on the grounds of its target market, and green location factors. [60]

There is clearly a need for a metric that engages with the impact of urban design and location on household lifestyle choices and habits that contribute towards carbon emissions – critically, because this could help mobilise capital towards urban upgrading and regeneration efforts. In Kenya, it is established that 78% of urban residents rent their accommodation. Much of this accommodation is of poor quality, with very limited access to services. What it has going for it, however, is location. Tenant households value location over other factors – and the rental accommodation they occupy gives them access to work and school. Most urban Kenyan tenants walk to work. What if their low carbon impact could be somehow leveraged through an internally recognised grading system (like EDGE) to create the basis for affordable ‘green’ mortgages targeted at well-located, affordable rental? How might this support improved building quality in good locations, without rising costs?

How do we monitor what is happening in real life?

The emergence of green and climate measurement standards has been hugely important for governments, DFIs and other lenders and investors, allowing them to impose impact conditions on their capital and discern between different potential investment targets. EDGE has probably been the most significantly used tool in Africa, and its prominence has championed and mainstreamed the notion of green and climate-resilient building.

Certification can be expensive, however, and this can impact on the affordability of the development itself. Most of the green measurement frameworks are designed for larger scale developers rather than the smaller operators that are the norm. They work best with new build rather than refurbishments and conversions. They overlook location as a key contributor to emissions over time. Indeed, they are primarily designed to measure the carbon footprint of the building at construction, but fail to consider other key factors, such as: the long term, actual building performance, given its location: the utilities usage habits of its residents; or the capacity and effectiveness of its
property management and maintenance.

Of course, all of these things are even more difficult to measure than the simple water usage statistics of a low flow tap, or the energy savings of a solar heat pump. And yet, they are essential to the way in which low income households manage their affordability and the way in which landlords manage their revenue streams, and to understanding how cities will be able to contribute to the net zero goals. This is a challenge that belongs to all of us. EDGE has expressed their commitment to exploring ways to better measure the kinds of development that are evolving in African cities. They need support from developers and governments in ensuring that the data that needs to be collected is available.

Green and affordable?

Both are important – green and affordable – and this really is the crux of the green affordable housing challenge. Every year, CAHF invites the authors of the Yearbook country profiles to identify the cheapest newly built house by a formal developer or contractor in an urban area, documenting the price in local currency units. Yearbook authors survey three formal developers who are known for delivering to the affordable market in the main urban centre of the country and request the sales price of the cheapest newly built house available on the market in the current year. The authors then select the lowest price house from these three examples. This year, prices ranged from US$9 391 in Nigeria to $66 720 in Guinea-Bissau. We don’t know if these houses are green. Without local income data, we also don’t know if they are affordable.

In years past, we have bought income data from the Canback Global Income Distribution Database, which last year was bought by the Economist Intelligence Unit. After much thought and comparison with more locally derived data, we’ve decided to no longer use CGIDD data to explore affordability. This is a serious problem, not only for CAHF, but for the housing sector as a whole – without reliable income data, how can we define our targets? This is an issue that Reall, CAHF, 71point and others are currently exploring through the Data Agenda for Africa. We hope that next year we’ll have better income data to share.

This year, as a proxy for income, we sought out the typical salary of an urban police officer and an urban teacher, and then calculated the price of house that they might afford with a mortgage at the current rates and terms in their country. The graph below compares this with the price of the cheapest newly built house – all converted into USD – for selected African countries. More information on these affordability calculations for a teacher and police officer and the underlying assumptions is provided in the country profiles.

The image is striking – the price of the cheapest newly built house is probably only affordable to a teacher in eight of the countries. For a police officer, the cheapest newly built house is likely unaffordable in all but 5 countries. Even in Nigeria, where for the third year in a row we have found the cheapest newly built house in Africa at $9 391 – this is more than double what a Nigerian police officer might afford and nearly 4 times what a Nigerian teacher might afford. It’s the same for Kenya: these two essential public sector workers are likely unable to afford the cheapest newly built house available. Perhaps a two-income household might fare differently – but even then, if the two income earners are teachers or police officers, they still can’t afford to buy with a mortgage the cheapest newly built house available in their country.

