Pan African Housing Fund

All Case Studies Published: 23 July 2013

In December 2012, CDC committed US$20m to Phatisa’s Pan African Housing Fund (‘PAHF’) with the aim of catalysing finance for the construction of up to 7,500 new homes over ten years. This will create an estimated 22,500 jobs.

Funding housing developments

The Fund will provide risk capital on a joint venture basis with selected local developers to build middle and lower-middle income residential housing in Kenya, Zambia, Tanzania, Uganda, Mozambique and Rwanda. All developments will be in urban areas and the housing provided will be for both sale and rental markets. Rent-to-buy schemes that help people get on to the housing ladder may be introduced where appropriate.

The construction/real estate industry is recognised as an essential provider of jobs to both skilled and unskilled workers. As well as the direct jobs created by developments, the construction industry frequently supports significant additional employment in the supply chain.

PAHF is the only fund providing the equity financing essential for the growth, development and institutionalisation of middle-income housing as an asset class in the region. By investing in the PAHF CDC aims to increase the provision of housing, a basic human need, as well helping to raise environmental, social and governance (ESG) standards in the sector.

CDC additionality

PAHF will work with selected local small and medium-sized enterprise developers and improving these partners’ ESG standards will be a focus area. During the fund raising period CDC worked with other investors, notably the African Development Bank and FMO, the Netherlands’ DFI, to enhance PAHF’s ESG policies and implementation procedures. Each development will have an ESG action plan covering efficient sewage treatment and recycling units, provision of health and safety training and equipment and the imposition of better construction practices and standards. Thorough due diligence will also be carried out on land history, land title and land use.

By providing nearly 50% of the PAHF’s committed capital at first close, CDC has helped establish PAHF as the first and only private equity fund exclusively dedicated to housing development in East and Southern Africa. Not only will it help alleviate the dire need for risk capital, but should also improve standards in the sector.

HOUSING IN EAST AND SOUTHERN AFRICA

65% of sub-Saharan Africa’s urban population live in slum conditions with poor infrastructure. This is partly the result of years of under-investment in housing across Eastern and Southern Africa, coupled with growing populations and rapid urbanisation.

In the six countries targeted by PAHF, the lack of decent, reasonably-priced housing stock prevents families moving out of the low-quality, informal housing sector. This exacerbates the pressures of urbanisation. For example, in Kenya the total housing backlog is estimated to be 2 million units (World Bank, 2011) and in Tanzania the annual demand for housing construction nationwide is estimated to be 200,000 units (Shelter Afrique, 2011).

Investment Data

Fund Pan-African Housing Fund
Fund Manager Phatisa
CDC Commitment to Fund US$20m
Date of Commitment 2012
Locations Kenya, Zambia, Tanzania, Uganda, Mozambique and Rwanda