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AU adopts five-point agenda on housing finance shortage

By Bertram Nwannekanma
30 December 2019   |   2:13 am
To address the challenges facing housing affordability across the African continent, members of African Union for Housing Finance (AUHF) have adopted a 5-Point Plan for African Governments to address housing finance issues.

Aerial view of Lagos

To address the challenges facing housing affordability across the African continent, members of African Union for Housing Finance (AUHF) have adopted a 5-Point Plan for African Governments to address housing finance issues. The adoption followed a declaration by AUHF members at the just concluded 35th yearly General Conference of the Union in Cape Town, South Africa.

It was learnt that the plan reached by 35 active members of AUHF, was aimed at tackling shortage in housing finance, seen as the most critical issue facing housing markets worldwide, whether in established or emerging market. Housing affordability challenges are rife in African countries, exacerbated by unfavourable macro-economic conditions, challenging labour market dynamics, municipal capacity constraints, as well as the pressures of urbanisation and climate change.

Government capacity to address the challenge on its own, is limited worsened by higher government debt and lower revenue, as a result of economic downturns being experienced in most African countries, have limited the budgetary room of policy makers. At the same time, governments have an enabling and catalytic role to play in supporting the development of an enabling macro-economic framework and the growth and appropriate targeting of housing finance markets, while also developing policies conducive to affordable housing development.

Nevertheless, there is significant activity and innovation among a growing sector of housing practitioners increasingly interested in addressing the housing affordability challenge.Their efforts are evident in initiatives in all links of the housing delivery value chain.

According to the declaration obtained by The Guardian, Nigeria and other African governments are urged to pursue five key recommendations. They were asked to set and pursue explicit targets for reducing the time and cost of key statutory and administrative processes on which housing delivery depends, such as development and zoning approvals, occupation inspections, land titling, infrastructure connections, and services clearances. They are also required to strengthen property and collateral registration, maintenance and foreclosure mechanisms, improving transaction timeframes, and to ensure the transparency of the collateral registry through free access to record-level data.

In fact, the union recommended the automation of deeds registries. They were further asked to pursue macro-economic policy and financial regulation and taxation conducive to long term, local housing investment, focusing explicitly on interest rates and inflation targets, as well as other measures that lower maturity premiums and credit risk premiums, and leverage the utilization of collateral value.

These measures, as well as explicit attention to local long-term capital (pension funds, institutional investors) will further stimulate investment and the availability of affordable housing finance. African countries are to support the affordable housing delivery process through enabling or otherwise incentivising the supply of well-located land and bulk infrastructure. Others include, to support the Data Agenda for Africa, agreeing on mortgage lending and other housing-related reporting standards to enable cross-country comparability, supporting the development of an effective and comprehensive credit reference system that efficiently covers all financially active consumers and stimulates market transparency, and explicitly supporting principles of data transparency and regular reporting.

It further urged international development finance institutions and other development agencies to invest in testing and establishing new blended financing models focused on the particularities of affordable housing, as well as early stage, venture capital investments that support innovation. The Declaration gave explicit emphasis to the need for an affordable green standard that addresses local climate-related and urbanisation pressures in relation to affordable housing.

While noting the breadth and diversity of housing sectors across the continent the declaration also highlighted the need for a diversity of housing financing mechanisms. Furthermore, the declaration urged the Development Finance Institution (DFI) sector to invest in the development of the information infrastructure necessary for investment affordable housing.

The declaration further committed the AUHF to carry on with its mandate, in terms of lobbying and advocacy, information dissemination, capacity building and training, member profiling, and supporting networking and deal-making. The individual signatories commit themselves to respond to the breadth and diversity of demand, giving special attention to lower income earners, and prioritizing affordability. To address this, signatories note that they need to think more carefully about risk and how they price for it. They are committed to uphold ethical business practices, and to support the development of strategic partnerships. Reiterating the commitment to the Data Agenda for Africa, members also agreed to track their commitments with clearly defined key performance indicators and looking forward to reporting on them at their next meeting, scheduled for late 2020 in Kigali, Rwanda.

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