Affordable Housing
Affordable Housing
Business Model Description
Construct affordable and sustainable housing to accommodate the growing population in urban and suburban areas. This includes both the development of new housing projects and the refurbishment and upgrading of informal settlements. The business model relies on the formation of public-private partnerships (PPPs) to effectively implement these projects. In these partnerships, government authorities contribute by providing land, regulatory approvals, and potential tax incentives, creating a supportive environment for development. Private investors, on the other hand, bring capital investment, construction expertise, and management skills to the projects. Together, these collaborations aim to design and execute affordable housing projects engaging marginalized communities in decision-making processes that not only meet current housing demands but also include necessary infrastructure to ensure access to basic services like water, electricity, and sanitation.
Expected Impact
Foster sustainable urban development through the provision of affordable, environmentally responsible housing.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Angola: Luanda
- Angola: Huíla
- Angola: Benguela
- Angola: Huambo
Sector Classification
Infrastructure
Development need
Angola initiated infrastructure reconstruction in the past decade with some success. However, the power transmission and distribution of infrastructure remains deficient; road quality and safety requires improvement, water supply systems remain insufficient and their tariffs do not reflect cost (1).
Policy priority
The 2023-2027 National Development Plan (NDP considers infrastructure development among its major priorities. This includes providing accessible affordable housing for low-income households (2).
Gender inequalities and marginalization issues
The growing population and the high poverty levels require affordable housing. This is particularly relevant for peri urban populations living in precarious informal settlements, a growing youthful middle class, and vulnerable groups such as female household heads, who have less access to jobs and education (25).
Investment opportunity introduction
Demand for affordable housing is rising, urging the need for new or expanded projects in urban areas, including utility connections, waste management, clean transportation, and major transport infrastructure investments (3).
Key bottlenecks introduction
Angola's infrastructure sector faces underdevelopment due to damages from the civil war and seasonal flooding, which hinders service industry investment and economic diversification (4).
Real Estate
Development need
While several projects of social housing have been completed (23/36 foreseen in the state programme), rapid demographic growth (3.1% in 2022) and urbanization demand for affordable housing and the requalification of informal settlements (80% of urban areas) (5).
Policy priority
The government has been actively involved in various housing construction projects to mitigate the significant shortages and enhance urban development. It plans to continue the "1 million Houses" programme involving the private sector in public-private partnerships, also with a focus on self-construction - urban plots attributed within planned construction areas - both in urban and rural areas (2).
Investment opportunity introduction
An estimated 1.7 million housing units are still lacking in Angola and one-third of the population does not have access to adequate housing (5).
Key bottlenecks introduction
The lack of suitable financing options for both developers and buyers remains a major bottleneck. Traditional banking systems often fail to cater to the needs of low-income households (6).
Home Builders
Pipeline Opportunity
Affordable Housing
Construct affordable and sustainable housing to accommodate the growing population in urban and suburban areas. This includes both the development of new housing projects and the refurbishment and upgrading of informal settlements. The business model relies on the formation of public-private partnerships (PPPs) to effectively implement these projects. In these partnerships, government authorities contribute by providing land, regulatory approvals, and potential tax incentives, creating a supportive environment for development. Private investors, on the other hand, bring capital investment, construction expertise, and management skills to the projects. Together, these collaborations aim to design and execute affordable housing projects engaging marginalized communities in decision-making processes that not only meet current housing demands but also include necessary infrastructure to ensure access to basic services like water, electricity, and sanitation.
Business Case
Market Size and Environment
> USD 1 billion
5% - 10%
Residential real estate dominates Angola's construction market with a projected volume of USD 398.80 billion in 2024. The market is anticipated to witness an annual growth rate of 6.28% for 2024-2028 (8). The projected volume of residential real estate provides valuable insights into the potential impact on market dynamics, economic factors, infrastructure development, policy opportunities, market segmentation, and social equity considerations.
In Angola the 87.2% of housing is self-built, and for 2023 the estimated housing shortfall was of 2.2 million units (27).
