Structuring public private partnerships in housing: Femi Adewole, Shelter Afrique, Director Business Development & Operations. With more than 46 cities in Africa swelling to populations of a million people or more — and 17 of the world's 100 fastest-growing cities located in Africa — there is an acute need to develop housing solutions for so many urban residents. But raising the capital to meet that growing demand for housing remains a significant challenge. In 2013, the African Union for Housing Finance (AUHF) will host a conference under the theme "Raising Capital for Housing Finance.” The Africa-China Urban Initiative will organize a conference panel discussion on "Understanding (and harnessing) Chinese investment interest." Chinese investment in residential development in Africa is increasingly having an impact and demonstrating a track record of opportunity and experience. Panelists invited include Chinese investors setting out their experiences and expectations for the market and an African corporation that has received Chinese financing. http://urban-africa-china.angonet.org/content/29th-annual-conference-mobilising-capital-housing-finance

1. AUHF ANNUAL CONFERENCE, MAURITIUS
13- 15 SEPTEMBER 2013

2. MOBILISING CAPITAL FOR HOUSING FINANCE:
-
STRUCTURING HOUSING PPPS
Mr ALASSANE BA
Managing Director, SHELTER AFRIQUE
AUGUST 2013

3. SHELTER AFRIQUE
 Pan-African Housing Finance Institution established by the AfDB
and 44 African Governments to finance affordable housing;
 Only specialist Housing Finance Institution on the Continent;
 Share Capital : USD1bn;
 Expects to approve about USD1.2bn of financing for new housing supply
over the next 5years;
 Key Products : Project Finance, Line of Credits, Equity Investment
and Trade Finance;
 Moody’s Baa - stable rating (2012)
 Based in Nairobi, Kenya but with presence in 32 African Countries.

4. During the course of this session…….
Thousands of families would have migrated to one of the major
cities in Africa in search of a new life adding to already severe
shortage of housing in urban areas.
Competing Needs………………………………
In the face of competing demands from health, education
etc, housing simply does not get adequate attention for public
expenditure. For instance in many countries less than 5% of the
budget is allocated to new housing.
PPPs are a viable solution………………………..
Given inadequate public resources to finance housing, access to the
increasing resources available in the private sector is an important
option. We believe that PPPs has to be the main choice for scaling up
housing supply to reduce need.

5. Housing PPPs : An important Solution
Public
Entity
Equity
Share
Holding
Private
Entities
Special Purpose
Vehicle
Contractor
Sub- Contractor
Loan
Agmt
Debt

6. A Case Study

7. AKAMUNIGO, KIGALI – RWANDA (2700 Homes)

8. Project Highlights
 58 Ha Site about 5km from the Centre of Kigali
 Proposal for about 2700 homes for sale including trunk and social
infrastructure;
 Objective to create a high quality, high density urban neighbourhood with
affordable housing;
 Project was initiated by the Mayor of Kigali in 2012.
 Shelter Afrique and Bank of Development of Rwanda invited to assist in
conceptualising the Project and implementing preliminary feasibility studies;
 Detailed Project Design and Development to commence in October 2013
 Commencement in June 2014 with completion of the first phase 18 months
later.

9. Rationale for Conceptualising this Project
1.
Housing Need : The City of Kigali identified need for up to 10,000 new
affordable housing units/per annum to meet severe shortfall. Political
determination to do something about it.
2.
Lack of Financing : Recognition that the City lacked adequate resources to
finance an appropriate housing programme on its own;
3.
Private sector participation as the only real option for realising political and
social objective;
4.
Early sponsors : Development Bank of Rwanda and Shelter Afrique who
carried the pre-feasibility cost and risk (US$250,000)

10. Outline Transaction Structure
CoK
SHAF/BRD/
OTHERS
Land
Cash Equity
 Lease Rights for 99 years on Land
 Cash Equity Finance
 Raise Debt Finance
 Facilitate grant of Development Rights
SPONSOR GRP
DEVELOPER/
CONTRACTOR
 Part Equity Contribution (Risk Participation)
 Construction/Completion of Housing Units
 Construction/Completion of Social + Trunk Inf.
Revenues
Sub-Leases
BUYERS

11. Making the Transaction Work
A number of important early steps were taken to ensure that the Project was
likely to be attractive to potential investors:
 Selection of a Lead Adviser with track record and substantial experience;
 Adequate funding of initial feasibility, transaction structuring, site
investigations, stakeholder consultations. This was paid for at risk by BRD
and Shelter Afrique as early investors;
 Secure firm commitment of City of Kigali in respect of critical success
factors including Land and infrastructure to Site.

12. Some Lesson we are Learning
 Desire to execute a PPP project is not enough. It is important to have the
capacity and experience of managing the process.
 It is critical to get a good Lead Adviser. It costs but it is money well spent.
Don’t fly blind.
 Ensure that the project conceptualisation is funded and well executed.
 PPPs take time and partners can loose interest, therefore keep interest alive
with good communication.
 Acute shortage of Construction Capacity for large scale projects. Its useful to
start selection process early.
 Disciplined planning is crucial. With many parties involved, its easy to loose
track

13. Some thoughts for Discussion
If PPP structures are an effective structure for facilitating
increased housing supply, why are there so few of them?
What role can organisations like the AHUF play in developing
and promoting Housing PPP practice and structures in Africa.
How can an initiative like this be funded?

14. Thank you
T: 254202722305-9
E: info@shelterafrique
W: www.shelterafriquq.org