This reality is beyond the capacity of fancy financial engineering on the demand side, and the
benefits of sustainable, alternative building materials on the supply side. We can’t go much
lower than a $9 391 house. Or can we?

Increasingly, market sector players are coming to recognise that the re-engineering that needs to happen, needs to be on the supply side, while being supported with appropriate finance on the demand side. By splitting up the housing delivery process into smaller steps and following an incremental process, households can finance their housing in manageable bites. This is how they have been doing it forever – step-by-step, room-by-room, as their financial capacity allows. The challenge raised by local building administrators and inspectors, is that this approach is slow and messy. It is also inefficient, and in this, fails to meet the green certification standards that would give those households access to finance which might stretch their capacity to build affordably. Is it possible to use a process of managed incrementalism to encourage efficiencies at the very bottom end of the income pyramid, such that initiatives that follow this approach within appropriate green guidelines get the access to finance benefits that larger scale, more traditional players get?

If an approach of managed incrementalism can be realised, the next challenge is to finance it. For the past thirteen years, CAHF has been reporting on the challenges relating to housing finance. Innovations and new initiatives aside, these challenges still remain. Mortgage to GDP rates are almost universally low across the continent. Interest rates are high, and although amortisation periods have been increasing, monthly affordability remains constrained. Furthermore, many households earn their income in ways that are uncomfortable for lenders, without payslips, informally, sometimes erratically or seasonally, or from multiple sources. When we look at the very low levels of mortgage lending that exist across the country, we must understand that the mortgage instrument – crucial for financial sector development and the evolution of housing markets over time – is not going to solve the housing challenge for the majority of urban households.

This highlights the need for other finance options. In some countries, pension-backed lending is permissible. In those and also in other countries, unsecured housing microfinance is also available, either explicitly or within the context of personal loans offered by Saccos or lenders, whether bank or non-bank. However, given the low level of even formal incomes, pension-backed loans are unlikely to be large enough to fund an entire house; and by definition housing microfinance is also too small. Critically, these instruments will be used to finance housing incrementally. This will therefore require its own green standards, so that they can attract the capital they need in the same manner as the high end green bond and green finance markets.

Earlier this year, Housing Finance Bank Uganda launched a housing microfinance product, “Incremental Housing Loan”. [61] HFB Uganda is a traditional mortgage lender, with approximately 65% market share of Uganda’s mortgage market. [62] With support from the French Development Agency AFD, the product was developed through the bank’s strategic pillar of growing a sustainable business. Recognising the development reality of incremental construction, it targets all Ugandans – both formally and informally employed – and very low income earners. Loans are tiny, ranging from UGX 200 000 – UGX 50m (US$50 – US$14 000) and are repayable over a period up to three years. The security requirements are flexible – borrowers can offer the title of their property, or sales agreements, machinery or chattels. HFB Uganda provides housing support services to facilitate the construction process. Building information and best practices, access to utility connections, and other support are also provided by the bank. Loans can be used for any housing-related need including the purchase of land, incremental home construction and improvements, the installation of off-grid services, maintenance, etc., and the repayment period is flexible, based on the customers’ income cycle. [63] As the development of this product is monitored, the next step will be to explore how green principles might be worked into the activity, both for the sustainability of the investment, and the sustainability of the finance source.

The fact of the matter is that in order for housing to be affordable, it must be green – and in order for it be green, it must be affordable. While efforts towards green in high value housing are important and commendable, this is a side-story: the vast majority of the housing need in Africa is for very low to moderate income households who will build their housing incrementally, who will do everything they can to leverage the resources around them, reducing what they use, reusing what they have, and recycling what has been before. Their ability to do this efficiently depends on their access to finance. If green certification measures and finance fail to recognise and engage with this reality of housing development in Africa, they will be missing the point, and ultimately, undermining the efficiency and affordability of low-income housing markets. We are at somewhat of a crossroads – while the green argument in housing is increasingly accepted and acknowledged, its application where it really matters, is largely overlooked. This is the real housing challenge – bringing the affordable and the green arguments together and giving expression to them on the ground.