Indicative Return
20% - 25%
The IHS Fund I, which has focused on affordable and green housing development in Sub-Saharan African countries, achieved a 23.3% IRR (26). However, introducing similar projects in Angola could alter these metrics due to the country's distinct economic, political, and infrastructural landscape. In Angola, the IRR might be impacted by higher economic and political risks, which could require adjustments such as increased risk premiums, potentially leading to a lower IRR.
Investment Timeframe
Medium Term (5–10 years)
The IHS Fund I, which has focused on affordable and green housing development in Sub-Saharan African countries, had investment horizon of 5-7 years (26). The investment horizon in Angola might need to be extended beyond the typical 5-7 years due to challenges like regulatory complexities and infrastructural deficits, which could delay project completions.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - Volatile
Market - Highly Regulated
Impact Case
Sustainable Development Need
Angola struggles to provide affordable housing due to rapid urbanization and inadequate infrastructure. Approximately 48.6% of the population lives in informal settlements (25). As of 2016, only 35% of the urban population had access to improved sanitation facilities, highlighting the pressing need for investment in housing and infrastructure development (1, 5).
Gender & Marginalisation
Affordable housing is crucial for peri urban populations residing in insecure informal settlements (comprising 48.6% of the total population), particularly female household heads who face limited access to employment and education (25). This demographic includes lower-income segments that have experienced a decline in housing initiatives aimed at providing them with adequate living accommodations (29).
Expected Development Outcome
Providing affordable homes stimulates economic growth and employment through construction and provision of jobs.
Affordable housing businesses contribute to reduced inequalities by improving living conditions in informal settlements, and fosters sustainable urban development.
Emphasizing sustainable construction practices and materials, affordable housing projects can contribute to environmentally responsible urban development, minimizing the ecological footprint of new constructions (11).
Gender & Marginalisation
Affordable housing initiatives can significantly reduce inequalities, including gender disparities, by providing stable living conditions that empower marginalized groups economically, enhance safety, promote social inclusion, and advocate for policies that ensure equal access and opportunities for all.
By increasing the supply of affordable homes, the intervention directly combats housing insecurity, offering stable living conditions for low- and middle-income families (11).
The development of affordable housing often includes the integration or improvement of essential services like water, sanitation, and electricity, significantly enhancing the quality of life for residents (11).
Primary SDGs addressed
11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing
The proportion of the urban population living in slums increased from 19.7% in 2000 to 62.6% in 2020 (20).
N/A
10.1.1 Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Outcome Risks
Gentrification and displacement: Affordable housing projects can inadvertently lead to gentrification, particularly if they're located in underdeveloped or transitioning neighbourhoods (12).
Strain on local infrastructure and resources: Rapid development without corresponding upgrades to local infrastructure can overwhelm existing services. This can lead to traffic congestion, overburdened public services, and reduced quality of life for residents (13).
Social segregation: Poorly planned affordable housing initiatives can lead to social segregation, where low-income populations are isolated in certain neighbourhoods without adequate access to opportunities and services (14).
Impact Risks
Affordability challenges pose a risk to affordable housing initiatives by potentially limiting access for low- and moderate-income households, threatening financial viability, reducing market demand, impacting social stability, complicating policy compliance, and jeopardizing long-term sustainability.
Impact Classification
What
Increase the access to affordable housing, ensuring social inclusion, and promoting environmental sustainability.
Risk
Affordability challenges pose a risk to affordable housing initiatives by potentially limiting access for low- and moderate-income households.
Contribution
The business model contributes by integrating marginalized communities into the decision-making process, providing essential infrastructure, and fostering sustainable urban development through collaboration between public and private sectors.
Impact Thesis
Foster sustainable urban development through the provision of affordable, environmentally responsible housing.
Enabling Environment
Policy Environment
The NDP 2023-2027 defines infrastructure as one of the major development priorities for supporting economic development. This includes providing accessible affordable housing for low-income households. The 2023-2027 NDP aims to boost the development of the urban network and encourage the expansion of private supply of affordable and decent housing. The government plans to continue the housing program with a focus on self-construction both in urban and rural areas, involving the private sector (16).
