Affordable mass housing

Affordable mass housing
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Affordable mass housing
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Real Estate
Business Model Description

Provide affordable housing to low and medium income earners through new constructions, property acquisitions or minority equity investments in companies operating along the housing value chain.

Expected Impact

Ensure households with limited income have access to clean and safe living environments

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in IRR)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Reduced Inequalities (SDG 10) Sustainable Cities and Communities (SDG 11)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Good health and well-being (SDG 3) Decent Work and Economic Growth (SDG 8)
Country
Regions
  • Nigeria: Countrywide
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
IF

Development need: Nigeria will face several challenges in the next decades, with the infrastructure sector as the basis for the country’s sustainable development due to its cross-cutting characteristics. There are several potential areas for investments. These opportunities focus on, but do not exclusively relate to, serving rapidly growing urban populations, and include electricity generation or waste management.

Policy priority: National Integrated Infrastructure Master Plan 2019 - The value of Nigeria’s core infrastructure stock represents only about 25% of gross domestic product (GDP) according to 2013 estimates, a value significantly lower than the global benchmark of 70%. This low stock has been attributed mainly to low public and private spending on infrastructure.(1)

Gender inequalities and marginalization issues: Poor infrastructure can exacerbate the gender gap. In low income countries, women are responsible for over 70% of water and fuel wood collection. The time spent on water collection adds up to 200 million hours every day. Unsafe and low security transport also disadvantages women, by exposing them to violence. This affects their wellbeing and workforce participation.(8)

Investment opportunities introduction: To efficiently revamp infrastructure across various sectors, estimated investment of USD 30 trillion is required over 30 years (2014 – 2043). This estimate includes investments in the following priority areas: Energy, transport, social infrastructure and housing. (1)(2)

Key bottlenecks introduction: The low infrastructure stock has been attributed mainly to low public and private spending on infrastructure.(1)

SubsectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Real Estate
IF.3

Development need: Despite improvements in macroeconomic indicators over the years, housing remains a perennial problem in Nigeria. Mortgages still stand at 1.13% of gross domestic product (GDP) and the total number of outstanding mortgages in the country is 113,069. With a projected population of 263 million by 2038, Nigeria's housing situation calls for an emergency response.(3)

IndustriesMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Home Builders
IF-HB
Investment Opportunity Area

Affordable mass housing

Business Model

Provide affordable housing to low and medium income earners through new constructions, property acquisitions or minority equity investments in companies operating along the housing value chain.

Market Size (USD)Describes the value in USD of a potential addressable market of the IOA.
> USD 1 billion

With the current yearly population growth of 2.7%, and the building requirements expected to increase to 2 million units a year, an estimated USD 363 billion is required to build affordable homes.(4)

Nigeria had an estimated housing deficit of 17 million dwellings at August 2012. Further, an estimated additional 700,000 houses must be built annually to keep up with demand, currently below 100,000. (4)

IRRDescribes an expected annual rate of growth of the IOA investment.
20% - 25%

A private company investing in affordable housing realized a return of 23.3% (average internal rate of return).(5)

Another private equity firm realized 26% internal rate of return on equity.(5)

TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)

Based on studied benchmark projects, cash flow generation is expected in the long term, between 15 - 20 years.

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Market - Highly Regulated
Ease of legal procedure for land acquisition. Weak policy implementation. Lack of understanding of land laws and regulations.
Capital - Limited Investor Interest
Limited access to finance
Business - Supply Chain Constraints
Availability of land for development
Sustainable Development Need

Despite improvements in macroeconomic indicators over the years, housing remains a perennial problem in Nigeria. Mortgages still stand at 1.13% of gross domestic product (GDP) and the total number of outstanding mortgages in the country is 113,069.(3)

With a projected population of 263 million by 2038, Nigeria's housing situation calls for an emergency response.(3)

Social housing schemes mitigate the constraints associated with lack of access to affordable housing. The Family Homes Fund, to be operated as a public-private partnership (PPP) aims to facilitate and supply 500,000 homes and 1.5 million jobs for low income earners by 2023. The PPP has an expected fund target of NGN 1 trillion.(2)

Gender & Marginalisation

Poor infrastructure can exacerbate the gender gap. In low income countries, women are responsible for over 70% of water and fuel wood collection. The time spent on water collection adds up to 200 million hours every day. Unsafe and low security transport also disadvantages women, by exposing them to violence. This affects their wellbeing and workforce participation.(8)

Expected Development Outcome

Investments help increase access to housing for the people and ultimately improve lives and livelihoods, decreasing infrastructural and housing gaps.

