- Shelter Afrique Development Bank (ShafDB) and the Bourse Régionale des Valeurs Mobilières (BRVM) will tap Green, Sustainability-linked, and Social (GSSS) bonds to finance housing.
- Green bonds will fund eco-friendly housing projects while social bonds will finance projects that prioritize affordability and accessibility.
- At the same time, sustainability-linked bonds will support both objectives, ensuring a comprehensive strategy for tackling the current housing crisis.
Shelter Afrique Development Bank (ShafDB) has taken a new step toward addressing affordable housing needs in Africa through a partnership with the Bourse Régionale des Valeurs Mobilières (BRVM), the regional stock exchange for the West African Economic and Monetary Union (WAEMU).
In a Memorandum of Understanding (MOU), the Pan-African institution focused on affordable housing, signed the deal on the sidelines of the IMF-World Bank Annual Meetings in Washington, D.C., aiming to mobilize capital for affordable housing projects across the continent, particularly in WAEMU’s eight member countries.
With Africa’s housing deficit estimated at over 53 million units, this fresh capital-raising bid highlights the urgent need for sustainable financing to support affordable housing.
Through innovative financial tools such as green and social bonds, and Real Estate Investment Trusts (REITs), the MOU establishes a framework for addressing the housing shortage with a focused and regionally tailored approach.
A new approach to financing: Green, social, and sustainability-linked bonds
To drive this ambitious initiative, ShafDB and BRVM will tap Green, Sustainability-linked, and Social (GSSS) bonds. These bonds, already popular globally for raising funds for projects with environmental or social goals, are becoming more prevalent in Africa’s financial markets.
Green bonds will fund eco-friendly housing developments, social bonds will finance projects that prioritize affordability and accessibility, and sustainability-linked bonds will support both objectives, ensuring a comprehensive strategy to housing finance.
The issuance of these bonds through BRVM opens new possibilities for investors interested in social and environmental impact. With an expanding middle class and a youthful population demanding affordable housing, these bonds could become instrumental in mobilizing private capital to supplement public funds in the sector.
Dr. Edoh Kossi Amenounve, CEO of BRVM, highlighted the importance of the partnership, stating, “BRVM is proud to partner with Shelter Afrique to boost investment flows into Africa’s housing market. This collaboration aligns with our mission to promote capital markets and support sustainable development.”
Real Estate Investment Trusts: Drawing investors to the affordable housing market
In addition to bonds, Real Estate Investment Trusts (REITs) are expected to play a central role in mobilizing capital. REITs allow investors to pool funds for large-scale property investments, making them ideal vehicles for addressing Africa’s housing challenges.
Through this mechanism, small investors can have a stake in affordable housing projects, potentially benefiting from returns while supporting social development.
For WAEMU countries, which include Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo, the introduction of REITs in housing finance could help boost domestic investment.
By focusing on affordable housing, REITs provide a means to finance properties that are within reach for lower-to middle-income families, directly addressing the region’s high demand for affordable homes.
Knowledge sharing and technical collaboration
Beyond financing, the partnership aims to strengthen technical expertise in affordable housing finance. ShafDB and BRVM said they will collaborate on research, share market data, and develop joint publications.
This knowledge-sharing component is intended to encourage innovation in affordable housing and inform policymakers and investors about best practices in sustainable housing finance.
According to Thierno-Habib Hann, CEO of Shelter Afrique, the partnership reflects a commitment to sustainable and scalable solutions for Africa’s housing crisis: “With Africa’s housing deficit now exceeding 53 million units, we need to scale our efforts rapidly. This MOU offers us the opportunity to mobilize the capital necessary to finance affordable and sustainable housing projects across the continent.”
Targeting the growing demand for affordable housing in WAEMU
The eight WAEMU countries represent one of the most rapidly urbanizing regions in Africa, with an increasing number of young people moving to urban areas in search of employment and better living conditions.
This trend has created an unprecedented demand for affordable housing, yet financing options have remained limited.
Shelter Afrique’s approach, which targets housing finance across the demand and supply sides, is well-suited to this region. The organization supports affordable housing projects through its Financial Institutions Group, Project Finance Group, Sovereign and Public-Private Partnerships (PPP) Group, and Fund Management Group.
Each of these areas brings unique expertise to the affordable housing sector, from securing project finance to managing long-term public-private partnerships.
Read also: ShafDB and CPF Group unite to co-finance Kenya’s affordable housing initiative
A potential blueprint for housing finance across Africa
The success of the partnership could set a precedent for other African regions facing similar housing challenges. By combining local expertise with innovative financing mechanisms, Shelter Afrique and BRVM’s collaboration provides a possible blueprint for other financial institutions and regional markets.
This model highlights how African financial markets can rise to meet continental challenges, especially in critical areas such as housing.
Affordable housing has long been a difficult issue to address, as many governments struggle to balance short-term needs with long-term investments.
This new approach, which draws on private investment through bonds and REITs, presents a potential solution that doesn’t rely solely on public funding. Instead, it allows for shared responsibility between governments, investors, and development institutions.
Housing in Africa: Challenges and opportunities
While the MOU is a promising development, the path to reducing Africa’s housing deficit is far from simple. Challenges remain in managing the costs of sustainable housing materials, navigating regulatory frameworks, and ensuring that the financing benefits reach lower-income populations.
However, Shelter Afrique’s existing partnerships and technical expertise, combined with BRVM’s access to regional capital markets, put them in a strong position to tackle these hurdles.
As the partnership unfolds, it may face hurdles in maintaining transparency and ensuring that projects remain focused on affordability and sustainability.
For now, Shelter Afrique’s renewed commitment to innovative financing represents a proactive response to Africa’s housing crisis. As regional financial markets open up to socially and environmentally responsible investments, the continent’s future housing landscape may begin to reflect the potential of partnerships like the one between Shelter Afrique and BRVM.
Through this collaboration, Shelter Afrique is not only aiming to bridge the housing gap, but also to contribute to a more inclusive and sustainable model for housing finance across Africa.