Central to government housing provision efforts is the NDP, which encourages the construction of affordable housing through public-private partnerships. Notably, the government has collaborated with international partners, such as China and Brazil, to develop large satellite towns aimed at easing the urban housing crisis. Additionally, organizations like UN-HABITAT have partnered with Angola's Ministry of Urban Planning and Housing to support urban planning and improve housing policies (23, 24, 25).
Financial Environment
Fiscal Incentives: Private Investment Law (Law 10/21 of 22 April 2021) offers incentives such as tax breaks, subsidies for support for infrastructure development, including housing. It promotes foreign direct investment offering a conducive legal framework and potential partnerships with local stakeholders (18).
Regulatory Environment
Under the Privatization Programme (PROPRIV), the government aims to promote the role of the private sector in this area by privatizing unfinished and/or planned housing projects (16).
Current regulatory framework for public-private partnerships (PPPs) includes a PPP law (2, 11) and private investment law, which generally also applies to housing and construction. The PPP law is unique as it requires PPPs to be implemented using special purpose vehicles (SPVs) (17).
Regulatory complexities in this business case include navigating land use regulations and zoning laws to secure suitable locations for housing projects, as well as obtaining permits and approvals for construction activities, especially in areas with informal settlements that may lack formal infrastructure. Additionally, ensuring compliance with building codes and safety standards adds another layer of complexity, requiring thorough coordination between public and private entities to streamline processes and mitigate regulatory risk (30).
Marketplace Participants
Private Sector
Broima, Association of Real Estate Professionals of Angola (APIMA), Zenki Real Estate, Kora Angola.
Government
Ministry of Public Works, Urban Planning and Housing, National Bank of Angola (BNA), Ministry of Economy (PROPRIV).
Multilaterals
International Finance Corporation (IFC), USAID, African Development Bank Group (AfDB), UN Habitat.
Non-Profit
Development Workshop.
Public-Private Partnership: Angolan government and Chinese company CITIC Construction (Kilamba Kiaxi Housing Project) (28).
Target Locations
Angola: Luanda
Angola: Huíla
Angola: Benguela
Angola: Huambo
References
- (1) Muzima J. (2018) Angola. Source: https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/country_notes/Angola_country_note.pdf
- (2) Governo de Angola (2023). Plano de Desenvolvimento Nacional 2023-2027. Source: https://www.mep.gov.ao/assets/indicadores/angola2050/20231030(3)_layout_Final_Angola_PDN%202023-2027-1.pdf.
- (3) World Bank (2019). Creating markets in Angola. Source: https://documents1.worldbank.org/curated/en/606291556800753914/pdf/Angola-Country-Private-Sector-Diagnostic-Creating-Markets-in-Angola-Opportunities-for-Development-Through-the-Private-Sector.pdf
- (4) Søren Kirk Jensen (2018). Angola’s Infrastructure Ambitions Through Booms and Busts. Source: https://www.chathamhouse.org/2018/09/angolas-infrastructure-ambitions-through-booms-and-busts
- (5) Allan Cain (2019). Africa Housing Finance Yearbook - Angola . Source: https://dw.angonet.org/wp-content/uploads/cain_2019_angola_profile_in_africa_housing_finance_yearbook_2019_-_pp_59-62.pdf.
- (6) Branca Do Espirito Santo (2021). Challenges and opportunities in Angola's housing sector. Source: https://housingfinanceafrica.org/documents/35397/.
- (7) Broima (n.d.). Sobre nós. Source: https://www.broima.co.ao/.
- (8) Statista (2023). Real Estate - Angola. Source: https://www.statista.com/outlook/fmo/real-estate/angola.
- (9) Centre for Affordable Housing Finance Africa (2019). Anuário sobre o Financiamento à Habitação 2019 Angola, https://housingfinanceafrica.org/app/uploads/Angola-Profile_Portuguese.pdf.
- (10) Muhammad Ali Musarat, Wesam Salah Alaloul, M.S. Liew (2021). Impact of inflation rate on construction projects budget: A review. Source: https://www.sciencedirect.com/science/article/pii/S2090447920300939.
- (11) Lukas Gutierrez (2023). Housing for All: Addressing the Social and Environmental Implications of the Housing Crisis. Source: https://sustainable-earth.org/housing-crisis/.