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2 See (Accessed 20 November 2022).
3 See (Accessed 20 November 2022).
4 See (Accessed 20 November 2022).

5 ReliefWeb (2022). Floods in Eastern Uganda kill at least 30 people and leave 400,000 without access to clean water. 4 August 2022. (Accessed 20 November 2022).
6 Thisday (2022). NEMA: 33 Nigerian States Ravaged by Flood in Eight Months. 9 Sep 2022. (Accessed 16 September 2022).
7 Reliefweb (2022). South Africa: Floods and Landslides – Apr 2022. (Accessed 6 September 2022).
8 USAID (2018). Climate Risk Profile: Tanzania. Fact Sheet. (Accessed 20 November 2022).
9 Ministry of Environment (2013). “Potential Impacts of Climate Change on the Egyptian Economy.” (Accessed 6 September 2022).
10 African Development Bank (2022). Côte d’Ivoire economic outlook.’ivoire/cote-divoire-economic-outlook (Accessed 20 November 2022).
11 Confederation of Business Associations (2021). Actions to accelerate private sector economic recovery. (Accessed 20 August 2022). Pg. 8.
12 Sanders, D (2011) Arrival City: How the Largest Migration in History is Reshaping our World. See (Accessed 22 November 2022).
13 African Development Bank (2022). Côte d’Ivoire economic outlook.’ivoire/cote-divoire-economic-outlook (Accessed 11 September 2022).
14 Portail official du gouvernement de Côte d’Ivoire (2021). COP 26: La Côte d’Ivoire s’engage à réduire s emissions de gaz à effets de serre de 30.41%d’ici à 2030. 11 November 2021. (Accessed 11 September 2022).

15 Government of Togo (2022). National Disaster Risk Reduction Strategy 2022-2026. Pg. 28.
16 Moroccan Institute of Standardization (2022). Guide to sustainable development in construction. (Accessed 28 August 2022).
17 United Nations Environment Programme (2022). We must prepare: Mozambique banks on nature as defence against climate change. 28 February 2022. UNEP. (Accessed 5 August 2022).

18 The LEED rating system is used globally to rate green buildings. Developed by the US Green Building Council, LEED certification involves rating buildings against criteria that address carbon, energy, water, waste, transportation, materials, health and indoor environmental quality standards. (Accessed 20 November 2022).
19 Isimbi, D.; Park, J. (2022). The Analysis of the EDGE Certification System on Residential Complexes to Improve Sustainability and Affordability. Buildings 2022, 12, 1729. (Accessed 20 November 2022).
20 See IFC EDGE Website:
21 Principles of Responsible Investment.
22 Net Zero Asset Owner Alliance 2025 target-setting protocol, Net Zero Insurance Alliance statement of commitment, Net Zero Asset Managers Initiative commitment, Net Zero Banking Alliance commitment statement.
23 See The website has a data portal and reporting tool with some content available to the public. To view the reporting tool, one needs to be “authenticated”.
24 Sager, M; Lotter, A; and S Palhol (2019). South Africa Scoping Study: Assessing the Potential for Green Bonds Financing Green Buildings. (Accessed 20 November 2022).

26 See

27 TUHF Client Pack (Accessed 20 November 2022).
28 See (Accessed 20 November 2022).
29 BizCommunity (2021). TUHF launches Sustainable Bond Framework, first social bonds. (Accessed 20 November 2022).
30 TUHF (2022). TUHF Social Bond Report. (Accessed 20 November 2022).
31 See footnote 26.
32 See footnote 18.
33 Cairncross, L (2019). Green innovation for long-term affordability. Presentation to the African Union for Housing Finance annual conference. (Accessed 20 November 2022).
34 See footnote 33.
35 StatsSA (2022) Statistical Release P5041.1 Selected building statistics of the private sector as reported by local government institutions, May 2022. (Accessed 21 November 2022).
36 Trading Economics. (2022). Nigeria Imports of Iron and steel.,updated%20on%20August%20of%202022. (Accessed 16 August 2022).
37 Ugochukwu, S. (2014). An Appraisal of the Sources, Quantities and Prices of Imported Building Materials in Nigeria. (Accessed 22 September 2022).
38 UN Habitat (2011). Ghana Housing Profile. (Accessed 11 August 2022).
39 CAPMAS. (2022). “Monthly bulletin of average retail, Prices of Major important building materials.” June 2022. (Accessed 20 August 2022).
40 Yahya.M. “Roundup: Price rise in building materials puts Egypt’s real estate sector under pressure”. 21 April 2022. (Accessed 21 September 2022).

