The Role of Impact Investing in Affordable Housing and Positive Social Change

Top 3 Key Points:

• Affordable housing is critical for addressing social inequality and urban challenges.
• Impact investing focuses on creating positive, sustainable outcomes in housing.
• Collaborative efforts from government and private sectors are key to success.

Affordable Housing: A Catalyst for Positive Social Change

Affordable housing is more than just a basic need; it is a cornerstone of social equity and a critical response to urban challenges.

As urbanisation intensifies and population growth continues to surge, the demand for affordable housing has never been more urgent. Ensuring that all citizens have access to quality, affordable homes remains one of the most important issues of our time.

Lusanda Netshitenzhe, CEO of TUHF21, emphasises that while achieving profit through affordable housing investments is important, it must be coupled with intentional actions aimed at creating lasting social impact.

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“In today’s landscape, funders increasingly focus on how companies align with Environmental, Social, and Governance (ESG) goals before committing to a project,” Netshitenzhe explains.

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The issue extends beyond mere construction. In South Africa, water scarcity and energy shortages - exacerbated by recurring load shedding - are making environmental concerns a top priority in housing and development projects.

As a result, many housing developments now integrate sustainable solutions such as solar power, energy-efficient water heating, and resource conservation strategies to address these urgent environmental issues.

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“We are no strangers to impact investing and its role in driving meaningful change,” says Netshitenzhe. “For over 21 years, TUHF21 has been dedicated to fostering urban regeneration and densification through affordable rental housing, and we continue to lead in this area. Now, more than ever, impact investing is central to our approach.”

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Affordable Housing: A Means of Empowerment and Dignity

Affordable and quality housing is not only vital for preserving human dignity but also plays a critical role in fostering economic prosperity. Access to decent homes enables individuals to build wealth, enhances community well-being, and addresses spatial exclusion and historical inequalities.

The South African government has made strides in tackling the affordable housing crisis, committing to expand housing provision in urban centres. With the recent introduction of the Expropriation Act, there is hope that abandoned and hijacked buildings will be repurposed to create affordable housing, addressing these pressing issues directly.

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However, Netshitenzhe points out that neither government nor legislation can tackle this challenge alone. “Fostering urban and economic development requires collaboration between government, private sector players, and entrepreneurs who are empowered to succeed,” she says. “Together, we can drive inclusive and sustainable growth in our cities and across the country.”

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The Challenge of Urban Sprawl and Inequality

For decades, the South African government has made substantial progress in providing affordable housing, especially through its various housing programmes.

However, these efforts have often resulted in developments on the outskirts of cities, where land is more affordable and construction costs are lower. While this has addressed the immediate need for housing, it has also led to urban sprawl, fragmented cities, and lengthy commutes for residents.

The COVID-19 pandemic has highlighted these inequalities even further, exposing the critical need for well-located, affordable housing that fosters social inclusion. The lockdowns and economic disruptions underscored the barriers to accessing quality homes and the need for more equitable funding solutions for housing entrepreneurs.

Reinvigorating Townships: A New Approach to Affordable Housing

At TUHF21, the solution lies in reinvigorating townships and making affordable housing accessible in traditionally underserved areas. Netshitenzhe describes their approach:

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“Our focus is on curating products that address urban development challenges. One such product we are exploring is a rent-to-own model, which will allow tenants to eventually purchase their homes, rather than just renting.”

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This innovative model will enable tenants to transition from renters to homeowners, facilitating entry into the property market for first-time buyers. Moreover, it will foster a greater sense of ownership, not just of the unit but of the entire building and surrounding area.

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“We believe this will lead to greater tenant involvement in managing finances, as well as improving urban upkeep and building maintenance,” Netshitenzhe adds.

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A Vision for Sustainable Urban Development

Ultimately, TUHF21’s goal is to create real, lasting impact in the areas where it invests, improving lives and promoting dignity, prosperity, and healthy communities.

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"Our commitment to impact investing goes beyond providing homes. We aim to create sustainable, inclusive urban development that benefits all residents, enabling them to thrive and contribute to society," says Netshitenzhe.

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Building a Collaborative Future

To achieve the vision of inclusive and sustainable housing development, a concerted effort is needed from all sectors.

By fostering partnerships between government, the private sector, and entrepreneurs, South Africa can take significant strides toward addressing its affordable housing challenges.

As the country moves forward, impact investing will play a pivotal role in ensuring that affordable housing is not just a dream, but a reality for more South Africans. Through innovative models and sustainable practices, we can build cities that are equitable, resilient, and inclusive for generations to come.