WEBINAR n 1 Welcome! African Pension Funds and Housing We will - - PowerPoint PPT Presentation

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

WEBINAR SERIES « Leveraging African Pension Funds for Housing Finance in Africa »

WEBINAR n°1

African Pension Funds and Housing Opportunities and Challenges

Welcome! We will begin shortly

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

Moderator Speakers

Mr David Ashiagbor, Coordinator, Making Finance Work for Africa (MFW4A) Partnership

• Dr. Alfred Shem Ouma, Chief Manager, Research and Strategy,

Retirement Benefits Authority, Kenya Ms Bopelokgale Soko, Director, Retirement Funds, Non-Bank Financial Institutions Regulatory Authority, Botswana Mrs Akosua Nelson-Cofie, Portfolio Manager, Social Security and National Insurance Trust, Ghana Mr Dave Uduanu, Managing Director, Sigma Pensions Nigeria and Chair, Africa Pension Funds Network

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

Webinar Housekeeping Items

►Today’s webinar is scheduled to last 1 hour ►To ensure the highest quality of experience, all participants will be muted ►Questions can be submitted via the “Chat” or the “Q&A” box ►Slides and a recording of this presentation will be circulated after the session ►Message the organizer (MFW4A Secretariat) for any issues using the “Chat” box ►Don’t forget to fill out the survey that appears automatically after the session

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

Publish, share and exchange on social networks with the following hashtags:

#HousingPensionsAfrica @MFW4A @CAHF_Africa

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

OUTLINE

1. About the Making Finance Work for Africa (MFW4A) Partnership 2. About the Centre for Affordable Finance in Africa (CAHF) 3. Strategic partnership: MFW4A & CAHF 4. Drivers of Pension Fund Growth 5. Overview of Pensions in Africa 6. Pension Investment Portfolio 7. Housing Market Landscape 8. Barrier to long-Term Investments by African Pension Funds 9. Discussion points / Q&A 10. Save the dates: Upcoming Webinars 5

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 1. ABOUT THE MAKING FINANCE WORK FOR AFRICA (MFW4A) PARTNERSHIP

►MFW4A members share a common vision of innovative, sustainable, competitive and diverse African financial systems, providing near universal access by 2030, and offering a full range of products and services for the continent. ►The Partnership’s mission is to be the reference platform for advocacy, knowledge sharing and cooperation on financial sector development in Africa.

Financial Inclusion Long-Term Finance Financial Stability & Regulatio n

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Knowledge Management

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

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• 1. ABOUT THE MAKING FINANCE WORK FOR AFRICA (MFW4A) PARTNERSHIP

MFW4A’s objective is to support the development of the affordable housing market in Africa

Knowledge Management and Research

• Identifying and disseminating

relevant interventions and alternative models

• Produce original research that

addresses market constraints and knowledge gaps Outputs: Webinars, Knowledge Briefs, Case Studies Networking and Advocacy

• Advocacy for the development of

the housing finance market

• Support peer-learning and

knowledge exchange on key issues in the sector Outputs: Networks, High-level conferences and roundtables Project Support and Capacity Building

• Build capacity on housing finance
• perations across the value chain
• «Deal-making» - Facilitating

business opportunities, strategic support for programmes Outputs: Trainings, Marketplace Partners Outcomes  Improved coordination among various stakeholders in the housing finance value chain  Extent of use of MFW4A outputs in supporting the development of an enabling environment in the housing delivery chain  Improved knowledge & capacities of policy makers and practitioners to engage and invest in affordable housing markets  Opportunities for investors to identify and structure viable project pipelines for housing

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 2. ABOUT THE CENTRE FOR AFFORDABLE HOUSING FINANCE (CAHF)

►CAHF is an independent think tank based in Johannesburg, South Africa established in May 2014. The vision of CAHF is an enabled affordable housing finance system in countries throughout Africa, where governments, business, and practitioners work together to provide a wide range of housing options accessible to all. ►CAHF’s mission is to make Africa’s housing finance markets work, with special attention to access to housing finance for the poor, through the dissemination of research and market intelligence, the provision of strategic support, and

• ngoing engagement in both the public and the private sector; supporting increased investment, cross-sector

collaborations and a market-based approach. ►The overall goal of our work is to see an increase of investment in affordable housing and housing finance throughout Africa: more players and better products, with a specific focus on the poor. ►CAHF’s work extends across the continent, and it is supported by and collaborates with a range of funders and partners. ►CAHF key funders are Financial Sector Deepening Africa (FSD Africa) and the French Development Agency (AFD). For more information, visit CAHF website: http://housingfinanceafrica.org/

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 3. STRATEGIC PARTNERSHIP: MFW4A & CAHF

► Shared interest in deepening the understanding housing finance markets in Africa; ► Recognise the mutual advantages of collaboration with a broader network

• f organisations with overlapping objectives and programmes;

►Develop a set of activities and knowledge outputs focused on: i. Exploring innovation in housing development and finance; ii. Supporting housing finance market development ►Activities: i. Joint Working Groups and investment vehicles (i.e. Housing Investment Indicators, Pension and Housing, Marketplace) ii. Case studies and knowledge briefs (i.e. Potential solutions for bond markets, private equity and affordable housing) iii. Webinar Series (i.e. REITs, Rental in Africa, Housing Investment Landscape)

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 4. DRIVERS OF PENSION FUNDS GROWTH

