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To Bridge Housing Deficit, InfraCredit Okays N3bn Financing for 1,200 Affordable Homes

By Adaobi Rhema Oguejiofor

InfraCredit, a specialized infrastructure credit guarantee institution, has announced the guarantee of N3 billion initial debt financing under a N12.5 billion debt programme for Modern Shelter Systems and Services Limited, for the development of affordable housing units according to International Finance Corporation (IFC) green building standard (EDGE) in Nasarawa Technology Village under a co-financing structure with the Shelter Afrique Development Bank.

The project aims to develop up to 1,200 EDGE-certified housing units in Nasarawa State.

This transaction is the first housing project to be executed under the InfraCredit’s Affordable Housing Funding Programme. The Programme seeks to address the funding constraints faced by developers resulting from the lack of institutional mechanism to provide both developers and homebuyers with access to affordable funding required to make both home financing and the final sale predictable and scalable. The Programme is being implemented in collaboration with development partners through technical assistance support.

InfraCredit has a pipeline of affordable housing developers under the programme which will benefit from technical assistance and transaction structuring towards a local currency bond issuance, incorporating best practices. To date, InfraCredit has originated an initial pipeline of EDGE-compliant housing infrastructure projects sized at over N70 billion from six (6) housing developers, requiring InfraCredit’s guarantee support for their respective construction debt issuances.

Nigeria, with a current population of 213 million, faces a significant housing deficit with a population projected to reach 400 million by 2050, necessitating an annual construction of at least 900,000 units. The existing housing deficit is estimated to stand at 28 million units, requiring an estimated investment of NGN21 trillion to bridge the deficit.

The Project was conceived as a Public-Private Partnership (PPP) arrangement between the Nasarawa State Government (NASG) and ABS Blueprint Limited in 2021 and following the execution of a concession agreement, Modern Shelter was appointed as the preferred developer to implement the Project under the design-build-finance-operate-maintain (DBFOM) project delivery model. 

The project is targeted at low to middle income earners within Abuja and environs, a region populated with Ministries, Departments, and Agencies (MDAs) of government, and will enlist no fewer than seven (7) highly skilled sub-contractors. The construction will prioritize the use of locally sourced building materials, procured in bulk at financial close, thereby minimizing exposure to importation or foreign exchange (FX) risks and mitigating the impact of inflationary pressures. The project is expected to create 1,220 new jobs, yield a 20% reduction in carbon emissions, and provide 370 new homes for low-income households when complete.

Shelter Afrique financed Modern Shelter’s N3 billion debt transactions, which underscores the institution’s mandate of supporting the development of Africa’s housing sector. On the demand side, the Housing Solution Fund entered into an offtake agreement with Modern Shelter under which it will facilitate the provision of affordable long-dated (up to 25 years) home loans to eligible homebuyers. The Fund is a local currency Real Estate Investment Trust (REIT) authorised and registered by the Securities & Exchange Commission of Nigeria under a N100 billion programme, sponsored by development partners, pension funds, and insurance companies.

Speaking on this development, the Chief Executive Officer of InfraCredit Chinua Azubuike expressed excitement with the successful closing of the transaction, adding that, with the success achieved, the relevant stakeholders have a unique opportunity to work with development partners in demonstrating innovative financing solutions to transition into new buildings, designed to meet energy efficiency standards, create green jobs and support climate resilient economic growth.

Also commenting, the Managing Director of Modern Shelter, Abdulmalik Mahdi, said the transaction marks another significant milestone for Modern Shelter, “providing us with access to stable, well-structured, long-term funding essential for delivering EDGE-certified affordable housing. This achievement owes much to the invaluable support of InfraCredit and Shelter Afrique. In collaboration with ABS Blueprint Limited and the Nasarawa State Government, we are wholeheartedly dedicated to alleviating Nigeria’s housing deficit with an unwavering focus on ensuring the project’s quality and timely completion.” 

On his part, the Managing Director of Shelter Afrique, Thierno-Habib Hann, said the partnership was not just expanding the scope of infrastructure to include housing, but also amplifying the impact of inclusive development.

“By combining the strengths of Shelter Afrique and InfraCredit, we are pioneering an approach that harmonizes housing with traditional infrastructure, thereby addressing crucial needs and transforming communities. This collaboration underpins our commitment to scaling up interventions in Nigeria, mitigating off-take risks, and providing beneficiaries with more accessible, affordable, and longer-tenured financing options, ultimately propelling sustainable development and prosperity.”