How a landmark financing deal will boost affordable housing and trade across Africa

A deal of billions of rands could boost access to affordable housing in South Africa and strengthen trade across the African continent. 

This was as the African Development Bank Group, Africa’s premier development finance institution and the Nedbank Group signed a landmark deal.  

The financing package comprises two components: a R2.5 billion social bond investment in Nedbank Group Limited and a $60 million(over R1 billion) trade finance Risk Participation Agreement with Nedbank Limited of South Africa.

"This partnership builds on our shared commitment to drive financial access for underserved communities and transform living conditions across South Africa," said Kennedy Mbekeani, African Development Bank's director general for Southern Africa.

"It marks a significant milestone in our nearly two-decade relationship with Nedbank Group, unlocking critical financing where it's needed most while strengthening our financial system's resilience."

Narrow Africa's trade finance gap

Together, the initiatives aim to narrow Africa’s trade finance gap, accelerate intra-African trade, and improve access to housing, two essential drivers of inclusive economic growth.

Affordable housing shortage

In June this year, Lightstone Property published an article titled: “Affordable housing shortage stymies low-income families.”

In it, it is written that low-income households in South Africa faced an acute shortage of formal housing stock, and data analysed by Lightstone shows that there is one property for 4.8 households earning under R13 000 a month.

The ratio improves to 3.3 households for every one formal property if the salary threshold moves to R26 000 a month. For higher income groups, this ratio is closer to 1.2 to 1.

“But either way, more than 80% of South Africa’s households earn under R26 000 per month, which means affordability remains a major obstacle to most households having a property to call their own." 

Housing for women and first-time homeowners is prioritised

The social bond is listed on the Johannesburg Stock Exchange(JSE), with proceeds channelled through Nedbank’s Sustainable Finance Fundraising Framework.

Funding will prioritise affordable housing for women and first-time homeowners, as well as green-certified units, reinforcing the Bank and Nedbank’s shared commitment to gender equality, climate resilience, and financial inclusion. The bond will contribute to achieving the African Development Bank’s vision for inclusive growth.

The $60 million(over R1 billion) trade finance Risk Participation Agreement will provide crucial credit risk cover for Nedbank's partnership with local banks issuing documentary letters of credit and similar trade instruments across the continent, including in Low-Income Countries and Transition States.

This mechanism will help close the continent’s trade finance gap and accelerate intra-African trade.

Mobilise funding for affordable housing

“This landmark partnership with the African Development Bank Group represents a pivotal step in our drive to deliver real impact for communities across South Africa and the continent.

"By mobilising funding for affordable housing, especially for women and first-time buyers, and supporting trade finance for local banks, we are helping to unlock opportunities for inclusive growth and sustainable development," said Jason Quinn, Chief Executive at Nedbank Group. 

“It underscores our commitment to enabling financial access, fostering climate resilience, and driving economic transformation through innovative, purpose-driven sustainable financing."

“We are proud of our shared commitment to sustainable financing, particularly through local debt capital markets, says Ahmed Attout, the African Development Bank’s director for the Financial Sector Development Department.

“This intervention builds on our previous support in 2020, when we invested in Nedbank’s inaugural green bond to support renewable energy access in South Africa. It also demonstrates the African Development Bank’s leading role in bridging the continent’s trade finance gap.”

Innovative housing finance combined with trade facilitation

The initiative was said to align with the African Development Bank’s Ten-Year Strategy (2024-2033), which aims to transform African economies through industrialisation, regional integration, and an improved quality of life for all Africans.

By combining innovative housing finance with trade facilitation, the agreement promotes inclusive and sustainable economic development across Africa.  

Earlier this month, Climate Fund Managers (CFM), a climate-focused blended finance investment manager, announced that it has approved a USD86.2 million (close to R1.4 billion) mezzanine debt investment from the Construction Equity Fund of its EU-supported Climate Investor Two facility to support the first two stages of the Olifants Management Model Programme (OMMP) in South Africa.

The investment would strengthen regional water security and climate resilience in one of the country’s most water-stressed regions.

The OMMP is a major bulk water initiative designed to address one of South Africa’s most persistent infrastructure challenges: the shortage of reliable water supply in regions experiencing rapid industrial expansion, population growth and climate-related drought.

The OMMP is being developed by the Badirammogo Water User Association (BWUA) to expand bulk raw water supply to commercial and industrial users, as well as potable water supply to communities, across the Northern and Eastern Limbs of the Bushveld Igneous Complex (BIC), which is one of the world’s most important mineral regions.

The BIC is said to support thousands of jobs and substantial export earnings, making a reliable water supply essential to both local communities and the national economy.

Climate Fund Managers is a joint venture between South Africa’s Sanlam InfraWorks and Dutch development finance institution FMO. Climate Investor Two (CI2) is a USD 1 billion blended finance fund formed in partnership with the European Commission and the Dutch Fund for Climate and Development (DFCD), that combines public and private capital to invest in and co-develop water, waste and oceans infrastructure in Africa, Asia and Latin America. 

The USD 86.2 million mezzanine investment from CI2 strengthens the OMMP’s bankability to unlock senior commercial debt from the appointed co-Mandated Lead Arrangers (MLAs), Standard Bank, Nedbank and Absa, who are advancing the senior debt package for the commercial portion of the OMMP’s first stage, with subsequent stages to follow.

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