In more ways than one, a supportive government policy has the capacity to attract private sector investment, leading to increased infrastructure provision, housing supply and job creation, experts have explained.
One good and supportive government policy that is not commonplace in many countries of the world, especially in Africa, is infrastructure funding which the continent requires to drive economic recovery.
Infrastructure deficit on the continent, particularly in Nigeria, is glaring as reflected in the Infrastructure Consortium for Africa (ICA) report which says over USD100 billion was committed to investments in Africa’s infrastructure in 2018 whereas USD170 billion per annum is required to bridge the continent’s infrastructure deficit by 2025.
It is estimated that the deficit costs the continent between 2 and 4 percent of GDP growth annually and may contribute to productivity costs of between 35 and 70 cents on the dollar. According to Deji Alli, Mixta Africa CEO, Africa can scarcely afford any productivity loss with its countries’ ambitions to take 100 million people out of poverty in 10 years.
“Specifically, the building of communities with affordable housing offers multiple economic and standard-of-life benefits necessary to help to bring millions out of poverty,” Alli noted, citing a research conducted by CAHF in 2017 which shows that if housing production were to be increased as a key economic recovery strategy, it would have a significant impact on GDP overall.
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Despite the odds, one African country, Morocco, has moved ahead of peers with supportive government policy introduced 13 years ago. This policy has accelerated the engagement of the private sector in delivering residential development across board in the country.
Alli disclosed to BusinessDay that, of the over 12,500 properties Mixta has delivered during its history, approximately 40 percent have been in Morocco.
In the affordable segment, he added, this policy has resulted in the halving of housing deficit from 800,000 units in 2012 to 400,000 in 2018, citing the Centre for Affordable Housing Finance in Africa (CAHF). “The real estate sector contributed to the country’s growth of 3.8 percent CAGR over the last 10 years to 2019,” he said.
“A tangible example of the success is Mixta’s Residencia Essafia development in Tetouan-Martil, Morocco was completed in 2015, delivering nearly 5,000 affordable homes, with price points starting at US$15,120,” Alli disclosed further.
He said that the development, which also comprised children’s play areas, a recreational park, a school, library and police station, created 6,630 jobs directly and over 15,000 indirectly through the construction supply chain.
Mixta Africa, a leader in African infrastructure for over 20 years, with operations in eight African countries and a pioneer in infrastructure development on the continent, positions the private sector as a key significant player in infrastructure roll-out.
The company has expertise in most built environment projects and is now focused on delivering affordable housing at scale. Various governments are approaching their national housing deficits differently and, therefore, the economics and successful project execution vary greatly.
Mixta predicts that Nigeria will overtake Morocco in terms of affordable homes built with suitable communities in the short and medium terms. The historic challenges of developing affordable homes at scale are now gradually being addressed, including security of land, access to capital and critical impetus behind a suitable mortgage market.
Notably the National Housing Fund (NHF) is granting affordable long-term mortgages for those Nigerians whose employer makes contributions on their behalf and the Central Bank of Nigeria (CBN) has injected significant liquidity into the programme.
This has enabled Mixta to facilitate its customers’ first mortgages on these affordable terms to be granted. In addition to Morocco and Nigeria, Mixta is the largest single provider of affordable homes in Senegal, with a strong brand in Tunisia and Cote D’Ivoire.
In selected African countries studied, GDP contribution to the economy ranged from 7 percent to as high as 14 percent as a result of upstream demand for building materials and labour, as well as the demand for manufactured goods along the value chain for home improvements, and the services associated with the management of rental properties.
These contributions had a positive impact on employment, stimulating job creation, not only in housing but also the manufacturing and services sectors. It is clear that the private sector will play an imperative role in support of Africa governments as they address the continent’s infrastructure deficit.
