african union for housing finance conference: affordable housing finance

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Mr Britt Gwinner, International Finance Corporation (IFC). Panel discussion: Donor perspectives on housing finance investment in Africa. Panelists from the Making Finance Work for Africa (MFW4A) Donor Working Group on Housing Finance. With more than 46 cities in Africa swelling to populations of a million people or more — and 17 of the world's 100 fastest-growing cities located in Africa — there is an acute need to develop housing solutions for so many urban residents. But raising the capital to meet that growing demand for housing remains a significant challenge. In 2013, the African Union for Housing Finance (AUHF) will host a conference under the theme "Raising Capital for Housing Finance.” The Africa-China Urban Initiative will organize a conference panel discussion on "Understanding (and harnessing) Chinese investment interest." Chinese investment in residential development in Africa is increasingly having an impact and demonstrating a track record of opportunity and experience. Panelists invited include Chinese investors setting out their experiences and expectations for the market and an African corporation that has received Chinese financing.


  • 1.Affordable Housing Finance Sub Saharan Africa September, 2013 THE POWER OF PARTNERSHIPS

2. IFCs Purpose To promote open and competitive markets in developing countries To help generate productive jobs and deliver essential services to the underserved To support companies and other private sector partners where there is a gap To catalyze and mobilize other sources of finance for private sector development 2 3. Fiscal Year 2013 Highlights Investments: 612 new projects in 113 countries Advisory services: $232 million in program expenditures $24.8 billion in financing: $18.3 billion for IFCs own account, $6.5 billion mobilized $49.6 billion committed portfolio IDA countries account for almost half of IFC projects overall: $3.5 billion invested in SubSaharan Africa3 4. Investments by Region, FY13 Commitments for IFCs Account: $18.3 Billion South Asia 9%Global 1% Latin America & the Caribbean 26%Middle East & North Africa 11%SSA is a priority region for IFCEast Asia & the Pacific 16%Sub-Saharan Africa 19%Europe & Central Asia 18%4 5. IFCs Priorities Long-term client relationships in emerging marketsLocal financial marketsFrontier marketsStrategic Focus AreasClimate change and environmental & social sustainabilityConstraints to private sector growth in infrastructure, health, education, & the food supply chain5 6. The Power of PartnershipsHost County GovernmentsIFCs Global Network for Solutions900 Financial Institution Clients30+ IFIs/DFIsSovereign Wealth Funds/ Institutional InvestorsCivil Society2,000 Private Sector Clients20+ Bilateral Donors/ 15+ Private Foundations6 7. Our Three Businesses Integrated Solutions, Increased ImpactInvestment ServicesAdvisory ServicesLoansAccess to financeEquityInvestment ClimateTrade financeSustainable BusinessSyndicationsSecuritized financePublic-Private PartnershipsRisk managementIFC Asset Management CompanyBlended finance $49.6 b portfolio (FY13)$232 m (FY13)7 Wholly owned subsidiary of IFC Private equity fund manager Invests third-party capital alongside IFC$5.5 b under mgmt (FY13) 8. IFC Real Property Portfolio: SnapshotIFC Housing Finance & Property Investments IFC finances the entire housing value chain, from building materials to capital markets Since 2002, IFC has directly financed more than 76 housing finance lenders worldwide, providing over USD 2.6 billion in financing to these institutions in emerging markets. IFC's Housing finance clients have provided USD 18.3 billion in housing finance loans to 1.9 million homeowners. As of March 2013, IFC HF projects included 85 clients, 167 projects, and $1.1 billion in commitments in all of the regions in which IFC works. IFC has committed approximately US$1.2 billion in Real Property production in 53 projects since 2007 (before 2007 negligible), of which 45% has been in Commercial Property and 55% in Residential Property (affordable housing) as of 6/20/2013. In FY 2012 & 2013, IFC funded lines of credit for US$20 million to Housing Finance Kenya, including up to $4 million from the IFC-Canada Climate Change Program to support a Green Mortgage component. Additionally, IFC recently committed US$100 million to the Kenya Commercial Bank to support its mortgage lending business.8 9. IFC Real Property Portfolio: SnapshotIFCs Approach to Housing Finance in SSA Our focus for now is on primary mortgage and microfinance lenders Need a robust primary lending market to support bond issuances Deal Flow Capital market solutions currently feasible in a only few places: SA, possibly Kenya, eventually Nigeria, Uganda, Ghana Production, Production, Production PPPs with authorities, JVs with international and local builders Banks can only make affordable mortgages if the formal sector builds affordable houses The residential construction industries in SSA ex-South Africa is atomized and inefficient IFC seeks to support mass scale developers and lenders in Africa, and Public Private Partnerships for large scale housing production Housing microfinance shows promise for lower income households that build incrementally. Partnerships Shelter Afrique, AfDB, World Bank, AUHF, U.N. Habitat, AfD, KfW, and more.9 10. IFC Real Property Portfolio: SnapshotIssues for Housing Finance in Sub-Saharan Housing demand is strong, and public Africa many countries have made reforms in authorities in recent years Uganda mortgage law; Rwanda cadaster automation, BEE reforms; Nigeria national strategy for housing Insufficient residential developer/builder capacity Banks can only make affordable mortgages if the formal sector builds affordable houses The residential construction industries in SSA countries outside of South Africa is atomized and inefficient The Business Enabling Environment (BEE) remains weak for housing construction and finance in many SSA countries To make housing affordable, it is critical to reduce the cost and time that it takes to trade in real property Interest rates remain too high in most SSA countries improved macro conditions would boost affordable housing production Mexico, mortgage rates fell from 19% in the year 2000 to 7% by 2008 Housing production from 200k units/year in 2000 to 750k units in 200810 11. IFC Real Property Portfolio: Snapshot Contacts Sub-Saharan AfricaGlobalW. Britt Gwinner Program Manager, Housing Finance SubSaharan Africa Nairobi, Kenya wgwinner@ifc.orgDouglas Grayson Head, Global Housing Finance Investments dgrayson@ifc.orgShana Billingy Operations Officer, Housing Finance Advisory Services Nairobi, Kenya sbillingy@ifc.orgFriedemann Roy Head, Global Housing Finance Advisory froy@ifc.org11


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