- (12) Azkia Hasan (2024). The Issues of Gentrification. Source: https://insights.grcglobalgroup.com/gentrification/.
- (13) Zurich Insurance (2023). The risks of rapid urbanization in developing countries. Source: https://www.zurich.com/en/knowledge/topics/global-risks/the-risks-of-rapid-urbanization-in-developing-countries.
- (14) Jacqueline Thomas (2019). Separated by Design: Why Affordable Housing Is Built in Areas With High Crime, Few Jobs and Struggling Schools. Source: https://www.propublica.org/article/separated-by-design-why-affordable-housing-is-built-in-areas-with-high-crime-few-jobs-and-struggling-schools.
- (15) The Uprooted Project (n.d.). Understanding Gentrification and Displacement. Source: https://sites.utexas.edu/gentrificationproject/understanding-gentrification-and-displacement/.
- (16) PROPRIV Dashboard (n.d.). Source: https://igape.minfin.gov.ao/PortalIGAPE/#!/privatizacoes/dashboardpropriv.
- (17) Assembleia Nacional (2011). Lei n.º 2/11 de 14 de janeiro. Source: https://lex.ao/docs/assembleia-nacional/2011/lei-n-o-2-11-de-14-de-janeiro/.
- (18) Law 10/21 of 22 April 2021. See also: UNCDTAD (2021). Amendments to the Private Investment Law. Source: https://investmentpolicy.unctad.org/investment-policy-monitor/measures/3705/amendments-to-the-private-investment-law-.
- (19) Soluap (2024). Most populated provinces of Angola. Source: https://soluap.com/most-populated-provinces-of-angola/.
- (20) UN STATS (n.d.). Country Profile: Angola. Source: https://unstats.un.org/sdgs/dataportal/countryprofiles/AGO#goal-10.
- (21) ILO (2021). ILO STAT Explorer. Source: https://rshiny.ilo.org/dataexplorer40/?lang=en&id=SDG_0831_SEX_ECO_RT_A.
- (22) UN Habitat (2019). Universal Periodic Review Angola. Source: https://uprdoc.ohchr.org/uprweb/downloadfile.aspx?filename=6808&file=EnglishTranslation.
- (23) UN HABITAT (n.d.). Angola. Source: https://unhabitat.org/angola.
- (24) SAIIA (2014). ‘Oil for Housing’: Chinese-built New Towns in Angola. Source: https://saiia.org.za/research/oil-for-housing-chinese-built-new-towns-in-angola/.
- (25) CAHF (2021). Challenges and opportunities in Angola's housing sector. Source: https://housingfinanceafrica.org/documents/35397/.
- (26) Impact investing institute (2021). IHS Fund II (SA and SSA). Source: https://www.impactinvest.org.uk/wp-content/uploads/2021/04/IHS-Fund-II-SA-and-SSA.pdf?_gl=1*1exuwsq*_up*MQ..*_ga*ODc3MzY5NzEuMTcxMzU1MzQ0OA..*_ga_SGZH7ZJGJZ*MTcxMzU1MzQ0Ni4xLjAuMTcxMzU1MzQ0Ni4wLjAuMA.
- (27) Mudzingwa, F. (2024). Analyzing Angola’s Housing Divide: Luxury Apartments Amidst a Struggle for Basic Shelter. Source: https://dotzedw.com/analysing-angolas-housing-divide-luxury-apartments-amidst-a-struggle-for-basic-shelter/#:~:text=It's%20still%20too%20early%20to,region%20of%202.2%20million%20units.
- (28) Xinhua (2024). Public welfare project exemplifies China and Angola's friendship. Source: https://english.news.cn/africa/20240418/903321a7279d45bf890e2a1aff6bb61b/c.html
- (29) CAHF (2021). 2021 Yearbook: Housing Finance in Africa. Source: https://housingfinanceafrica.org/app/uploads/2021/11/2021_CAHF-yearbook-final-compressed-1.pdf
- (30) CAHF (2016). Land markets for housing in Angola policy paper. Source: https://housingfinanceafrica.org/app/uploads/Land-markets-for-housing-Policy-paper-2016.pdf