2015 will see Shelter Afrique, the Pan African body mandated to mobilise and deploy resources for housing development in Africa reinventing its business model following the transformation of the sector on many parts of the continent.

When the body was set up 34 years ago, it was to work with private and public institutions in identifying, financing and implementing housing and related infrastructure.

It was also mandated with assisting African governments in formulating and implementing policies related to housing.

According to James Mugerwa, the managing director, the housing industry has changed rapidly within the last three decades as national governments begin to see housing as a basic human right thus drafting policies to address the shortage of housing on the continent.

He says that African populations are continuing to grow with a strikingly young demographic, with many countries on the continent expected to double their populations in the next 30 years.

Rapid urbanisation is also expected with 70 per cent of Africa projected to live in urban centres pushing the housing crisis further.

In addition, Mugerwa says banks and financial institutions have begun to develop housing, mortgage and construction financing products - whole units dedicated to housing and mortgages.

Countries are also beginning to create primary and secondary mortgage institutions such as the Tanzania Mortgage Re-Finance Company and the Nigerian Mortgage Re-Finance Company.

Sectoral changes

“This wasn’t the case when we came into existence and we are beginning to find our model challenged and competition in the industry increasing. However, we see the competition as welcome and timely with the entry of more players into the industry leading to many more housing and mortgage products. These should ultimately lead to a reduction in price and widespread home accessibility,” says Mugerwa.

It is against this background that Shelter Afrique has strategically moved its business model towards affordable housing and access to construction finance for homes in the middle income and low-income brackets.

The company says this is where demand is most apparent. Through public private partnerships, Shelter Afrique hopes to leverage on its long standing relationship with close to 44 African governments that can buy in on projects by providing resources such as land.

Such programmes are already being implemented in some regional countries. In Uganda, for example, Shelter Afrique has signed an agreement with the government to partner in the delivery of large scale affordable housing and other related infrastructure.

The project will involve the implementation of either part or all of 4000 commercial and social housing units with related infrastructure over five years.

The project will cost US$200 million (Sh18 billion) with Shelter Afrique providing funding as well as sourcing for debt partners.

In Rwanda, a sustainable integrated community development project known locally as Rugarama is at the pre-development stage.

The high density housing estate with over 2700 units will be developed in conjunction with the City of Kigali and the Development Bank of Rwanda and will cater for lower and medium income earners.

In Kenya, the Mavoko Sustainable Neighbourhood Programme, a joint project between Shelter Afrique,  UN-Habitat and the Government will offer 2500 units at a starting cost of Sh450,000.

“Many  urban centres in Africa do not follow proper urban planning regulations. The effect of this is that land available for development in urban centres is running out. With land being one of the largest costs in home construction, we are happy to partner with governments that have a more solid hold on such land issues. In Kigali, for example, the city government committed to providing land for development and hopefully, other states will follow suit,” says Mugerwa.

Perhaps one of the greatest shifts in the company’s policy is the need to promote renting homes as opposed to home ownership.

Last year, the company organised an international conference on rental housing in Nairobi where stakeholders in the public, private and civil sectors deliberated a way forward for rental housing in Africa.

14 million houses needed

According to Mugerwa, Africa needs 14 million units each year to meet the demand for affordable housing that conversations at alternative means of providing affordable housing for all Africans can no longer just be based on absolute home ownership.

“Renting can be a legitimate option for housing and we have certainly seen it work in advanced economies like Germany and Netherlands where most of the housing options are rental. We see this approach as innovative, because quite often the problem with addressing housing has always been focusing on home-ownership as the only solution, instead of a myriad of solutions,” he says.

With Kenya leading the pack as far as establishment of universities and colleges is concerned, Shelter Afrique is eyeing this unique segment of the market to provide housing needs for both students and staff members.