Development of affordable housing and the provision of water, sanitation and electricity to communities across sub-Saharan Africa will benefit from a significant finance initiative launched in Nairobi today. The European Investment Bank has formally agreed to provide EUR 15m to specialist development finance institution, Shelter Afrique. Small and medium-sized companies involved in eligible housing development projects will be able to access lower cost funds through Shelter Afrique.
The landmark housing partnership, the first agreement between the European Investment Bank and Shelter Afrique, and the first direct engagement in the housing sector by the European Investment Bank in sub-Saharan Africa was formally signed at Shelter Afrique’s headquarters in Nairobi by Pim van Ballekom, European Investment Bank Vice President responsible for sub-Saharan Africa and Alassane Bâ, Managing Director of Shelter Afrique.
“Access to affordable housing, clean water, sanitation and power is essential for economic and social development. However this remains an exclusive privilege and there are acute shortages of affordable housing in many African countries. The European Investment Bank recognises the importance of long-term investment in the housing sector and looks forward to working with Shelter Afrique to help families across the continent. Supporting local developments through an experienced pan-African partner will help address the significant challenges of low cost housing, contribute to poverty reduction and go a long way towards achieving Millennium Development Goals.” said Pim van Ballekom.
Mr Bâ hailed the event as a key milestone for Shelter Afrique’s growth ambitions. “I strongly believe that this new strategic partnership is only the beginning of a long and fruitful relationship between our institutions. We thank EIB for trusting Shelter Afrique and recognizing its key role for housing and urban development in Africa. We praise EIB for this first and bold commitment to support and strengthen Shelter Afrique to enable it to potently deliver on its mandate and mission to facilitate access to housing for all, thereby promoting development throughout Africa for the betterment of the living conditions of our People” added Mr Bâ.
Under the initiative launched today, Shelter Afrique will provide EIB backed loans to local developers engaged in the construction of eligible affordable housing estates - including the provision of related community infrastructure and services such as clean water, sanitation, power and roads, as well as site clearance and preparation. It is expected that projects will be developed in a number of sub-Saharan countries, starting with Kenya and Rwanda and that schemes will be integrated into relevant national and local urban development plans.
To benefit from the programme, each housing project must be technically sustainable and financially viable. Priority will be given to development of affordable housing in urban centers and in areas linked to existing transport and basic infrastructure.
The EIB-backed Shelter Afrique lending initiative is expected to particularly benefit SME-type developers, whose capacity Shelter Afrique would contribute to further build up. The overall initiative is expected to stimulate total housing investments of around EUR 50 million with significant local job creation. Shelter Afrique can finance a maximum of 60% of the development cost of an eligible project.
The European Investment Bank will also provide to Shelter Afrique with technical assistance to help improve the preparation, planning and implementation of affordable housing projects and the loans extended to developers will benefit from an interest rate subsidy reflecting the expected significant social and environmental impacts of selected initiatives.
Shelter Afrique is the only pan-African development finance institution that exclusively promotes the development of the housing and real estate sector in Africa. It is backed by 44 African governments, the African Development Bank (AfDB) and the Africa Reinsurance Company. It currently has an active portfolio of projects in more than 30 African countries and it offers a wide array of financial products to support the efficient delivery of affordable housing.