The quantity and quality of the housing stock in any country largely determines the development and quality of life of its citizens. Housing and sustainable development are two sides of the same coin and cannot be separated, as housing remains one of the indices that measures the development of a country’s economy.
It is no longer news that the African continent and indeed, Nigeria as a country has a huge backlog in the area of housing and the deficit continues to increase as population expands. Even more, the increasing poverty rate occasioned by the devastating effect of the coronavirus pandemic on the economies of countries in Africa only continues to compound the problem of housing deficit already being experienced.
In all of this, How is Africa’s multilateral development finance institution, African Development Bank (AfDB) intervening?
A private sector Specialist with the African Development Bank (AfDB), Mr. Emmanuel Akinwunmi has spoken on some of the ways the bank is intervening to eradicate poverty and improve the standard of living in African countries with emphasis on Nigeria.
Mr Akinwunmi explained some of AfDB’s activities in his presentation as a guest panellist at a recent webinar hosted by the Housing Development Advocacy Network (HDAN) themed: “Housing Finance Ecosystem: Matching the Demand and Supply and the Intervention”.
In his words, “African Development Bank is at the forefront of eradicating poverty in Africa and that of course includes the poverty of shelter. In terms of the Bank’s works in the country, we have to look at the entire ecosystem like the building materials industry, talking of water and sanitation, talking about power infrastructure, talking about security infrastructure, you’re talking about data infrastructure and so on.”
Commenting on the bank’s mode of operation and intervention which appears to be covert, Akinkwunmi said, “The African Development Bank is a silent worker in the sense that the hands of the bank is seen in projects but you don’t see the face. This bank is operating on what we call Five Pillars of intervention in Africa including Nigeria.
“The First Pillar is power Africa which also has very good relationship with housing. There is no decent housing without power. The second one is Feed Africa, the third one is Industrialize Africa and you know the role of industrialisation in housing delivery. The fourth one is Integration, to integrate Africa and Nigeria needs to integrate. And then lastly Improving the quality of life of African people. There is no quality of life without shelter”
Speaking further, Akinwunmi reiterated AfDB’s commitment towards deploying various instruments and resources to different institutions capable of initiating and sustaining development and also established the Development Bank of Nigeria, (BDN).
“When you look at the various instruments that we are deploying for development in the country for instance equity, the bank is in the forefront and I can say it is a principal founder in the establishment of Shelter Afrique which role is to ensure affordable housing in Africa. Up till today Shelter Afrique is playing a noble the role in that direction. And this is one of the scope of the bank to work, which I said that in some scenes you will see the face of Shelter Afrique but you don’t see the African Development Bank what you see is the hand of the African Development Bank.
“Recently the bank also deployed resources to establishment of Development Bank of Nigeria and one of the mandate of that institution is to provide facilities for the mortgage sector. So mortgage banks could actually go to DBN and source for financing” he stated.
On the issue of trade finance, Akinwunmi noted that AFDB has been providing line of credit to financial institutions in the country, as part of its efforts to support the housing finance ecosystem with funds for development.
“Talking about trade finance which is being used by some of the practitioners in the housing sub-sector, they enjoy trade finance facilities for importation all financing of local production raw materials in the country.
“The giant of it all is what we call line of credit. Line of credit currently, we have over 1 billion dollars deployed to various commercial Banks microfinance institutions and also local development Banks like the bank of industry and so on.
“When you look at the hands, you don’t see the face of AfDB these projects, but when you dig deep down you will see that all this line of credit we are providing to Commercial Banks, local development Banks and microfinance institutions what are they using these resources to finance?” the expert said.
The Private sector specialist further stated that the bank has been doing a lot, not only in the area of housing finance, but in the entire housing ecosystem and the Bank remains committed to creating the enabling environment for various players within the housing value chain to have a smooth playing field on which to operate for maximum productivity.
“You will see a large number of practitioners in the housing ecosystem, you will see cable manufacturers, tile and marble manufacturers, you will see manufacturers of roofing sheet, cement, carpet, furniture all these are components of the housing delivery which ordinarily you may not see the face of AfDB there but you see the hands. Apart from what we have done there are some other things we can do much more.
“What happened is that you see a lot of Borrowers coming to the bank, approaching the bank as if the bank is a Commercial Bank approaching the bank as if it is one of the mortgage Banks. AfDB is not a mortgage bank it is not a Commercial Bank, but at the same time AfDB is there to provide resources both financial and non-financial and creating an enabling environment. The bank create enabling environment through institutions” he noted.
He also revealed how AfDB has been partnering with housing institutions stating that “the Nigerian Mortgage Refinance Company, for instance has benefited enormously from the Bank’s financing and we expect the Nigeria Mortgage Refinance Company to also do the same thing. That is why we are on them putting documents together to make sure that NMRC is part of AfDB’s partners. In family homes fund AfDB is there.
“Apart from the financing one of the unique delivery in AfDB platform is to look beyond dollars and naira two other areas. In the packaging of Family Homes Funds financing mechanism for instance, we went into negotiation with them that they have to allocate some of these resources to train artisans, find jobs for women, to provide jobs for the youth, to support innovative practices in housing delivery and so on”
The expert, while commenting on whether the proposed CBN intervention for the Housing sector should be directed at the demand or supply side of the housing value chain, said “the first assignment of the CBN 500 billion naira intervention is to use it as a capital for resource mobilization. That is, it will not just be 500 billion. Through it we can easily raise additional 1 trillion Naira on a ratio 1:2 basis.
“This means if the CBN comes forward and knocks on the door of DFIs and say we have this 500 billion Naira and I want to pump it into the housing sector we need your partnership, I can assure you that one trillion Naira will follow so we are not discussing 500 billion anymore, we will be discussing 1.5 trillion Naira available to fund mortgages. So with that 1.5 trillion naira we can do model Community Housing. So the resources can be deployed to both the demand and the supply side” Akinwunmi noted.
