The European Investment Bank (EIB), Europe’s long-term lending institution, has agreed to provide a further R2 billion (EUR €150 million) for investment in affordable and social housing in South Africa.
The new programme will be managed in South Africa by four local partners – two public development finance institutions and two commercial banks - who have already identified a pipeline of development projects that would deliver approximately 23,800 new housing units.
The first of the four loan agreements were signed in Johannesburg by Pim van Ballekom, European Investment Bank Vice President responsible for sub-Saharan Africa and South Africa, and representatives of Nedbank. Funding provided by the EIB to the four South African institutions will enable public and private developers to increase engagement in the affordable and social housing sector.
“Support for increased provision of affordable and social housing is essential for further economic and social integration in South Africa. The European Investment Bank's second programme reflects the goals of the country’s National Development Plan 2030. Building on the success of the previous engagement; it uses the same model of fruitful cooperation with local public and commercial banks to help stimulate financing for building new homes and upgrading existing ones across the country. We recognise the special importance of improving housing for low-income South Africans as crucial to helping South Africa achieve economic and social integration and development objectives.” said Pim van Ballekom, European Investment Bank Vice President.
The European Investment Bank’s engagement reflects the 2012 Financial Sector Code committing South African banks to promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of South Africa and to direct investment into targeted sectors of the economy such as social and affordable housing.
In keeping with its ranking of the JSE’s most empowered company under the dti Codes, Nedbank has also demonstrated its commitment to transformation by its Affordable Housing Development unit in Nedbank Corporate, ensuring the development of new homes for people in the Financial Sector Code income sector, which aims to eradicate housing backlogs for the lower income groups,” says Manie Annandale Head: Affordable Housing Development Finance.
“In addition, the Affordable Housing Development Finance unit in 2013 developed a Social Housing development funding product for SHRA (South African Social Housing Regulatory Authority) accredited Social Housing Institutions to accelerate much needed Social Housing delivery for the income groups between R1500 and R7500pm. This funding initiative is the first of its kind among the top four Commercial Banks in SA.”
The EIB’s new initiative follows a successful similar programme launched in 2008 that has supported the delivery of some 42,000 affordable and social housing units in both, inner city neighbourhoods and on Greenfield sites. Individual housing schemes funded under the initiative will be implemented across the country by developers and housing providers.
Under the initiative the European Investment Bank will contribute up to half of a housing schemes’ cost. Selected housing schemes are expected to be implemented by 2016 with around 6,500 construction jobs created during construction. The funding will also support renewable energy components such as solar geysers which will be part of new constructions.
The new Affordable and Social Housing Initiative remains the European Investment Bank's most substantial financial support for low income housing outside Europe, reflecting the importance of decent housing conditions for further economic and social development in South Africa.
