Affordable Housing in Urban Localities
Affordable Housing in Urban Localities
Business Model Description
Develop low to middle income housing units for urban areas at scale, targeting Government employees and private sector workforce.
Expected Impact
Provide affordable housing to underserved communities in urban areas of Namibia, offering safe and conducive living environments.
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
- Namibia: Omaheke Region
- Namibia: Khomas Region
- Namibia: Erongo Region
- Namibia: Otjozondjupa Region
Sector Classification
Infrastructure
Development need
The Africa SDG Index and Dashboards Report 2019, on SDG 9 regarding Industry, Innovation and Infrastructure, indicates that Namibia has “major challenges” in achieving this SDG (VIII). The country's infrastructure performance is ranked 94 out of 114 countries in the WEF Global Competitiveness Report 2019 (XII).
Policy priority
The Government prioritises infrastructure development towards SDG achievement (I). Namibia's 5th National Development Plan (NDP5) highlights how the lack of infrastructure development results in bottlenecks for economic development (II). It committed to spending 42% (NAD 74 billion, USD 5.3 billion) of the country's GDP on infrastructure projects over five years (VII).
Gender inequalities and marginalization issues
Given that infrastructure projects are typically linked to large-scale construction, gender representation in the construction industry was used as a proxy to gauge gender equality within the infrastructure sector. Namibia’s construction industry is male-dominated; 92% of its workforce is male (XII).
Investment opportunities introduction
Namibia put in place the Public Private Partnership Act in 2018, which aims to address the country's critical infrastructure needs through participation from the private sector through leveraging public private partnerships (PPPs) (IX). It also established a dedicated infrastructure fund to support the sector's growth (X).
Real Estate
Development need
Ensuring access for all to adequate, safe and affordable housing and basic services in Namibia, as captured under SDG 11 on Sustainable Cities and Communities, continues to face significant challenges in Namibia, even if its indicator is expected to be achieved (VIII).
Gender inequalities and marginalization issues
In Namibia's rural areas, 75.3% of female headed households resides in traditional dwellings compared to 58.5% of male headed households. In urban areas, a slightly higher number of male headed households (30.4%) reside in improvised housing units, compared to 28.5% of female headed households (XIII, XVI).
Home Builders
Pipeline Opportunity
Affordable Housing in Urban Localities
Develop low to middle income housing units for urban areas at scale, targeting Government employees and private sector workforce.
Business Case
Market Size and Environment
> USD 1 billion
Namibia's housing backlog stands at 300,000.
Namibia’s housing backlog from the National Development Plan 4 (NDP4) review stands at 300,000 (4).
72% or 82,961 Government employees qualify for home loan amounts ranging from USD 28,000 - 56,000, however, 76% (63,050) of these employees do not own a home (5).
Using the size of demand for housing for Government employees in the low-middle income bracket with qualifying housing subsidies and home loaned qualifying amounts ranging from USD 15,000 - 56,000, the total opportunity is USD 3.178b. This comprises USD 507.1m for the low-income housing bracket and USD 2.607b for the middle income bracket of government employees with housing subsidies.
Indicative Return
20% - 25%
Based on a benchmark project, the projected IRRs range between 18-23% (12).
Investment Timeframe
Medium Term (5–10 years)
The investment timeframe for affordable housing depends on scale. For 4,500 units and less, it is estimated at below five years; for up to 13,500 units, the investment timeframe is expected to be up to 15 years (27).
Market Risks & Scale Obstacles
Market - Highly Regulated
Market - Highly Regulated
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Over 400,000 Namibians live in shacks in 113 informal settlements in the country, and the rural-urban migration adds to this number (9).
While 78% of Namibians are bankable, 74% of the country's population is unable to afford conventional housing (1, 2).
Gender & Marginalisation
30% of the population lives in traditional dwellings, especially in rural areas, which can lack appropriate safety features and limit the comfort for its inhabitants (6).
Expected Development Outcome
Improved adequate housing for thousands of Namibians in urban parts of the country. This will promote health and well-being of low income households as housing drives access to basic services (4).
Improved supply of affordable housing by providing adequate unit stock; it is also expected to curb the current trend of sprawling informal settlements on the periphery of urban centres in Namibia (5).
Gender & Marginalisation
Improved housing and health situations for marginalised groups in urban Namibia.
Primary SDGs addressed
11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing
1.4.1 Proportion of population living in households with access to basic services
1.4.2 Proportion of total adult population with secure tenure rights to land, (a) with legally recognized documentation, and (b) who perceive their rights to land as secure, by sex and type of tenure
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Public sector
Outcome Risks
Given the orientation of the housing as affordable options, the units may cause health and environmental damages if not well planned and executed.
The open market could turn the affordable housing into speculative objects and subleasing of units, which would lead to an increase in costs, rather than a decrease.
