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A new partnership formed by the International Finance Corporation (IFC) and Senegal’s Sovereign Wealth Fund, FONSIS, aims to address the lack of affordable housing in the west African country by developing up to 20,000 homes over the next eight to ten years.
Kajom Capital, an investment platform established by IFC and FONSIS, will attract up to $10 million in IFC funding over the medium-term and more than $50 million over the long-term to develop the housing units and help the government of Senegal address a deficit of 160,000 houses in Dakar alone and up to 370,000 units across the country.
The deficit is a result of the rapid growth in the population and the high upfront costs required when wanting to purchase a house. As a result, potential buyers are struggling to raise or save the funds required to purchase houses, according to a press release by the IFC, resulting in developers hesitating to construct lower-cost housing units.
IFC and FONSIS will also attract additional investments from local and international institutions which they will use to acquire housing units from developers and make them available to lower-income earners through a rent-to-own scheme.
“This rent-to-own vehicle, besides accelerating and fostering access to property, will also encourage Senegalese people to save and better plan for their retirement and children’s education. It will offer investment opportunities to financial structures like insurances,” stated Papa Demba Diallo, the CEO of FONSIS.
The project will commence with the construction of 200 houses in the region of Dakar with up to 120,000 set to benefit under efforts by the two organizations to help the Senegalese government to revitalize its economy and achieve its goal of constructing 100,000 affordable housing units by 2025 as part of the ‘100,000 Logements’ initiative.
“Increasing access to quality affordable housing is critical to accelerating social well-being and economic development,” stated Makhtar Diop, IFC’s Managing Director, adding that, “IFC is proud to partner with FONSIS to help address Senegal’s affordable housing supply shortage through an innovative, private-sector led solution.”
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