African cities become home to over 40,000 people every day; many of whom migrate from rural areas. Once they arrive, they often have nowhere to live. Rapid urbanization is outpacing housing markets across Africa. In Kenya, the shortage of housing is estimated at 2 million units, while Nigeria is in want of 17 million units.
Where will the money for housing investment come from? How will it reach the people who need it most? How can microfinance institutions and banks enter housing finance markets?
These urgent questions formed the basis for a recent conference in Nairobi hosted by IFC and Lafarge, the global cement and concrete conglomerate. The event was attended by 50 leaders from microfinance institutions, banks, development finance institutions and UN Habitat.
At the conference, IFC and Lafarge unveiled their plans to increase access to housing finance and building materials in Africa. IFC will work with microfinance institutions and other lenders in Africa to make housing finance available to borrowers at affordable rates. Meanwhile, Lafarge will provide cement building kits and technical assistance to low-income families who wish to construct their homes.
“Around the world, low income earners build their houses incrementally, a few blocks at a time”, said Britt Gwinner IFC’s Housing Finance Program Manager for sub Saharan Africa. “It can take 15 or more years to build a house this way. IFC strongly supports Lafarge’s approach, which brings together building material suppliers and microfinance institutions, so that people at the base of the pyramid can build homes more quickly and efficiently.”
“The housing finance loans will range between $1500 and $2000 for every 20 square metres”, said Francois Perrot, Manager of Lafarge’s Affordable Housing Project. “Lafarge will help design housing plans and provide engineering advice to low-income home builders”.
As Africa urbanizes, the private sector has a central role to play in addressing shortages of affordable housing. IFC has implemented programs that combine housing finance with building materials in several countries including Haiti, Albania, Afghanistan, Indonesia and Bangladesh. The partnership with Lafarge will extend the approach to countries in Africa.
To date, IFC has invested more than $3 billion in housing finance in over 46 countries world-wide. IFC focuses on regions where large portions of the population live in sub-standard housing and have limited access to credit to build, expand, or renovate their homes.
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