A rapidly urbanizing, young and growing middle class, has suggested an important investment opportunity at the same time as opportunities in other sectors have declined. While conventional investors began to explore residential property in general, investors looking for impact opportunities have taken this further towards affordable housing,supported by DFI wishing to leverage their interest.  

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The public sector is recognizing the link between housing and growth, and that not only can good housing contribute to the twin goals of economic growth and poverty alleviation, but that the opposite is also true: poor housing can undermine economic growth and exacerbate poverty.

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Meanwhile, housing backlogs persist and cities are struggling under the pressure of informal,household-level, privately-financed efforts to meet housing needs. While we track investment activity, we can see that only a fraction goes into residential real estate.

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The next frontier for the growth of affordable housing in Africa, therefore, is to build the investment argument – because this argument will ultimately shape the potential for affordable housing at the scale required.

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Understanding Housing Delivery in Africa: Value Chains

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Formal housing is the product of specialized supply and demand-sidevalue chains. Housing ‘formality’ typically means a home that (i) has valid legaltitle, (ii) is structurally sound and complies with local planning standardsand building codes, and (iii) can be pledged as collateral for a long‐termmortgage loan.

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Formal housing units with such qualifications are the product of coordination between public and private sector activities, involving land,infrastructure, design and construction on the supply side, and a corresponding set of demand side inputs related to housing finance.

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Specific conditions for formal housing provision, such as sources of private capital and deep public sector attention to infrastructure‐appropriate regulations and standards, have emerged indeveloped economies over a long time but do not hold well in the housing sector in developing countries.