Supporting access to affordable housing

For nearly 20 years, TUHF Limited, a nonbank financial institution, has been financing small-scale entrepreneurs investing in the affordable rental housing market through the rehabilitation of existing inner-city buildings or the construction of new buildings in major South African cities. TUHF plays a key role in financing the housing market for the low- and middle-income segments of the population, in line with the national strategy to facilitate access to housing. 

TUHF offers its clients financial support through long-term loans and non-financial support (property and general business management training and mentorship, networking opportunities with fellow investors and tailored one-on-one support on specific client issues, such as managing construction, navigating town-planning requirements and property management). TUHF also has a particular focus on the advancement of women and has developed a Gender Action Plan which aims to promote women clients and therefore women’s entrepreneurship. TUHF consequently qualifies for the 2X Challenge, an initiative launched in 2018 by several Development Finance Institutions (DFIs) to strengthen the economic role of women in developing countries.

Proparco has allocated a ZAR-denominated credit line for an amount equivalent to EUR 10m to TUHF Limited. The project will finance loans for the rehabilitation/construction of affordable and well-located housing in South African cities and townships. The project benefits from the support of the European Union’s EFSD COVID program. 

TUHF has recently expanded its lending activity into historic township areas that were previously underdeveloped. This project will contribute to revitalizing township economies and will help entrepreneurs operating in these areas for the benefit of inclusive growth and development. A portion of the total financing (EUR 3m) will be allocated to uMaStandi (a subsidiary of TUHF) which operates in these lending areas.

This credit line is included in the “EFSD COVID” guarantee program granted to Proparco by the European Union (EU). This program, set up in late 2020, enables Proparco to support, through the EU guarantee, financial institutions targeting SMEs in Sub-Saharan Africa and the EU Neighborhood zone. These institutions are mainly microfinance institutions and specialized nonbank institutions, such as TUHF.

 

TUHF also benefits from support from a consultant to strengthen its environmental and social (E&S) risk management system.

The main expected impacts of this financing are:

•  Access to affordable and quality rental housing for 1,300 South African households on low incomes in well-located areas: close to business areas, urban centers and transportation networks, including in the townships where TUHF wishes to expand its model and offer quality housing solutions to population groups that are still underserved 
•  175 jobs supported over the next 5 years
•  Promotion of gender equality with 67% of women employees and 40% of women in the management team (thereby qualifying the project for the 2X Challenge)

The project should contribute to SDG 5 (Gender equality), SDG 8 (Decent work and economic growth) and SDG 11 (Sustainable cities and communities).