Abuja – January 8, 2024 – Viewpoint Housing News.
An innovative Affordable Housing Credit Guarantee Programme has been established in Nigeria by Shelter Afrique Development Bank (ShafDB), a pan-African housing financing organisation with headquarters in Kenya. The programme’s goal is to finance and advance the development of housing, urban areas, and related infrastructure.
With the help of InfraCredit, a specialised infrastructure credit guarantee organisation, this project intends to create 370 affordable housing units in Nasarawa Technology Village while upholding the Excellence in Design for Greater Efficiencies (EDGE) green building standards set forth by the International Finance Corporation (IFC).
The first pilot transaction of a comprehensive affordable housing initiative, which involves a N3 billion debt financing guarantee for Modern Shelter Systems and Services Limited, marked the beginning of this novel financing structure.
This is part of ShafDB’s expansive N200 billion Affordable Housing Credit Programme in Nigeria. Early last year, ShafDB preceded with a debut of a N46 billion bond issuance in Nigeria’s capital market, which was oversubscribed by 60.7 per cent and reflecting a strong investor appetite. ShafDB’s bond issuance lays the ground for its local currency funding to mitigate foreign currency risk.
Along with ShafDB’s anchor investment in Housing Solution Fund (HSF), to address the demand side, they are closing the loop on de-risking the housing ecosystem and value-chain. Furthermore, under the financing guarantee structure between Shelter Afrique and InfraCredit, this venture marks a significant stride in addressing Nigeria’s housing deficit, with the overall project targeting the development of up to 1,200 EDGE certified housing units in Nasarawa State.
Nigeria, with a population projected to reach 400 million by 2050, faces a housing deficit estimated at 28 million units, requiring substantial investment. The HSF sponsored by ShafDB, through an off-take agreement, will facilitate affordable, long-term home loans to eligible homebuyers.
“This initiative is a testament to ShafDB’s unwavering commitment to nurturing sustainable and resilient housing solutions, propelling positive transformation across the African continent,” according to the Managing Director, Shelter Afrique, Thierno-HabibHann.
He emphasised the institution’s commitment to “scaling up interventions in Nigeria in an integrated model, mitigating off-take risks, and providing beneficiaries with more accessible, affordable, and longer-tenured financing options, ultimately fostering sustainable development and prosperity.”
Chief Executive Officer of InfraCredit, Chinua Azubike, said “We are excited with the successful closing of this transaction and the significance of the project in the housing sector, because of our ability to replicate and scale its impact. The Nasarawa Technology Village project underscores a successful example of public–private partnerships as a mechanism of unlocking climate financing for sustainable development.
InfraCredit is a ‘AAA’ rated specialised infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, GuarantCo and InfraCo, KfW Development Bank, Africa Finance Corporation, and African Development Bank, to provide local currency guarantees and mobilise long-term debt financing for infrastructure in Nigeria.
It acts as a catalyst to attract domestic credit from pension funds, insurance firms and other long-term investors into credit-worthy infrastructure projects, thereby deepening the Nigerian debt capital markets. InfraCredit operates on a commercial basis with a developmental role and benefits from private sector governance. It also maintains the highest domestic financial strength ratings accorded to any financial institution by Agusto and Co. and Global Credit Ratings Co., two of the major domestic credit rating agencies.
HSF is a local currency real estate investment trust (REIT) authorised and registered by the Securities & Exchange Commission of Nigeria with a N100 billion funding programme.
The fund was established in collaboration with development partners to provide innovative market-based solutions to stimulate housing demand and sustainably scale housing supply by investing in affordable and accessible long-dated home loans offered to eligible homebuyers in partnership with participating lending institutions and pre-qualified housing developers in Nigeria.
The fund is managed by an alternative investment management firm, FundCo Capital Managers, and co-sponsored by Shelter Afrique, alongside pioneer investments from four domestic pension funds and one insurance company. Shelter Afrique recently invested equity of N816 million in HSF.
