On 21st October 2016, African Governments signed up for the New Urban Agenda in Quito, Ecuador, a non-binding agenda for making cities safe, sustainable and resilient. The New Urban Agenda sets global standards for sustainable urban development during a period in which the world is experiencing the most rapid urbanization in history.
More than any other continent, Africa is facing extreme rapid urbanization. This is a challenge that Shelter Afrique and other Regional Institutions will tackle with African Governments and their agencies in delivering the New Urban Agenda. It is for this reason that the 2017 Symposium aimed at achieving the following objectives :

a) Shareholders to discuss in a plenary session how Shelter Afrique can be repositioned to act as the key inter-regional vehicle in the New Urban Agenda;
b) For Shelter Afrique to explore in a workshop session the required capital to effectively play the role in (a) above and how this capital can be mobilized for delivery of affordable housing projects;
c) For Shareholders to explore appropriate governance structures required to ensure that Shelter Afrique can sustainably fulfill its mandate.

Plenary Session:
There was a key note address from Honorable Fashola, contributions from four speakers as well as submissions by participants. From all these, it emerged as follows:

1) Housing should be a priority in the debate surrounding sustainable urbanisation and implementation of the same should be a lifetime and generational approach.
2) Shelter Afrique should endeavour to work with both Public and Private sector to deliver affordable housing.
3) The governance and administrative structure of Shelter Afrique needs to be strengthened if the institution is to achieve its mandate.
4) Rental housing should be viewed as a first step towards the home provision and governments should put in place policies to support rental housing programs.
5) Shelter Afrique should expand its mandate to being a resource center for housing and providing technical advice in addition to providing housing finance

Finance Break Away Session:

The moderator of the session, Mr Gabriel Negatu presented the current financial situation of Shelter Afrique. Some of the key highlights of his presentation are as follows:

• Shelter Afrique would run out of cash in 2017 unless the shareholders contribute an additional $33 million above the amounts already paid.
• The root cause of the company’s financial difficulties was weak capitalization due to the Shareholders failure to meet their capital contribution commitments.
• Shelter Afrique required cash injections of $33 million in 2017, $80 in 2018 and 2019 to fully recover from the crisis.

A question was then posed to the participants on how Shelter Afrique can get sufficient and timely capital subscription to sustain the organization. The outcome of the deliberations is detailed below:

1) African countries should mobilize resources specifically for the housing sector and housing related infrastructure from special levies. Africans needs to find its own solutions rather than counting on the international community to address our housing needs.
2) The expectations of Africa go beyond SHAF’s capabilities. Shelter Afrique should be able to leverage its equity to attract additional funding to finance larger scale projects.
3) It is the responsibility of the Board of Directors and Management ensure all the lending that is done is aligned to available resources so that the company does not experience a liquidity crisis.
4) SHAF has been lax in the collection of the overdue subscriptions. The institution should introduce steep penalties for delayed payments before the end of July. The AGM should consider auctioning the shares of the countries in arrears.
5) Shelter Afrique should provide member countries (Ministries of Housing) with a value proposition to increase shareholding as this ultimately needs to be presented to the Ministries of Finance to justify release of funds.
6) In order to increase its impact, SHAF should hold joint planning sessions with Member Counties to understand the country priorities and, make sure that SHAF intervention are in support the countries housing policies.
7) The AGM should review the company’s statutes and allow the company to raise equity outside is membership.
8) The issue of affordability needs to be addressed. We will never be able to raise enough funding to meet the housing gap. For instance, we need to use local material to bring the cost down. We also need trade financing for imports of material from overseas.
9) Home ownership through shared equity. This allows a home owner to gain entry through owning part of a home and when income rises purchase the remainder. These need an equity partner — either a financial institution or a government-backed provider.
10) Governments could stimulate supply of rental housing through various policies which are flexible and cover a wide range of target groups and rental housing types.
11) Governments could also support the supply of rental housing by providing subsidies and tax incentives.
12) Long term capital is essential for financing rental housing. This can be accessed through bonds, pension funds and insurance companies.
13) Successful rental housing programs have been implemented across the world. A case study from India was shared with the participants where relaxation of floor space index and offering of transferable development right ( TDRs) was used to create available space in a congested area.
14) Other successful rental housing schemes that were presented included: Johannesburg Housing Company ( JHC) where more than 4,000 rental houses had been developed and OMH- Mali where PP model has been used to develop more than 6,000 rental units

