How Local Currency, Green Finance, Others Can Aid the Delivery of Affordable Housing in Ghana and Nigeria – PIDG
The Private Infrastructure Development Group (PIDG), highlights the importance of local currency and capacity building, sustainability, and green finance solutions in the delivery of affordable housing in Ghana and Nigeria.
Affordable housing which has been recognised as a key priority by the Nigerian and Ghanaian governments, given the sector’s importance in addressing social needs and its role in the local economy, constituted a major focal point during an Affordable Housing Workshop hosted by PIDG together with the Foreign, Commonwealth & Development Office (FCDO) Accra and Lagos.
The workshop which drew contributions from the Ghanaian and Nigerian governments, the FCDO, GuarantCo (a PIDG company), InfraCredit Nigeria, Mixta Africa, the Centre for Affordable Housing Finance in Africa, the National Housing and Mortgage Fund – Ghana, CDC, the Ghana Infrastructure Investment Fund and the World Bank, was attended by key figures including Honourable Minister for Works and Housing, Ghana – Honourable Francis Asenso-Boakye, Honourable Minister of State for the Federal Ministry of Works and Housing, Federal Republic of Nigeria – Engineer Abubakhar Aliyu and Philippe Valahu, PIDG CEO.
Tim Streeter, Head of Investor Relations at PIDG shares the key findings from the discussions, highlighting the importance of local currency and capacity building, sustainability, and green finance solutions in the delivery of affordable housing in Ghana and Nigeria.
Streeter who emphasized that affordable housing is an infrastructure sector that is of particular interest to PIDG, disclosed that their most recent project in this sector is Acorn Housing – an energy efficient university student accommodation project for 5,000 students in Nairobi, certified to IFC EDGE standards. PIDG companies GuarantCo and the Emerging Africa Investment Fund (EAIF) invested in the first East African green bond – with dual listing on the London Stock and Nairobi Securities Exchanges. As with all of our infrastructure projects, Acorn Holdings was supported to take a deliberate gender angle in the design and management of the buildings, developing tailored solutions to ensure safety and well-being of women students as part of their positioning in the market. The Acorn project drew on many facets that could be replicated in other jurisdictions: denominated in local currency, EDGE-certified, financed by means of a green bond and subsequently with a REIT.
The workshop equally recognized Real Estate Investment Trusts (REITs) which are increasingly being used for housing projects. Streeter stated that for REITs to develop successfully – as they have in many markets across Africa – confidence in the market needs to be built, which is often an issue of experience. According to Streeter, key focus for REIT market capacity to develop is transparency to help the investor understand the dynamics of the market – meaning regulation, liquidity and institutional participation. Sharing data to encourage transparency and efficiency will serve to decrease transaction costs. In these ways, REITs can facilitate the raising of capital locally to support housing projects and aggregate investment opportunities.
On the role of Green Finance in broadening sources of funding, Streeter disclosed that when discussing affordable housing, it is crucial to recognise the importance of sustainability and the potential of green finance. In Ghana, housing is specifically mentioned in the strategy for meeting the SDGs. Sustainability brings multiple benefits to housing projects, not only in terms of the build itself, but also in attracting subsidies and lower financing costs (at both wholesale and retail levels). Investor demand for green bonds is high. For example, Acorn Housing demonstrated incremental investor interest by virtue of its EDGE certification.