Gender & Marginalisation

Investments in affordable housing can help increase the number of women and rural communities living in a safe and clean environment.

Primary SDGs addressed
10 - Reduced Inequalities
Reduced Inequalities (SDG 10)
11 - Sustainable Cities and Communities
Sustainable Cities and Communities (SDG 11)

11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing

Current Level

N/A

Target Level

Nigeria’s 2017 Programmatic Objectives includes establishing a Social Housing Fund to deepen the mortgage system and expand its availability across all States of the Federation.(9)

Secondary SDGs addressed
2 - Zero Hunger
Zero Hunger (SDG 2)
3 - Good Health and Well-Being
Good health and well-being (SDG 3)
8 - Decent Work and Economic Growth
Decent Work and Economic Growth (SDG 8)
Directly impacted stakeholders
People
Urban dwellers, low to medium-scale income earners
Outcome Risks

Investments may drive environmental pollution and over-population.

Impact Risks

Stakeholder participation risk depending on the selection of regions to expand affordable housing (risks of excluding certain regions/communities)

Unexpected impact risk given the negative environmental effects of construction activities

Efficiency risk given the heavy involvement of public bodies (with higher costs) in the housing sector

Execution risk if activities are not delivered as planned and do not result in the desired outcomes

What

Positive impact through provision of affordable mass housing for the population.

Who

Low and medium income earners

Risk

Change in government policy

Impact Thesis

Ensure households with limited income have access to clean and safe living environments

Policy Environment

Economic Recovery and Growth Plan: The Central Bank of Nigeria (CBN) continues to support Nigeria's mortgage market with the proposed creation of the Nigerian Mortgage Guarantee Company (NMGC) and Mortgage Interest Draw Back Fund. 

The Central Bank of Nigeria is also working to develop a framework that will enable banks to securitize mortgage loans, which can then be sold in capital markets.(6)

Financial Environment

Financial incentives: The Central Bank of Nigeria's 5-year policy thrust aims to reduce the cost of obtaining mortgages. It also aims to support growth of the real estate sector by allowing banks to securitize mortgage loans and sell them in capital markets.(6)

Other incentives: The Central Bank of Nigeria has also disclosed its intention to create a fund for real estate developers.

Regulatory Environment

Land Use Act No. 6 of 1978: This Act guides policy in the land market.(4)

Private Sector

Shelter Afrique, Africa Reinsurance Corporation, Mbvoni, Nigeria Integrated Social Housing

Government

Development Bank of Nigeria, Federal Ministry of Finance, Nigeria Sovereign Investment Authority, Federal Mortgage Bank of Nigeria

Public-Private Partnership

Family Homes Funds

country static map
urban
Nigeria: Countrywide
High rates of urbanization and increasing population coupled with inadequate housing, unplanned development, improper maintenance of existing structures, absence of social infrastructure and poor waste management have characterized many urban cities, making them suitable for affordable mass housing.
Sector Sources
  • 1) National Planning Commission (2015). National Integrated Infrastructure Master Plan. 2) Federal Republic of Nigeria (2017). Economic Recovery and Growth Plan 2017 - 2020. Abuja: Ministry of Budget and National Planning. 3) Centre for Affordable Housing (2019). Housing finance in Africa. http://housingfinanceafrica.org/app/uploads/2019_yearbook-20.12.2019-compressed.pdf
IOA Sources
  • 4) Nigerian Bureau of Statistics (2015). Nigerian real estate sector summary report 2010-2012. 5) Bertha Centre for Social Innovation and Entrepreneurship (2015). Investment theme: Access to housing. https://www.sbs.ox.ac.uk/sites/default/files/2019-01/Impact-theme-Acess-to-Housing.pdf 6) Securities and Exchange Commission (2019). CBN 5-year policy thrust: implications for the capital market. https://sec.gov.ng/wp-content/uploads/2019/10/OCE-Policy-Brief-07.pdf 7) Countrywide Housing Company (2021). Countywide Housing Company. http://chclimited.com/index.php 8) OECD (2019). Gender Equality and Sustainable Infrastructure. https://www.oecd.org/governance/gender-equality-and-sustainable-infrastructure-paris-march-2019.htm 9) Federal Republic of Nigeria (2017). Implementation of the SDGs: a national voluntary review. https://sustainabledevelopment.un.org/content/documents/16029Nigeria.pdf