27 TUHF Client Pack (Accessed 20 November 2022).
28 See (Accessed 20 November 2022).
29 BizCommunity (2021). TUHF launches Sustainable Bond Framework, first social bonds. (Accessed 20 November 2022).
30 TUHF (2022). TUHF Social Bond Report. (Accessed 20 November 2022).
31 See footnote 26.
32 See footnote 18.
33 Cairncross, L (2019). Green innovation for long-term affordability. Presentation to the African Union for Housing Finance annual conference. (Accessed 20 November 2022).
34 See footnote 33.
35 StatsSA (2022) Statistical Release P5041.1 Selected building statistics of the private sector as reported by local government institutions, May 2022. (Accessed
21 November 2022).
36 Trading Economics. (2022). Nigeria Imports of Iron and steel.,updated%20on%20August%20of%202022. (Accessed 16 August 2022).
37 Ugochukwu, S. (2014). An Appraisal of the Sources, Quantities and Prices of Imported Building Materials in Nigeria. (Accessed 22 September 2022).
38 UN Habitat (2011). Ghana Housing Profile. (Accessed 11 August 2022).
39 CAPMAS. (2022). “Monthly bulletin of average retail, Prices of Major important building materials.” June 2022. (Accessed 20 August 2022).
40 Yahya.M. “Roundup: Price rise in building materials puts Egypt’s real estate sector under pressure”. 21 April 2022. (Accessed 21 September 2022).

41 See TUHF (2021). We See Opportunities Where Others See Decline. (Accessed 15 November 2022). TUHF primarily targets property entrepreneurs/landlords seeking to deliver affordable residential units for rental in South Africa’s inner cities, providing mortgage finance as an SME product. TUHF has 5 branches operating across 128 suburbs in 8 metropolitan municipalities. Between 2015-2020, TUHF created 5 926 short term jobs and 2 729 permanent jobs.
42 See (Accessed 23 October 2022).
43 See (Accessed 21 November 2022).
44 See,years%2C%20Saturday%20PUNCH%20has%20learnt. (Accessed 21 November 2022).
45 DAG (2021). Contractor & Developer Academy. (Accessed 5 November 2022).

46 Economist (2021). Why are there so many unfinished buildings in Africa? (Accessed 21 November 2022).
47 See (Accessed 21 November 2022).
48 Government of Togo (2022). National Disaster Risk Reduction Strategy 2022-2026. Pg. 28.
49 See (Accessed 21 November 2022).
50 See (Accessed 21 November 2022).
51 See (Accessed 21 November 2022).
52 Republic of Rwanda (2019). Rwanda Building Code. Official Gazette no.Special of 16/04/2019.
(Accessed 2 August 2022). Pg. 154.
53 See (Accessed 21 November 2022).

54 See (Accessed 21 November 2022).
55 See (Accessed 21 November 2022).
56 See (Accessed 21 November 2022).
57 Arup (2021). Does Location Matter: A quantitative study on impact of housing development location on carbon emissions in Johannesburg, South Africa. Prepared for Divercity Urban Property Fund and the Green Building Council of
South Africa. (Accessed 21 November 2022).
58 See (Accessed 21 November 2022).
59 See (Accessed 21 November 2022).
60 See (Accessed 21 November 2022).

61 Ssebwami, J (2022). Housing Finance Bank Launches its Incremental Housing Loan dubbed ‘Zimba Mpola Mpola’. (Accessed 22 November 2022).
62 Mandela, N (2022). Housing Finance Bank leads in enabling Ugandans access affordable home financing. (Accessed 22 November 2022).
63 See (Accessed 22 November 2022).




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