Impact Risks
Due to the economic downtime following COVID-19, the demand for home ownership may be limited among private sector employees, reducing the market of this opportunity to Government employees.
Namibians most in need may not be able to afford the housing units and remain excluded from safe and conducive living conditions.
Impact Classification
What
The outcome is likely to be positive, important and intended because affordable housing has a socio-economic catalytic effect.
Risk
While affordable housing models exist, they can lead to speculative purchases and subleasing of units, which will have a counterproductive effect on the affordability of housing in Namibia.
Impact Thesis
Provide affordable housing to underserved communities in urban areas of Namibia, offering safe and conducive living environments.
Enabling Environment
Policy Environment
National Housing Policy, 2017: States that the role of Government is to facilitate and promote partnership between all relevant public and private parties concerned with the delivery of land, shelter and human settlement development (15).
Vision 2030, 2004: Identifies the objectives of providing access to adequate shelter for 60% of Namibia's low-income population by the year 2025 (16).
Financial Environment
Financial incentives: Government employees are provided with housing subsidy in line with their income brackets (but limited housing stock hinders most from activating the subsidy) (29).
Other incentives: The National Housing Enterprise and the Build Together programme promote home ownership for individuals earning under USD 2,000 per month (13, 14).
Regulatory Environment
National Housing Development Act, 2000: Lists bodies and funds to provide low-cost accommodation. It gives local authorities the mandate to carry out power, function or duty of the local authority council relating to the establishment of housing schemes by a municipality (17).
National Building Regulations and Building Standards Act, 1977: Promotes uniformity in the erection of buildings and prescribes standards. Promulgated in South Africa, it has remained in force subsequent to independence. It includes following SANS 0400 codes that define the code for buildings (18).
Local Authorities Act, 1992: Provides for the establishment of housing schemes by a municipal or town council (19).
Marketplace Participants
Private Sector
Investors such as the Government Institution Fund (property / housing mandate department) and the Development Bank of Namibia. Companies and existing projects such as the Ongos Valley Development.
Government
Ministry of Urban and Rural Development, Namibia Industrial Development Agency (NIDA), Ministry of Finance.
Non-Profit
Shack Dwellers Federation of Namibia.
Target Locations
Namibia: Omaheke Region
Namibia: Khomas Region
Namibia: Erongo Region
Namibia: Otjozondjupa Region
References
- (I) Republic of Namibia, National Planning Commission, 2018, Implementation of Sustainable Development Goals, Voluntary National Review, https://sustainabledevelopment.un.org/content/documents/19880New_Version_Full_Voluntary_National_Review_2018_single_1_Report.pdf. II) Republic of Namibia, National Planning Commission, 2017, Namibia's 5th National Development Plan (NDP5), https://www.npc.gov.na/?wpfb_dl=294. III) Republic of Namibia, Office of the President, 2016, Harambee Prosperity Plan 2016/17 - 2019/20 Progress Report, Goals and Outcomes, https://op.gov.na/documents/84084/572904/HPP+Report+2019/66c2eef8-3b23-45be-bc2c-5e728699057e. IV) African Development Bank Group, 2020, Namibia: African Development Bank approves $121.7 million loan, Euro 3 million grant to support water and sanitation sector, https://www.afdb.org/en/news-and-events/press-releases/namibia-african-development-bank-approves-1217-million-loan-euro-3-million-grant-support-water-and-sanitation-sector-34727. V) Canning, David & Bennathan, Esra. 2000, The Social Rate of Return on Infrastructure Investment, The World Bank, Policy Research Working Paper Series, https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-2390. VI) Republic of Namibia, Public Private Partnership Act 4, 2017, Section 40(1), https://laws.parliament.na/cms_documents/public-private-partnership-act-4-of-2017---regulations-2018-353-c96b676b6f.pdf. VII) African Development Bank Group, 2018, 2018 African Economic Outlook, https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/country_notes/Namibia_country_note.pdf. VIII) SDG Center for Africa and Sustainable Development Solutions Network, 2019, Africa SDG Index and Dashboards Report 2019, Kigali and New York: SDG Center for Africa and Sustainable Development Solutions Network, https://sdgcafrica.org/wp-content/uploads/2019/06/SDGS_INDEX_REPORT_2019WEB.pdf. IX) Republic of Namibia, Public Private Partnership Act 4, 2017, Section 40(1), https://laws.parliament.na/cms_documents/public-private-partnership-act-4-of-2017---regulations-2018-353-c96b676b6f.pdf. X) World Bank, 2020, Leveraging Pension Fund Investment for Domestic Development: Namibia’s Regulation 29 Approach, http://documents1.worldbank.org/curated/en/125241594367606090/pdf/Leveraging-Pension-Fund-Investment-for-Domestic-Development-Namibia-s-Regulation-29-Approach.pdf. XI) Ino Harith Capital, Our Partners, https://www.harith.co.za/our-partners-2. XII) Schwab, K, World Economic Forum, 2019, The Global Competitiveness Report 2019, http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf. XIII) Republic of Namibia. Namibian Statistics Agency, 2018, Labour Force Survey 2018 Report, https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NLFS_2018_Report_Final_.pdf. XIV) United Nations, 2018, Accelerating SDG 7 Achievement Policy Brief 12 Global Progress of SDG 7 - Energy and Gender, https://sustainabledevelopment.un.org/content/documents/17489PB12.pdf. XV) Republic of Namibia. Namibian Statistics Agency, 2016, Namibia Household Income and Expenditure Survey (NHIES) 2015/2016 Report, https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NHIES_2015-16.pdf. XVI) DNA Economics, 2021, SAM Multiplier Analysis for the SDG study in Namibia, Six Capitals.