REGULATORY ENVIRONMENT

• Privatisation of pension funds
• Mandatory retirement contributions
• Permitted pension fund allocations to

alternative investments

MACROECONOMICS

• Compelling growth story, expansion of middle

class

• Prudent fiscal policies reduce bond spreads
• Low interest rates fuel search for yield

DEMOGRAPHICS

• Young, rapidly growing population…
• … fuels steady increases in pension fund AUM
• Younger population has greater risk appetite

ALTERNATIVE INVESTMENTS

• Greater awareness and understanding of new

asset classes

• Demand for access to unlisted companies
• Emergence of proven track records

AuM Growth

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 5. OVERVIEW OF PENSIONS IN AFRICA

CASE STUDY: Nigeria

Source: National Pension Commission

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7 9,6 13 15 16,62 24,9 30 27 19 20 5 10 15 20 25 30 35 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AuM Growth / Nigeria ($bn)

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 5. OVERVIEW OF PENSIONS IN AFRICA

CASE STUDY: Kenya

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Source: Retirement Benefits Authority

2,17 2,46 3,40 3,43 4,72 6,02 7,13 8,34 1 2 3 4 5 6 7 8 9 2008 2009 2010 2011 2012 2013 2014 2015

AuM Growth Rates / Kenya ($bn)

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 6. PENSION INVESTMENT PORTFOLIO

Nigeria Pension Industry Portfolio - 30 September 2017 13

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Domestic Ordinary Shares Foreign Ordinary Shares FGN Securities State Govt. Securities Corporate Debt Securities Supra-National Bonds Local Money Market Securities Foreign Money Market Securities Open/close-End Funds Reits Real Estate Properties Private Equity Fund Infrastructure Fund Cash & Other Assets

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 7. HOUSING MARKET LANDSCAPE

Projected Population by Major Region 2010-2100 (In Millions)

HOUSING DEFICIT & INVESTMENT POTENTIAL

 Nigeria

Current housing shortage estimated at 17 million units with funding requirement of $363bn

 Ghana

Shortage estimated at 1.7 million units with funding requirements between $51.8bn and

$52.5bn

 Kenya

Shortage estimated at 2 million units per annum 14

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 7. HOUSING MARKET LANDSCAPE

Demand Pressures

• By 2050, Africa’s population will have doubled
• 50 percent to be living in towns and cities by

2030

• Africa has the youngest population in the

world – prolonged period of demand for housing

Mortgage Markets

• Low Mortgage penetration rate – 3.24% in Kenya;

1% in Ghana; 0.91% in Nigeria Macroeconomics – ‘Risk-free’ rates are already too high

• Perceived high credit risk; high transaction costs

and lack of competition in the banking sector

Current Limitations

• Developers and investors focused on the top

end of the market

• Poor targeting and insufficient scale – Few

developers that can deliver more than 500units

• Weaknesses all along the value chain (i.e.

Supply, demand, policy and regulatory).

Finance Gap

• High cost of capital; lack of diversified investor

base; absence of viable secondary markets

• Lack of investment and construction capital;

end-user finance and other interventions (guarantees, insurance, subsidies etc.) Untapped opportunity in the affordable housing market

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 8. BARRIERS TO LONG-TERM INVESTMENTS BY AFRICAN PENSION FUNDS

Regulation Knowledge Gap - Regulators, Trustees & Pension Managers Regulatory - Restriction on Offshore Investments Monetary Policy/ High Bond Yields Exit challenges PFs small/lack scale to build a credible alternative assets program Absence of data Lack of product

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 9. DISCUSSION POINTS

#1 Under what conditions and how much of the AuM can be allocated in housing? What does the regulation allows in your market ? #2 What has been the experience of African pension funds in terms of investments in the affordable housing sector?

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#3 What opportunities and risks do trustees and managers of pension funds see in investing in the affordable housing sector?

22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 9. DISCUSSION POINTS

Q & A

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

• 10. SAVE THE DATES: UPCOMING WEBINARS

▶ Webinar n° 2 – Affordable Housing in Africa – Opportunities and Challenge – March 29th, 2018

This webinar will provide market insight and industry knowledge on the affordable housing market, as well as the

• pportunities available for pension funds to finance this asset from a housing financier’s perspective. What does

Africa’s affordable housing market look like? Where does the financing come from? What are the key risks and

• pportunities? How do practitioners manage these? What is the business case for pension fund investment in

affordable housing in Africa?

▶ Webinar n° 3 – Leveraging Pension Assets for Affordable Housing in Africa – April 19th, 2018

The final webinar will build on the first two to explore opportunities to leverage pension assets for affordable

• housing. Case studies will be used to explore the structures / products from both a practitioner and pension fund

point of view. DFIs will also discuss their housing finance strategies, with a focus on opportunities to support leveraging of domestic resources.

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22nd FEBRUARY 2018 Webinar n°1 - African Pension Funds and Housing Opportunities and Challenges

Making Finance Work for Africa (MFW4A)

HOUSING FINANCE Mr Abdelkader Benbrahim a.benbrahim@afdb.org INSTITUTIONAL INVESTORS – PENSION FUNDS Mr Arnaud Floris a.floris@afdb.org

Centre for Affordable Housing Finance (CAHF)

• Mrs. Kecia Rust

kecia@housingfinanceafrica.org

• Mr. Olivier Vidal
• livier@housingfinanceafrica.org

Thank you !

http://www.mfw4a.org http://housingfinanceafrica.org