Governance Break away session

The moderator of the session, Mr. Steve Mainda opened the session by highlighting the fact that Shelter Afrique had undergone 2 major crisis in the last six years which had a negative financial impact to the company. Both these crisis were caused by weak corporate governance structures. He then posed a question to the participants as to what shelter Afrique needed to do to ensure it was better governed. A summary of the deliberations is shown below:

1) Board Members need to improve frequency of communication to the General Assembly to at least once a quarter.
2) Board members representing country groupings need to communicate to other members of the group after each Board session to keep them updated on the discussion at the Board meetings.
3) The Annual General Meeting should evaluate performance of Board members on an annual basis.
4) Shareholding of the company should be open to Non regionals to generate new capital and also improve governance structures.
5) Internal Audit function needs to be strengthened to be able to detect early warning signals within the organisation before the matters reach the press/whistle blowing agent.
6) Recruitment of Key positions (Managing Director, Company Secretary and Internal Audit) should be outsourced to a reputable recruitment firm.
7) Strategy of organisation needs to be aligned to needs of member countries need. This will generate more support from shareholders financially and encourage them to be more invested in the company’s affairs.

CONCLUSION

The Symposium concluded that Shelter Afrique is instrumental in the implementation of the New Urban agenda and African governments should make housing a priority in the debate surrounding sustainable development. It was also acknowledged that, for Shelter Afrique to play this important role, member countries needed to pay their subscriptions in a timely manner and leverage these resources to obtain additional funding from non-African investors to meet the mandate of the institution.

Shareholders also concluded that Shelter Afrique’s governance structures needed strengthening and called for improved communication between the Board and the General Assembly and annual evaluation of Board members performance.

 

Shelter Afrique’s 2016 Symposium was designed to address the uncomfortable and increasingly often less told story of Africa’s urban poor.
Almost universally, housing supply has failed to respond to the need of the urban poor with the cost of new housing including those built by Government Agencies significantly in excess of what this segment of the population can afford. The consequence is the rapid growth of informal settlements, slums on the edge of Africa’s major cities with obvious consequences for economic development, health, safety and security.

It is on this background that the Symposium sought to address the following key objectives:
1. Explore and introduce the audience to current approaches and innovations in planning and designing affordable housing for Urban Low Income Earners;

2. Showcase a range of construction methodologies appropriate for implementing affordable housing for people on low income;

3. Explore Financing Options and Structures for Low Income Housing Projects

Key Outcomes

The Symposium received two key note addresses including one by the Honorable Minister for Power, Works and Housing of the Federal Republic of Nigeria. Thereafter, experts from Nigeria, Malawi, United States of America and Senegal constituted two panels and engaged the audience in two thematic areas. The first panel discussed on “Designing and Building Low Cost Housing” while the second panel discussed “Financing Housing Supply and Demand for Low Income Earners”. Key messages from the well selected experts included:

1. Need for proper Planning: That there is need for proper planning throughout the house delivery chain to identify opportunities for cost control and reduction. Planning should also encompass inclusion of storage facilities, adequate and reliable water supply, power, roads and other relevant infrastructure as well as social amenities for workers to avoid proliferation of informal settlements. Planning should further be extended to post-implementation property management and maintenance.

2. Need for Standardization: That there is need for standardization of housing stock as opposed to customization. When there is harmony and uniformity of design, then it becomes possible to standardize fittings and other construction materials which then encourages manufacturers and other businesses including small scale businesses to assemble and deliver in mass scale to builders. This mass delivery yields economies of scale and cost optimization that lead to low construction costs.