- (1) Namibia Statistics Agency, 2017, Namibia Financial Inclusion Survey, https://nsa.org.na/microdata1/index.php/catalog/32/pdf-documentation.
- (2) Republic of Namibia, Ministry of Regional and Local Government, Housing and Rural Development, Namibia National Housing Policy (Reviewed), 2009, https://www.ohchr.org/Documents/Issues/Housing/sub-nationalgovernments/201114_Response_Namibia2.pdf.
- (3) Republic of Namibia, National Planning Commission, 2017, Namibia's 5th National Development Plan (NDP5), https://www.npc.gov.na/?wpfb_dl=294.
- (4) Kecia Rust. Centre for Affordable Housing Finance in Africa, Housing is central to achieving the SDGs, http://housingfinanceafrica.org/documents/housing-is-central-to-achieving-the-sdgs.
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- (7) UNDP, Subnational Human Development Index Database, Namibia, https://globaldatalab.org/shdi/shdi/NAM/?levels=1%2B4&interpolation=0&extrapolation=0&nearest_real=0.
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- (9) Republic of Namibia, Ministry of Finance, 2020, Long list of candidate PPP Projects.
- (10) Republic of Namibia, Namibia Industrial Development Agency, 2020, Long list of candidate PPP Projects.
- (11) Philippa Howden-Chapman, José Siri, Elinor Chisholm, Ralph Chapman, Christopher N.H. Doll and Anthony Capon, SDG 3: Ensure Healthy lives and promote well-being for all at all ages, 2017, https://council.science/wp-content/uploads/2017/03/SDGs-interactions-3-healthy-lives.pdf
- (12) Osona Village Development, Preferred Investment Property Fund, 2020.
- (13) National Housing Enterprise, Namibia, https://www.nhe.com.na.
- (14) Build Together Programme, Namibia, https://world-habitat.org/world-habitat-awards/winners-and-finalists/build-together-programme.
- (15) Namibia National Housing Policy, Windhoek, Namibia National Housing Policy, Republic of Namibia, 2017.
- (16) Namibia Vision 230, Republic of Namibia, 2004, https://www.npc.gov.na/vision-2030.
- (17) National Housing Development Act, 2000, Republic of Namibia, https://laws.parliament.na/annotated-laws-regulations/law-regulation.php?id=98.
- (18) National Building Regulations and Building Standards Act, 1977, Republic of Namibia, http://www.thedtic.gov.za/wp-content/uploads/building_standards_act.pdf.
- (19) Local Authorities Act, 1992, Republic of Namibia, https://laws.parliament.na/annotated-laws-regulations/law-regulation.php?id=178.
- (20) City of Windhoek, 2016, City of Windhoek Council, http://www.windhoekcc.org.na/pdf/Councillor%20Ogranogram%202016.pdf.
- (21) IPPR, February 2018, Housing in Namibia: Rights, Challenges and Opportunities; Research Report, Right to Housing project, https://ippr.org.na/wp-content/uploads/2018/03/IPPR_HousingBook_PRINT.pdf.
- (22) Namibia University of Science & Technology, Informal Settlements, 2018, https://ilmi.nust.na/sites/default/files/FACT-SHEET-6-2018-Informal-settlements.pdf.
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- (24) First Capital Treasury Solutions, 2018, Housing Funding Options for government employees low income earners.
- (25) First National Bank, June 2020, FNB Residential Property Report, https://www.fnbnamibia.com.na/downloads/namibia/housingIndex/HousingIndexJune2020.pdfRepublicof Namibia.
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- (27) Ongos Valley Development Bankable Feasibility Study, 2019, Available upon request from Ongos Valley Development.
- (28) Namibia University of Science and Technology (NUST), 2018, Land, livelihoods and housing Programme 2015-18 Working Paper, https://ilmi.nust.na/sites/default/files/WP7-CHIRIPANHURA-Housing-in-Namibia-WEB.pdf.
- (29) Office of the Prime Minister of Namibia (2018) data on the breakdown of housing subsidy per income bracket for civil servants, Available on request to Monasa Advisory & Associates.