Roy Cokayne
The development of affordable housing in South Africa and sub-Saharan Africa has received a significant boost through the investment of more than $63 million (R630m) into the second fund of global private equity investor International Housing Solutions (IHS).
The International Finance Corporation (IFC), a member of the World Bank group, has contributed $25m to the fund. A South African government entity, the National Housing Finance Corporation (NHFC), has contributed R300m.
Samson Moraba, the chief executive of the NHFC, said yesterday that in partnership with the IHS and IFC, the second fund would be able to leverage foreign direct investment of about R3 billion and private sector investment into the affordable housing market of about R10bn.
The NHFC could not have achieved this on its own, even over 10 or 20 years, he said.
Another benefit was the jobs that would be created with every housing development.
He said the NHFC was satisfied that by becoming an anchor investor, some of its objectives would be fulfilled by the fund.
Key to this was that through this initiative the NHFC saw itself making housing accessible to this segment of the market at scale, he said.
“NHFC funding on its own is not able to make a difference in this market, where there is a 600 000 housing unit shortage.”
The shortage was a moving target, particularly as a result of “rapid urbanisation and the influx of people across the borders”, he said.
“We acknowledge as a government entity that scale does not belong to government. We don’t have the infrastructure and the deep pockets.
“Scale belongs to the private market, which is why it is part of our strategy to see how we can leverage the private sector to a greater extent so we get scale,” he said.
Soula Proxenos, managing partner of the IHS, said yesterday that through its first fund the IHS had already provided financing for more than 28 000 housing units across 34 projects in South Africa with a combined total value of more than R8.6bn.
Proxenos said the IHS worked in the market in which people earned too much to get a government subsidy but earned too little to be traditionally supplied by the private sector.
She said about R2bn was raised by the first fund, which unlocked about R6.87bn into the affordable housing market in South Africa. All this was now committed.
Proxenos said indications were that the second fund would be bigger. She added that the investments by the IFC and the NHFC were the first commitment to this fund and the IHS now had between 12 and 18 months to raise the rest of the capital from the capital market.
She believed there was a good appetite among investors for the second fund.
“The capital markets are riddled with problems and there is a lot of capital sitting unallocated, with allocators being nervous about what is happening in the market place.
“It’s important that the NHFC and IFC have shown a commitment, particularly NHFC, because it’s really important to have local domestic investors in the fund. It gives international investors a lot of comfort,” she said.
Saleem Karimjee, the IFC’s senior manager for southern Africa, said providing affordable basic services, such as access to quality housing, was a priority for the IFC in Africa.
The second fund was an attractive opportunity for private investors to gain access to a fast-growing market with significant positive social impact.
“IFC’s commitment will stimulate investment, growth and job creation in sub-Saharan Africa, demonstrating our support that can help catalyse additional fundraising,” he said.