3. Industrialization: Significant reduction in cost and time of housing production can be achieved through sustainable industrialization of the housing delivery process through the building of indigenous productive capacity. This will require various paradigm shifts including:

– Transition from low-consistency craft based labor to high consistency high-productivity technology-enhanced labor;
– Transition from use of low value-added building materials to high value-added high performance building components and technology;
– Transition from low-productivity customized building construction to high productivity modular industrial production.

4. Use of unconventional building methodologies to bring down the construction costs while adopting innovative financial solutions to fund both construction and home purchase options. Approaches include availing technical assistance and use of stabilized soil blocks and other indigenous materials in an organized building system.

5. Use of micro-finance institutions to access housing micro-loans was identified as a major avenue through which the urban poor can be supported to become home owners. Two models were discussed including: Stand-alone Incremental Housing Microfinance, and; Linked Housing Microfinance (Housing Micro-Finance linked to other products offered by a micro-finance institution). Through either model, access to financing becomes available for home extensions and renovations as well as for new homes built incrementally.

6. Is subsidized financing for low income housing a sustainable option? The Symposium noted that indeed various governments have adopted different approaches to subsidize the cost of home ownership with varying degrees of success. Some of the subsidy options adopted includes reducing interest rates to specific income groups, extending loan tenors through government supported mortgage liquidity facilities as well as credit enhancements such as down payment assistance and insurance for housing loans.

Conclusion

By exploring various approaches and innovations in planning and designing affordable housing for urban low income earners, and by identifying financing options and structures for low income housing projects, the Symposium’s objectives were well achieved. The outcome of the Symposium can be well adopted by SHELTER-AFRIQUE and other stakeh

 

Given that 80-90% of Africa’s population are renters in urban areas, and this option is largely informal and totally ignored as part of strategy, the 2015 Symposium aimed at achieving two key objectives:

• Make a case for Rental Housing as an important means of addressing the housing need; and
• Use examples from Africa and the rest of the world to illustrate practical approaches and structures for developing affordable rental housing.

There were five presentations and contributions as well as submissions by participants. From all these, it emerged as follows.

Myths surrounding home ownership are not necessarily true. Based on research done across the world, it was clarified that;

• There is no correlation between wealth and home ownership
• Not everyone wants to own a home
• Home ownership does not necessarily offer a better life

Strong incentives for rent vis a vis purchase were shared with the participants. These included but were not limited to:

• Option for those without sufficient income or equity to secure home ownership
• Flexibility in managing household budget
• Accommodates transitory periods in people’s lives from single to family sizes without taxes associated with home ownership
• Supports mobility for work and study
• Reduces the level of financial commitment to maintain accommodation
• For lower income workers allows more disposable income for needs of family
• For higher income families allows more diverse options for wealth creation

Affordable rental housing programs could be achieved through subsidies to reduce the cost of market rental either through direct Government provided capital grant programs or direct provision of housing.

Rental eligibility requirements are necessary to ensure that housing is allocated to those in greatest need.

Income adjusted or discounted market rent systems ensure affordability.

Effective regulation of affordable rental providers ensures public confidence in the delivery of rental operations and allocation of subsidies.

Rent to buy programs allow tenants and affordable rent in order to save for a deposit and secure home loan

 

Shared equity allows a home owner to gain entry through owning part of a home and when income rises purchase the remainder. These need an equity partner — either a financial institution or a government-backed provider.

Governments could stimulate supply of rental housing through various policies which are flexible and cover a wide range of target groups and rental housing types.

Governments could also support the supply of rental housing by providing subsidies and tax incentives.

Long term capital is essential for financing rental housing. This can be accessed through bonds, pension funds and insurance companies.

Successful rental housing programs have been implemented across the world. A case study from India was shared with the participants where relaxation of floor space index and offering of transferable development right ( TDRs) was used to create available space in a congested area.

Other successful rental housing schemes that were presented included: Johannesburg Housing Company ( JHC) where more than 4,000 rental houses had been developed and OMH- Mali where PP model has been used to develop more than 6,000 rental units

Conclusion

The Symposium successfully highlighted the case for Rental Housing as an important means of addressing the housing need. Experiences were drawn from across the world to share ideas about practical approaches of achieving successful rental housing programs in order to house 80-90% of the African population who live in rental accommodation.