Johannesburg, 4 July 2023: Investment in low-cost housing and SME development is critical for economic growth and dignified living standards in South Africa in 2023. These sectors have been hard hit by Covid and resultant global economic shocks, to the detriment of those who rely on these sectors for survival.
TUHF is a specialised commercial property financing company that finances property investors exclusively in inner cities, and works to address South Africa’s underserved low- to middle-income market. TUHF’s primary source of funding is debt funding with credit facilities from local development finance institutions, asset managers, and commercial banks. But despite its impressive 20-year track record of achievement in the South African residential space, access to finance – particularly since the pandemic – has been its biggest obstacle to significant growth.
To facilitate the work that TUHF does, Proparco, the private sector subsidiary of Agence Francaise de Developpement (AFD) Group, has delivered the first disbursement of a total loan of close on R200m (EUR10m) to TUHF.
When TUHF adjusted its focus to securing new funding partners to continue growing its inner-city portfolio, diversify the nature of its debt, and develop its uMaStandi township rental housing portfolio, it attracted the interest of Proparco. Proparco’s aim in South Africa is to provide financial support to SMEs and businesses, both directly as well as through banking and non-banking institutions.
TUHF’s excellent work in providing affordable housing and boosting small business development provided an ideal opportunity for Proparco to positively impact the far-reaching work that TUHF does.
Nadia Kruger-Levy, Proparco Southern Africa’s Financial Institutions Investment Officer, says: “We are proud to be supporting the innovative and impactful work that TUHF undertakes, particularly in the context of South Africa’s severely underserved affordable housing market. Through this financing, Proparco will contribute to addressing spatial and socio-economic inequalities in South Africa’s metros, while also supporting access to finance for emerging entrepreneurs operating in the South African property space.”
The support for TUHF will contribute financing to the uMaStandi programme, which is based on an innovative ‘backyard rental’ model, where township-based homeowners and entrepreneurs develop multiple small units on their properties, which are rented out to low-income people wanting accommodation close to job opportunities. uMaStandi includes a training programme to build the capacity of backyard developers and property entrepreneurs, which includes mentoring and training on financial management, property management, executing leases, and landlord-tenant law.
To date, TUHF has funded over 44 000 units since inception, and created many jobs. Proparco estimates that the TUHF funding will support the development of about 1 300 residential units, which in turn will serve as affordable, quality, and well-located accommodation for over 3 600 low-income people. In addition to the loan, TUHF will benefit from a Technical Support line targeting environmental and social issues. As a result of TUHF’s focus on advancing women and promoting female entrepreneurship, the project qualifies for the 2X Challenge, a global initiative launched in 2018 by several DFIs to strengthen the economic role of women in developing countries.
In April 2023, the Centre for Affordable Housing in Africa report to the UN stated that: “Housing affordability is a pervasive issue in South Africa. The persons or groups who are most affected are residents of informal settlements, households living in overcrowded dwellings or in backyard rental units which are not safe and properly serviced, the homeless population in the inner city of major urban areas. … Many poor households have been on the ‘waiting list’ for fully subsidised housing for a number of years, up to 20.”
TUHF targets SME property developers in the country’s urban areas with its 15-year loan facility. It also shares its market environment and property trends knowledge with its entrepreneurs, working alongside them to ensure that market conditions, purchase prices, and project feasibility are in line. TUHF provides expert guidance to its entrepreneurs throughout the negotiation, construction or renovation and rental management process, for the duration of the 15-year loan term.
“Proparco looks forward to seeing the tangible outcomes of TUHF’s boosted programme on SMEs and entrepreneurs, as well as on low-income households who have access to improved rental homes as a direct result of this loan,” says Kruger-Levy.
About Proparco:
Proparco is the private-sector arm of the French Development Agency (Agence Française de Développement – AFD). Proparco has been promoting sustainable economic, social and environmental development for over 40 years. It provides funding and support to businesses in Africa, Asia, Latin America and the Middle East. Its action focuses on key development sectors, particularly healthcare, education, renewable energy, agribusiness and financial institutions.
Proparco’s operations aim to strengthen the private sector’s contribution to the Sustainable Development Goals (SDGs). To this end, Proparco finances companies creating jobs and decent incomes, providing essential goods and services and combating climate change. For a World in Common.
For further information: www.proparco.fr and @Proparco
About TUHF:
TUHF is a non-bank financial institution that offers commercial mortgage finance to entrepreneurs that deliver affordable rental housing in South Africa’s major cities. Over a period of 18 years, TUHF has financed the creation of over 44,000 affordable rental units and is now expanding its operations into “township” areas that were historically underdeveloped.
For further information: www.tuhf.co.za
Press Contact:
Mantis Communications
Kerry Simpson
Tel: 079 438 3252
Email: [email protected]
